I-3 - Taxation Act

Section 688 Disposition versions

2019-06-19

688. Subject to sections 688.0.0.1, 688.0.0.2 and 691 to 692, if at a particular time a property of a personal trust or a prescribed trust is distributed (otherwise than as a SIFT trust wind-up event) by the trust to a taxpayer who was a beneficiary under the trust and there is a resulting disposition of all or any part of the taxpayer’s capital interest in the trust, the following rules apply:

(a)  the trust is deemed to dispose of the property for proceeds of disposition equal to its cost amount to the trust immediately before that time;

(b)  the taxpayer is, subject to section 688.2, deemed to acquire the property at a cost equal to the total of its cost amount to the trust immediately before that time and the specified percentage of the amount by which the adjusted cost base to the taxpayer of the capital interest or part thereof immediately before that time, determined without reference to the first paragraph of section 686, exceeds the cost amount to the taxpayer of the capital interest or part thereof immediately before that time;

(c)  the taxpayer’s proceeds of disposition of all or part, as the case may be, of the capital interest in the trust disposed of by the taxpayer on the distribution are deemed to be equal to the amount by which the cost at which the taxpayer would be deemed under paragraph b to acquire the property if the specified percentage referred to in that paragraph were 100% exceeds the aggregate of all amounts each of which is an eligible offset at that time of the taxpayer in respect of the capital interest or part thereof;

(d)  for the purposes of sections 93 to 104, Chapter III of Title III and any regulations made under paragraph a of section 130 or under section 130.1, where the property distributed was depreciable property of a prescribed class of the trust and the amount that was the capital cost to the trust of such property exceeds the cost at which, in accordance with sections 688, 689, 691 and 692, the taxpayer is deemed to acquire the property, the following rules apply:

i.  the capital cost of the property to the taxpayer is deemed to be the capital cost of the property to the trust, and

ii.  the excess is deemed to have been allowed to the taxpayer as depreciation in respect of the property for the taxation years preceding the acquisition by him of the property;

(d.1)  (subparagraph repealed);

(e)  (subparagraph repealed).

For the purposes of subparagraph b of the first paragraph, the specified percentage is

(a)  where the property is capital property other than depreciable property, 100%;

(b)  (subparagraph repealed);

(c)  in any other case, 50%.

1972, c. 23, s. 519; 1973, c. 17, s. 81; 1975, c. 22, s. 190; 1977, c. 26, s. 76; 1979, c. 18, s. 55; 1990, c. 59, s. 242; 1993, c. 16, s. 246; 1994, c. 22, s. 239; 1996, c. 39, s. 177; 2000, c. 5, s. 148; 2001, c. 7, s. 73; 2003, c. 2, s. 172; 2005, c. 1, s. 133; 2009, c. 5, s. 216; 2010, c. 25, s. 52; 2011, c. 6, s. 143; 2015, c. 21, s. 221; 2019, c. 14, s. 175.

2015-10-21

688. Subject to sections 688.0.0.1, 688.0.0.2 and 691 to 692, if at a particular time a property of a personal trust or a prescribed trust is distributed (otherwise than as a SIFT trust wind-up event) by the trust to a taxpayer who was a beneficiary under the trust and there is a resulting disposition of all or any part of the taxpayer’s capital interest in the trust, the following rules apply:

(a)  the trust is deemed to dispose of the property for proceeds of disposition equal to its cost amount to the trust immediately before that time;

(b)  the taxpayer is, subject to section 688.2, deemed to acquire the property at a cost equal to the total of its cost amount to the trust immediately before that time and the specified percentage of the amount by which the adjusted cost base to the taxpayer of the capital interest or part thereof immediately before that time, determined without reference to the first paragraph of section 686, exceeds the cost amount to the taxpayer of the capital interest or part thereof immediately before that time;

(c)  the taxpayer’s proceeds of disposition of all or part, as the case may be, of the capital interest in the trust disposed of by the taxpayer on the distribution are deemed to be equal to the amount by which the cost at which the taxpayer would be deemed under paragraph b to acquire the property if the specified percentage referred to in that paragraph were 100% exceeds the aggregate of all amounts each of which is an eligible offset at that time of the taxpayer in respect of the capital interest or part thereof;

