Consolidated Statutes and Regulations
Consolidated Statutes
Consolidated Regulations
Annual Statutes and Regulations
Annual Statutes
Annual Regulations
Additional information
Québec Official Publisher
What’s new?
Information note
Policy of the Minister of Justice
Laws: Amendments
Laws: Provisions not in force
Laws: Provisions brought into force
Annual Statutes: PDF versions since 1996
Regulations: Amendments
Annual Regulations: PDF versions since 1996
Court Decisions
I-3 - Taxation Act
Section 785.1
Disposition versions
785.1. For the purposes of this Part, where at a particular time a taxpayer becomes resident in Canada, the following rules apply:
(a) if the taxpayer is a corporation and paragraph a of subsection 1 of section 128.1 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) does not apply to the taxpayer in respect of the particular time, the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time and to have ended at the time at which the taxpayer’s taxation year (determined for the purposes of the Income Tax Act) that includes the particular time, ended;
(a.1) if the taxpayer is a trust (other than a succession that is a graduated rate estate), the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time;
(a.2) if the taxpayer is a trust that is a succession that is a graduated rate estate and paragraph a of subsection 1 of section 128.1 of the Income Tax Act does not apply to the taxpayer in respect of the particular time, the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time;
(b) the taxpayer is deemed to have disposed, at the time, in this section referred to as the “time of disposition”, that is immediately before the time that is immediately before the particular time, of each property then owned by the taxpayer for proceeds equal to its fair market value at the time of disposition, other than, if the taxpayer is an individual,
i. property that is a taxable Canadian property, subject to the application of paragraph b.1,
ii. property that is described in the inventory of a business carried on by the taxpayer in Canada at the time of disposition,
iii. property that is included in Class 14.1 of Schedule B to the Regulation respecting the Taxation Act (chapter I-3, r. 1) in respect of a business carried on by the taxpayer in Canada at the time of disposition, and
iv. an excluded right or interest of the taxpayer, other than an interest described in paragraph k of the definition of “excluded right or interest” in section 785.0.1;
v. (subparagraph repealed);
(b.1) if the taxpayer is an inter vivos trust, other than a trust exempt from tax under Book VIII, the taxpayer is deemed to have disposed, at the time of disposition, of each property that is a specified immovable then owned by the taxpayer for proceeds of disposition equal to its fair market value at the time of disposition;
(c) the taxpayer is deemed to have acquired at the particular time each property deemed by paragraph b or b.1 to have been disposed of by the taxpayer, at a cost equal to the proceeds of disposition of the property;
(c.1) if the taxpayer is a corporation and a particular amount has been added to the paid-up capital in respect of a class of shares of the corporation’s capital stock because of paragraph b of subsection 2 of section 128.1 of the Income Tax Act,
i. the corporation is deemed to have paid, immediately before the time of disposition, a dividend on the issued shares of the class equal to the particular amount, and
ii. a dividend is deemed to have been received, immediately before the time of disposition, by each person, other than a person in respect of whom the corporation is a foreign affiliate, who held any of the issued shares of the class equal to the amount obtained by multiplying the amount of the dividend referred to in subparagraph i by such proportion as the number of shares of the class held by the person immediately before the time of disposition is of the number of issued shares of the class outstanding immediately before that time; and
(d) where the taxpayer was, immediately before the particular time, a foreign affiliate of another taxpayer that is resident in Canada,
i. the taxpayer is deemed to have been a controlled foreign affiliate, within the meaning assigned by section 572, of the other taxpayer immediately before the particular time, and
ii. the amount prescribed is to be included in the foreign accrual property income of the taxpayer for the taxpayer’s taxation year ending immediately before the particular time.
