I-3 - Taxation Act

Section 184 Disposition versions

2009-05-15

184. If the sale of all or substantially all the property of a business includes debts that have been or will be included in computing the vendor’s income for a previous year or for the taxation year or debts arising from loans made in the ordinary course of the business if part of the vendor’s ordinary business has been the lending of money, the purchaser proposes to continue to carry on the business, and the vendor and the purchaser make a valid election under subsection 1 of section 22 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) after 19 December 2006 in relation to the sale, the following rules apply:

(a)  the vendor may deduct and the buyer must include, in computing their income for the taxation year, an amount equal to the excess of the face value of the debts so sold, other than debts in respect of which a deduction has already been made under section 141 by the vendor over the consideration paid by the purchaser for such debts;

(b)  for the purposes of sections 140 and 141, the debts so sold are deemed to have been included in computing the income of the purchaser for the taxation year or a previous year, but the latter shall not make any deduction under section 141 respecting a debt in respect of which the vendor has previously made a deduction;

(c)  for the purposes of paragraph i of section 87 the purchaser is deemed to have himself deducted the amount deducted by the vendor under section 141 in computing his income for a previous year in respect of any of the debts sold.

Chapter V.2 of Title II of Book I applies in relation to an election made under subsection 1 of section 22 of the Income Tax Act or in relation to an election made under this section before 20 December 2006.

1972, c. 23, s. 171; 1974, c. 18, s. 10; 1994, c. 22, s. 116; 2009, c. 5, s. 65.

2006-03-01

184. Where the sale of all or substantially all the property of a business includes debts which have been or will be included in computing the income of the vendor for a previous year or the taxation year or debts arising from loans made in the ordinary course of such business if part of his ordinary business has been the lending of money and the purchaser proposes to continue the business, the vendor and the purchaser may elect jointly, in prescribed form, to have the following rules apply:

(a)  the vendor may deduct and the buyer must include, in computing their income for the taxation year, an amount equal to the excess of the face value of the debts so sold, other than debts in respect of which a deduction has already been made under section 141 by the vendor over the consideration paid by the purchaser for such debts;

(b)  for the purposes of sections 140 and 141, the debts so sold are deemed to have been included in computing the income of the purchaser for the taxation year or a previous year, but the latter shall not make any deduction under section 141 respecting a debt in respect of which the vendor has previously made a deduction;

(c)  for the purposes of paragraph i of section 87 the purchaser is deemed to have himself deducted the amount deducted by the vendor under section 141 in computing his income for a previous year in respect of any of the debts sold.

1972, c. 23, s. 171; 1974, c. 18, s. 10; 1994, c. 22, s. 116.