(d)  for the purposes of sections 93 to 104, Chapter III of Title III and any regulations made under paragraph a of section 130 or under section 130.1, where the property distributed was depreciable property of a prescribed class of the trust and the amount that was the capital cost to the trust of such property exceeds the cost at which, in accordance with sections 688, 689, 691 and 692, the taxpayer is deemed to acquire the property, the following rules apply:

i.  the capital cost of the property to the taxpayer is deemed to be the capital cost of the property to the trust, and

ii.  the excess is deemed to have been allowed to the taxpayer as depreciation in respect of the property for the taxation years preceding the acquisition by him of the property;

(d.1)  (subparagraph repealed);

(e)  where the property distributed was incorporeal capital property of the trust in respect of a business of the trust, the following rules apply:

i.  (subparagraph repealed),

ii.  for the purposes of Division III of Chapter II of Title III, Chapter III of Title III and sections 188 and 189, where the incorporeal capital amount of the trust in respect of the property exceeds the cost at which the taxpayer is deemed, under this section, to have acquired the property,

(1)  the incorporeal capital amount of the taxpayer in respect of the property is deemed to be the incorporeal capital amount of the trust in respect of the property, and

(2)  3/4 of the excess are deemed to have been deducted by the taxpayer in respect of the property under paragraph b of section 130 in computing income for taxation years ending before the acquisition by the taxpayer of the property and after the adjustment time, within the meaning of section 107.1, of the taxpayer in respect of the business, and

iii.  for the purpose of determining after the particular time the amount required by paragraph b of section 105 to be included in computing the taxpayer’s income in respect of any subsequent disposition of property of the business, there shall be added to the amount otherwise determined under subparagraph ii of subparagraph a of the second paragraph of section 107, the proportion of the amount determined under that subparagraph ii in respect of the business of the trust immediately before the particular time that the fair market value, immediately before the particular time, of the incorporeal capital property is of the fair market value, immediately before the particular time, of all the incorporeal capital property of the trust in respect of the business.

For the purposes of subparagraph b of the first paragraph, the specified percentage is

(a)  where the property is capital property other than depreciable property, 100%;

(b)  where the property is incorporeal capital property in respect of a business of the trust, 100%; and

(c)  in any other case, 50%.

1972, c. 23, s. 519; 1973, c. 17, s. 81; 1975, c. 22, s. 190; 1977, c. 26, s. 76; 1979, c. 18, s. 55; 1990, c. 59, s. 242; 1993, c. 16, s. 246; 1994, c. 22, s. 239; 1996, c. 39, s. 177; 2000, c. 5, s. 148; 2001, c. 7, s. 73; 2003, c. 2, s. 172; 2005, c. 1, s. 133; 2009, c. 5, s. 216; 2010, c. 25, s. 52; 2011, c. 6, s. 143; 2015, c. 21, s. 221.

2011-06-06

688. Subject to sections 688.0.0.1, 688.0.0.2 and 691 to 692, if at a particular time a property of a personal trust or a prescribed trust is distributed (otherwise than as a SIFT trust wind-up event) by the trust to a taxpayer who was a beneficiary under the trust and there is a resulting disposition of all or any part of the taxpayer’s capital interest in the trust, the following rules apply:

(a)  the trust is deemed to dispose of the property for proceeds of disposition equal to its cost amount to the trust immediately before that time;

(b)  the taxpayer is, subject to section 688.2, deemed to acquire the property at a cost equal to the total of its cost amount to the trust immediately before that time and the specified percentage of the amount by which the adjusted cost base to the taxpayer of the capital interest or part thereof immediately before that time, determined without reference to the first paragraph of section 686, exceeds the cost amount to the taxpayer of the capital interest or part thereof immediately before that time;