785.1. For the purposes of this Part, where at a particular time a taxpayer becomes resident in Canada, the following rules apply:
(a) if the taxpayer is a corporation and paragraph a of subsection 1 of section 128.1 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) does not apply to the taxpayer in respect of the particular time, the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time and to have ended at the time at which the taxpayer’s taxation year (determined for the purposes of the Income Tax Act) that includes the particular time, ended;
(a.1) if the taxpayer is a trust (other than a succession that is a graduated rate estate), the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time;
(a.2) if the taxpayer is a trust that is a succession that is a graduated rate estate and paragraph a of subsection 1 of section 128.1 of the Income Tax Act does not apply to the taxpayer in respect of the particular time, the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time;
(b) the taxpayer is deemed to have disposed, at the time, in this section referred to as the “time of disposition”, that is immediately before the time that is immediately before the particular time, of each property then owned by the taxpayer for proceeds equal to its fair market value at the time of disposition, other than, if the taxpayer is an individual,
i. property that is a taxable Canadian property, subject to the application of paragraph b.1,
ii. property that is described in the inventory of a business carried on by the taxpayer in Canada at the time of disposition,
iii. incorporeal capital property in respect of a business carried on by the taxpayer in Canada at the time of disposition, and
iv. an excluded right or interest of the taxpayer, other than an interest described in paragraph k of the definition of “excluded right or interest” in section 785.0.1;
v. (subparagraph repealed);
(b.1) if the taxpayer is an inter vivos trust, other than a trust exempt from tax under Book VIII, the taxpayer is deemed to have disposed, at the time of disposition, of each property that is a specified immovable then owned by the taxpayer for proceeds of disposition equal to its fair market value at the time of disposition;
(c) the taxpayer is deemed to have acquired at the particular time each property deemed by paragraph b or b.1 to have been disposed of by the taxpayer, at a cost equal to the proceeds of disposition of the property;
(c.1) if the taxpayer is a corporation and a particular amount has been added to the paid-up capital in respect of a class of shares of the corporation’s capital stock because of paragraph b of subsection 2 of section 128.1 of the Income Tax Act,
i. the corporation is deemed to have paid, immediately before the time of disposition, a dividend on the issued shares of the class equal to the particular amount, and
ii. a dividend is deemed to have been received, immediately before the time of disposition, by each person, other than a person in respect of whom the corporation is a foreign affiliate, who held any of the issued shares of the class equal to the amount obtained by multiplying the amount of the dividend referred to in subparagraph i by such proportion as the number of shares of the class held by the person immediately before the time of disposition is of the number of issued shares of the class outstanding immediately before that time; and
(d) where the taxpayer was, immediately before the particular time, a foreign affiliate of another taxpayer that is resident in Canada,
i. the taxpayer is deemed to have been a controlled foreign affiliate, within the meaning assigned by section 572, of the other taxpayer immediately before the particular time, and
ii. the amount prescribed is to be included in the foreign accrual property income of the taxpayer for the taxpayer’s taxation year ending immediately before the particular time.
785.1. For the purposes of this Part, where at a particular time a taxpayer becomes resident in Canada, the following rules apply:
(a) if the taxpayer is a corporation and paragraph a of subsection 1 of section 128.1 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) does not apply to the taxpayer in respect of the particular time, the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time and to have ended at the time at which the taxpayer’s taxation year (determined for the purposes of the Income Tax Act) that includes the particular time, ended;
(a.1) if the taxpayer is an inter vivos trust, the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time;
(a.2) if the taxpayer is a testamentary trust and paragraph a of subsection 1 of section 128.1 of the Income Tax Act does not apply to the taxpayer in respect of the particular time, the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time;
(b) the taxpayer is deemed to have disposed, at the time, in this section referred to as the “time of disposition”, that is immediately before the time that is immediately before the particular time, of each property then owned by the taxpayer for proceeds equal to its fair market value at the time of disposition, other than, if the taxpayer is an individual,
i. property that is a taxable Canadian property, subject to the application of paragraph b.1,
ii. property that is described in the inventory of a business carried on by the taxpayer in Canada at the time of disposition,
iii. incorporeal capital property in respect of a business carried on by the taxpayer in Canada at the time of disposition, and
iv. an excluded right or interest of the taxpayer, other than an interest in a testamentary trust not resident in Canada that was never acquired for consideration;
v. (subparagraph repealed);
(b.1) if the taxpayer is an inter vivos trust, other than a trust exempt from tax under Book VIII, the taxpayer is deemed to have disposed, at the time of disposition, of each property that is a specified immovable then owned by the taxpayer for proceeds of disposition equal to its fair market value at the time of disposition;
(c) the taxpayer is deemed to have acquired at the particular time each property deemed by paragraph b or b.1 to have been disposed of by the taxpayer, at a cost equal to the proceeds of disposition of the property;
(c.1) if the taxpayer is a corporation and a particular amount has been added to the paid-up capital in respect of a class of shares of the corporation’s capital stock because of paragraph b of subsection 2 of section 128.1 of the Income Tax Act,
i. the corporation is deemed to have paid, immediately before the time of disposition, a dividend on the issued shares of the class equal to the particular amount, and
ii. a dividend is deemed to have been received, immediately before the time of disposition, by each person, other than a person in respect of whom the corporation is a foreign affiliate, who held any of the issued shares of the class equal to the amount obtained by multiplying the amount of the dividend referred to in subparagraph i by such proportion as the number of shares of the class held by the person immediately before the time of disposition is of the number of issued shares of the class outstanding immediately before that time; and
(d) where the taxpayer was, immediately before the particular time, a foreign affiliate of another taxpayer that is resident in Canada,
i. the taxpayer is deemed to have been a controlled foreign affiliate, within the meaning assigned by section 572, of the other taxpayer immediately before the particular time, and
ii. the amount prescribed is to be included in the foreign accrual property income of the taxpayer for the taxpayer’s taxation year ending immediately before the particular time.