(c)  the taxpayer is deemed to dispose of all or part, as the case may be, of the taxpayer’s capital interest in the trust for proceeds of disposition equal to the amount by which the cost at which the taxpayer would be deemed under paragraph b to acquire the property if the specified percentage referred to in that paragraph were 100% exceeds the aggregate of all amounts each of which is an eligible offset at that time of the taxpayer in respect of the capital interest or the part thereof;

(d)  for the purposes of sections 93 to 104, Chapter III of Title III and any regulations made under paragraph a of section 130 or under section 130.1, where the property distributed was depreciable property of a prescribed class of the trust and the amount that was the capital cost to the trust of such property exceeds the cost at which, in accordance with sections 688, 689, 691 and 692, the taxpayer is deemed to acquire the property, the following rules apply:

i.  the capital cost of the property to the taxpayer is deemed to be the capital cost of the property to the trust, and

ii.  the excess is deemed to have been allowed to the taxpayer as depreciation in respect of the property for the taxation years preceding the acquisition by him of the property;

(d.1)  (subparagraph repealed);

(e)  where the property distributed was incorporeal capital property of the trust in respect of a business of the trust, the following rules apply:

i.  (subparagraph repealed),

ii.  for the purposes of Division III of Chapter II of Title III, Chapter III of Title III and sections 188 and 189, where the incorporeal capital amount of the trust in respect of the property exceeds the cost at which the taxpayer is deemed, under this section, to have acquired the property,

(1)  the incorporeal capital amount of the taxpayer in respect of the property is deemed to be the incorporeal capital amount of the trust in respect of the property, and

(2)  3/4 of the excess are deemed to have been deducted by the taxpayer in respect of the property under paragraph b of section 130 in computing income for taxation years ending before the acquisition by the taxpayer of the property and after the adjustment time, within the meaning of section 107.1, of the taxpayer in respect of the business, and

iii.  for the purpose of determining after the particular time the amount required by paragraph b of section 105 to be included in computing the taxpayer’s income in respect of any subsequent disposition of property of the business, there shall be added to the amount otherwise determined under subparagraph ii of subparagraph a of the second paragraph of section 107, the proportion of the amount determined under that subparagraph ii in respect of the business of the trust immediately before the particular time that the fair market value, immediately before the particular time, of the incorporeal capital property is of the fair market value, immediately before the particular time, of all the incorporeal capital property of the trust in respect of the business.

For the purposes of subparagraph b of the first paragraph, the specified percentage is

(a)  where the property is capital property other than depreciable property, 100%;

(b)  where the property is incorporeal capital property in respect of a business of the trust, 100%; and

(c)  in any other case, 50%.

1972, c. 23, s. 519; 1973, c. 17, s. 81; 1975, c. 22, s. 190; 1977, c. 26, s. 76; 1979, c. 18, s. 55; 1990, c. 59, s. 242; 1993, c. 16, s. 246; 1994, c. 22, s. 239; 1996, c. 39, s. 177; 2000, c. 5, s. 148; 2001, c. 7, s. 73; 2003, c. 2, s. 172; 2005, c. 1, s. 133; 2009, c. 5, s. 216; 2010, c. 25, s. 52; 2011, c. 6, s. 143.

2010-10-27

688. Subject to sections 688.0.0.1, 688.0.0.2 and 691 to 692, if at a particular time a property of a personal trust or a prescribed trust is distributed (otherwise than as a SIFT trust wind-up event) by the trust to a taxpayer who was a beneficiary under the trust and there is a resulting disposition of all or any part of the taxpayer’s capital interest in the trust, the following rules apply:

(a)  the trust is deemed to dispose of the property for proceeds of disposition equal to its cost amount to the trust immediately before that time;

(b)  the taxpayer is, subject to section 688.2, deemed to acquire the property at a cost equal to the total of its cost amount to the trust immediately before that time and the specified percentage of the amount by which the adjusted cost base to the taxpayer of the capital interest or part thereof immediately before that time, determined without reference to the first paragraph of section 686, exceeds the cost amount to the taxpayer of the capital interest or part thereof immediately before that time;

(c)  the taxpayer is deemed to dispose of all or part, as the case may be, of the taxpayer’s capital interest in the trust for proceeds of disposition equal to the amount by which the cost at which the taxpayer would be deemed under paragraph b to acquire the property if the specified percentage referred to in that paragraph were 100% exceeds the aggregate of all amounts each of which is an eligible offset at that time of the taxpayer in respect of the capital interest or the part thereof;

(d)  for the purposes of sections 93 to 104, Chapter III of Title III and any regulations made under paragraph a of section 130 or under section 130.1, where the property distributed was depreciable property of a prescribed class of the trust and the amount that was the capital cost to the trust of such property exceeds the cost at which, in accordance with sections 688, 689, 691 and 692, the taxpayer is deemed to acquire the property, the following rules apply:

i.  the capital cost of the property to the taxpayer is deemed to be the capital cost of the property to the trust, and

ii.  the excess is deemed to have been allowed to the taxpayer as depreciation in respect of the property for the taxation years preceding the acquisition by him of the property;

(d.1)  the property is deemed to be taxable Canadian property of the taxpayer where

i.  the taxpayer is not resident in Canada at that time,

ii.  that time is before 2 October 1996, and

iii.  the property is deemed under subparagraph d of the first paragraph of section 301, any of sections 521, 538, 540.4 and 554 or subparagraph c of the second paragraph of section 614 to be taxable Canadian property of the trust; and

(e)  where the property distributed was incorporeal capital property of the trust in respect of a business of the trust, the following rules apply:

i.  (subparagraph repealed);

ii.  for the purposes of Division III of Chapter II of Title III, Chapter III of Title III and sections 188 and 189, where the incorporeal capital amount of the trust in respect of the property exceeds the cost at which the taxpayer is deemed, under this section, to have acquired the property,

(1)  the incorporeal capital amount of the taxpayer in respect of the property is deemed to be the incorporeal capital amount of the trust in respect of the property, and

(2)  3/4 of the excess are deemed to have been deducted by the taxpayer in respect of the property under paragraph b of section 130 in computing income for taxation years ending before the acquisition by the taxpayer of the property and after the adjustment time, within the meaning of section 107.1, of the taxpayer in respect of the business, and

iii.  for the purpose of determining after the particular time the amount required by paragraph b of section 105 to be included in computing the taxpayer’s income in respect of any subsequent disposition of property of the business, there shall be added to the amount otherwise determined under subparagraph ii of subparagraph a of the second paragraph of section 107, the proportion of the amount determined under that subparagraph ii in respect of the business of the trust immediately before the particular time that the fair market value, immediately before the particular time, of the incorporeal capital property is of the fair market value, immediately before the particular time, of all the incorporeal capital property of the trust in respect of the business.

For the purposes of subparagraph b of the first paragraph, the specified percentage is

(a)  where the property is capital property other than depreciable property, 100%;

(b)  where the property is incorporeal capital property in respect of a business of the trust, 100%; and

(c)  in any other case, 50%.

1972, c. 23, s. 519; 1973, c. 17, s. 81; 1975, c. 22, s. 190; 1977, c. 26, s. 76; 1979, c. 18, s. 55; 1990, c. 59, s. 242; 1993, c. 16, s. 246; 1994, c. 22, s. 239; 1996, c. 39, s. 177; 2000, c. 5, s. 148; 2001, c. 7, s. 73; 2003, c. 2, s. 172; 2005, c. 1, s. 133; 2009, c. 5, s. 216; 2010, c. 25, s. 52.