785.1. For the purposes of this Part, where at a particular time a taxpayer becomes resident in Canada, the following rules apply:
(a) if the taxpayer is a corporation and paragraph a of subsection 1 of section 128.1 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) does not apply to the taxpayer in respect of the particular time, the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time and to have ended at the time at which the taxpayer’s taxation year (determined for the purposes of the Income Tax Act) that includes the particular time, ended;
(a.1) if the taxpayer is an inter vivos trust, the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time;
(a.2) if the taxpayer is a testamentary trust and paragraph a of subsection 1 of section 128.1 of the Income Tax Act does not apply to the taxpayer in respect of the particular time, the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time;
(b) the taxpayer is deemed to have disposed, at the time, in this section referred to as the “time of disposition”, that is immediately before the time that is immediately before the particular time, of each property then owned by the taxpayer for proceeds equal to its fair market value at the time of disposition, other than, if the taxpayer is an individual,
i. property that is a taxable Canadian property, subject to the application of paragraph b.1,
ii. property that is described in the inventory of a business carried on by the taxpayer in Canada at the time of disposition,
iii. incorporeal capital property in respect of a business carried on by the taxpayer in Canada at the time of disposition, and
iv. an excluded right or interest of the taxpayer, other than an interest in a testamentary trust not resident in Canada that was never acquired for consideration;
v. (subparagraph repealed);
(b.1) if the taxpayer is an inter vivos trust, other than a trust exempt from tax under Book VIII, the taxpayer is deemed to have disposed, at the time of disposition, of each property that is a specified immovable then owned by the taxpayer for proceeds of disposition equal to its fair market value at the time of disposition;
(c) the taxpayer is deemed to have acquired at the particular time each property deemed by paragraph b or b.1 to have been disposed of by the taxpayer, at a cost equal to the proceeds of disposition of the property;
(c.1) if the taxpayer is a corporation and a particular amount has been added to the paid-up capital in respect of a class of shares of the corporation’s capital stock because of paragraph b of subsection 2 of section 128.1 of the Income Tax Act,
i. the corporation is deemed to have paid, immediately before the time of disposition, a dividend on the issued shares of the class equal to the particular amount, and
ii. a dividend is deemed to have been received, immediately before the time of disposition, by each person, other than a person in respect of whom the corporation is a foreign affiliate, who held any of the issued shares of the class equal to the amount obtained by multiplying the amount of the dividend referred to in subparagraph i by such proportion as the number of shares of the class held by the person immediately before the time of disposition is of the number of issued shares of the class outstanding immediately before that time; and
(d) where the taxpayer was, immediately before the particular time, a foreign affiliate of another taxpayer that is resident in Canada,
i. the taxpayer is deemed to have been a controlled foreign affiliate, within the meaning assigned by section 572, of the other taxpayer immediately before the particular time, and
ii. such amount as is prescribed shall be included in the foreign accrual property income, within the meaning assigned by section 579, of the taxpayer for the taxpayer’s taxation year ending immediately before the particular time.