2009-05-15

688. Subject to sections 688.0.0.1, 688.0.0.2 and 691 to 692, where a property of a personal trust or a prescribed trust is distributed, at a particular time, by the trust to a taxpayer who is a beneficiary under the trust and there is a resulting disposition of all or any part of the taxpayer’s capital interest in the trust, the following rules apply:

(a)  the trust is deemed to dispose of the property for proceeds of disposition equal to its cost amount to the trust immediately before that time;

(b)  the taxpayer is, subject to section 688.2, deemed to acquire the property at a cost equal to the total of its cost amount to the trust immediately before that time and the specified percentage of the amount by which the adjusted cost base to the taxpayer of the capital interest or part thereof immediately before that time, determined without reference to the first paragraph of section 686, exceeds the cost amount to the taxpayer of the capital interest or part thereof immediately before that time;

(c)  the taxpayer is deemed to dispose of all or part, as the case may be, of the taxpayer’s capital interest in the trust for proceeds of disposition equal to the amount by which the cost at which the taxpayer would be deemed under paragraph b to acquire the property if the specified percentage referred to in that paragraph were 100% exceeds the aggregate of all amounts each of which is an eligible offset at that time of the taxpayer in respect of the capital interest or the part thereof;

(d)  for the purposes of sections 93 to 104, Chapter III of Title III and any regulations made under paragraph a of section 130 or under section 130.1, where the property distributed was depreciable property of a prescribed class of the trust and the amount that was the capital cost to the trust of such property exceeds the cost at which, in accordance with sections 688, 689, 691 and 692, the taxpayer is deemed to acquire the property, the following rules apply:

i.  the capital cost of the property to the taxpayer is deemed to be the capital cost of the property to the trust, and

ii.  the excess is deemed to have been allowed to the taxpayer as depreciation in respect of the property for the taxation years preceding the acquisition by him of the property;

(d.1)  the property is deemed to be taxable Canadian property of the taxpayer where

i.  the taxpayer is not resident in Canada at that time,

ii.  that time is before 2 October 1996, and

iii.  the property is deemed under subparagraph d of the first paragraph of section 301, any of sections 521, 538, 540.2 and 554 or subparagraph c of the second paragraph of section 614 to be taxable Canadian property of the trust; and

(e)  where the property distributed was incorporeal capital property of the trust in respect of a business of the trust, the following rules apply:

i.  (subparagraph repealed);

ii.  for the purposes of Division III of Chapter II of Title III, Chapter III of Title III and sections 188 and 189, where the incorporeal capital amount of the trust in respect of the property exceeds the cost at which the taxpayer is deemed, under this section, to have acquired the property,

(1)  the incorporeal capital amount of the taxpayer in respect of the property is deemed to be the incorporeal capital amount of the trust in respect of the property, and

(2)  3/4 of the excess are deemed to have been deducted by the taxpayer in respect of the property under paragraph b of section 130 in computing income for taxation years ending before the acquisition by the taxpayer of the property and after the adjustment time, within the meaning of section 107.1, of the taxpayer in respect of the business, and

iii.  for the purpose of determining after the particular time the amount required by paragraph b of section 105 to be included in computing the taxpayer’s income in respect of any subsequent disposition of property of the business, there shall be added to the amount otherwise determined under subparagraph ii of subparagraph a of the second paragraph of section 107, the proportion of the amount determined under that subparagraph ii in respect of the business of the trust immediately before the particular time that the fair market value, immediately before the particular time, of the incorporeal capital property is of the fair market value, immediately before the particular time, of all the incorporeal capital property of the trust in respect of the business.

For the purposes of subparagraph b of the first paragraph, the specified percentage is

(a)  where the property is capital property other than depreciable property, 100%;

(b)  where the property is incorporeal capital property in respect of a business of the trust, 100%; and

(c)  in any other case, 50%.

1972, c. 23, s. 519; 1973, c. 17, s. 81; 1975, c. 22, s. 190; 1977, c. 26, s. 76; 1979, c. 18, s. 55; 1990, c. 59, s. 242; 1993, c. 16, s. 246; 1994, c. 22, s. 239; 1996, c. 39, s. 177; 2000, c. 5, s. 148; 2001, c. 7, s. 73; 2003, c. 2, s. 172; 2005, c. 1, s. 133; 2009, c. 5, s. 216.

2006-03-01

688. Subject to sections 688.0.0.1, 688.0.0.2 and 691 to 692, where a property of a personal trust or a prescribed trust is distributed, at a particular time, by the trust to a taxpayer who is a beneficiary under the trust and there is a resulting disposition of all or any part of the taxpayer’s capital interest in the trust, the following rules apply:

(a)  the trust is deemed to dispose of the property for proceeds of disposition equal to its cost amount to the trust immediately before that time;

(b)  the taxpayer is, subject to section 688.2, deemed to acquire the property at a cost equal to the total of its cost amount to the trust immediately before that time and the specified percentage of the amount by which the adjusted cost base to the taxpayer of the capital interest or part thereof immediately before that time, determined without reference to the first paragraph of section 686, exceeds the cost amount to the taxpayer of the capital interest or part thereof immediately before that time;

(c)  the taxpayer is deemed to dispose of all or part, as the case may be, of the taxpayer’s capital interest in the trust for proceeds of disposition equal to the amount by which the cost at which the taxpayer would be deemed under paragraph b to acquire the property if the specified percentage referred to in that paragraph were 100% exceeds the aggregate of all amounts each of which is an eligible offset at that time of the taxpayer in respect of the capital interest or the part thereof;

(d)  for the purposes of sections 93 to 104, Chapter III of Title III and any regulations made under paragraph a of section 130 or under section 130.1, where the property distributed was depreciable property of a prescribed class of the trust and the amount that was the capital cost to the trust of such property exceeds the cost at which, in accordance with sections 688, 689, 691 and 692, the taxpayer is deemed to acquire the property, the following rules apply:

i.  the capital cost of the property to the taxpayer is deemed to be the capital cost of the property to the trust, and

ii.  the excess is deemed to have been allowed to the taxpayer as depreciation in respect of the property for the taxation years preceding the acquisition by him of the property;

(d.1)  the property is deemed to be taxable Canadian property of the taxpayer where

i.  the taxpayer is not resident in Canada at that time,

ii.  that time is before 2 October 1996, and

iii.  the property is deemed under subparagraph d of the first paragraph of section 301, any of sections 521, 538 and 554 or subparagraph c of the second paragraph of section 614 to be taxable Canadian property of the trust; and

(e)  where the property distributed was incorporeal capital property of the trust in respect of a business of the trust, the following rules apply:

i.  (subparagraph repealed),

ii.  for the purposes of Division III of Chapter II of Title III, Chapter III of Title III and sections 188 and 189, where the incorporeal capital amount of the trust in respect of the property exceeds the cost at which the taxpayer is deemed, under this section, to have acquired the property,

(1)  the incorporeal capital amount of the taxpayer in respect of the property is deemed to be the incorporeal capital amount of the trust in respect of the property, and

(2)  3/4 of the excess are deemed to have been deducted by the taxpayer in respect of the property under paragraph b of section 130 in computing income for taxation years ending before the acquisition by the taxpayer of the property and after the adjustment time, within the meaning of section 107.1, of the taxpayer in respect of the business, and

iii.  for the purpose of determining after the particular time the amount required by paragraph b of section 105 to be included in computing the taxpayer’s income in respect of any subsequent disposition of property of the business, there shall be added to the amount otherwise determined under subparagraph ii of subparagraph a of the second paragraph of section 107, the proportion of the amount determined under that subparagraph ii in respect of the business of the trust immediately before the particular time that the fair market value, immediately before the particular time, of the incorporeal capital property is of the fair market value, immediately before the particular time, of all the incorporeal capital property of the trust in respect of the business.

For the purposes of subparagraph b of the first paragraph, the specified percentage is

(a)  where the property is capital property other than depreciable property, 100%;

(b)  where the property is incorporeal capital property in respect of a business of the trust, 100%; and

(c)  in any other case, 75%.

1972, c. 23, s. 519; 1973, c. 17, s. 81; 1975, c. 22, s. 190; 1977, c. 26, s. 76; 1979, c. 18, s. 55; 1990, c. 59, s. 242; 1993, c. 16, s. 246; 1994, c. 22, s. 239; 1996, c. 39, s. 177; 2000, c. 5, s. 148; 2001, c. 7, s. 73; 2003, c. 2, s. 172; 2005, c. 1, s. 133.