785.1. For the purposes of this Part, where at a particular time a taxpayer becomes resident in Canada, the following rules apply:
(a) if the taxpayer is a corporation and paragraph a of subsection 1 of section 128.1 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) does not apply to the taxpayer in respect of the particular time, the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time and to have ended at the time at which the taxpayer’s taxation year (determined for the purposes of the Income Tax Act) that includes the particular time, ended;
(a.1) if the taxpayer is a trust, other than a testamentary trust, the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time;
(a.2) if the taxpayer is a testamentary trust and paragraph a of subsection 1 of section 128.1 of the Income Tax Act does not apply to the taxpayer in respect of the particular time, the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before the particular time and a new taxation year is deemed to have begun at the particular time;
(b) the taxpayer is deemed to have disposed, at the time, in this section referred to as the “time of disposition”, that is immediately before the time that is immediately before the particular time, of each property then owned by the taxpayer for proceeds equal to its fair market value at the time of disposition, other than, if the taxpayer is an individual,
i. property that is a taxable Canadian property,
ii. property that is described in the inventory of a business carried on by the taxpayer in Canada at the time of disposition,
iii. incorporeal capital property in respect of a business carried on by the taxpayer in Canada at the time of disposition, and
iv. an excluded right or interest of the taxpayer, other than an interest in a testamentary trust not resident in Canada that was never acquired for consideration;
v. (subparagraph repealed);
(c) the taxpayer is deemed to have acquired at the particular time each property deemed by paragraph b to have been disposed of by the taxpayer, at a cost equal to the proceeds of disposition of the property;
(c.1) if the taxpayer is a corporation and a particular amount has been added to the paid-up capital in respect of a class of shares of the corporation’s capital stock because of paragraph b of subsection 2 of section 128.1 of the Income Tax Act,
i. the corporation is deemed to have paid, immediately before the time of disposition, a dividend on the issued shares of the class equal to the particular amount, and
ii. a dividend is deemed to have been received, immediately before the time of disposition, by each person, other than a person in respect of whom the corporation is a foreign affiliate, who held any of the issued shares of the class equal to the amount obtained by multiplying the amount of the dividend referred to in subparagraph i by such proportion as the number of shares of the class held by the person immediately before the time of disposition is of the number of issued shares of the class outstanding immediately before that time; and
(d) where the taxpayer was, immediately before the particular time, a foreign affiliate of another taxpayer that is resident in Canada,
i. the taxpayer is deemed to have been a controlled foreign affiliate, within the meaning assigned by section 572, of the other taxpayer immediately before the particular time, and
ii. such amount as is prescribed shall be included in the foreign accrual property income, within the meaning assigned by section 579, of the taxpayer for the taxpayer’s taxation year ending immediately before the particular time.
785.1. For the purposes of this Part, where at a particular time a taxpayer becomes resident in Canada, the following rules apply:
(a) where the taxpayer is a corporation or a trust,
i. the taxpayer’s taxation year that would otherwise include the particular time is deemed to have ended immediately before the particular time and a new taxation year of the taxpayer is deemed to have begun at the particular time, and
ii. for the purpose of determining the taxpayer’s fiscal period after the particular time, the taxpayer is deemed not to have established a fiscal period before the particular time;
(b) the taxpayer is deemed to have disposed, at the time, in this section referred to as the “time of disposition”, that is immediately before the time that is immediately before the particular time, of each property then owned by the taxpayer for proceeds equal to its fair market value at the time of disposition, other than, if the taxpayer is an individual,
i. property that is a taxable Canadian property,
ii. property that is described in the inventory of a business carried on by the taxpayer in Canada at the time of disposition,
iii. incorporeal capital property in respect of a business carried on by the taxpayer in Canada at the time of disposition, and
iv. an excluded right or interest of the taxpayer, other than an interest in a testamentary trust not resident in Canada that was never acquired for consideration;
v. (subparagraph repealed);
(c) the taxpayer is deemed to have acquired at the particular time each property deemed by paragraph b to have been disposed of by the taxpayer, at a cost equal to the proceeds of disposition of the property;
(c.1) if the taxpayer is a corporation and a particular amount has been added to the paid-up capital in respect of a class of shares of the corporation’s capital stock because of paragraph b of subsection 2 of section 128.1 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement),
i. the corporation is deemed to have paid, immediately before the time of disposition, a dividend on the issued shares of the class equal to the particular amount, and
ii. a dividend is deemed to have been received, immediately before the time of disposition, by each person, other than a person in respect of whom the corporation is a foreign affiliate, who held any of the issued shares of the class equal to the amount obtained by multiplying the amount of the dividend referred to in subparagraph i by such proportion as the number of shares of the class held by the person immediately before the time of disposition is of the number of issued shares of the class outstanding immediately before that time; and
(d) where the taxpayer was, immediately before the particular time, a foreign affiliate of another taxpayer that is resident in Canada,
i. the taxpayer is deemed to have been a controlled foreign affiliate, within the meaning assigned by section 572, of the other taxpayer immediately before the particular time, and
ii. such amount as is prescribed shall be included in the foreign accrual property income, within the meaning assigned by section 579, of the taxpayer for the taxpayer’s taxation year ending immediately before the particular time.
