I-3 - Taxation Act

Section 785.2.2 Disposition versions

2009-05-15

785.2.2. Where an individual, other than a trust, becomes resident in Canada at a particular time in a taxation year and the time, in this section referred to as the “emigration time”, before the particular time, at which the individual last ceased to be resident in Canada was after 1 October 1996, the following rules apply:

(a)  subject to subparagraph b, subparagraphs b and c of the first paragraph of section 785.2 do not apply to the individual’s cessation of residence at the emigration time in respect of all properties that were taxable Canadian properties of the individual throughout the period that began at the emigration time and that ends at the particular time, if the individual makes, in relation to the individual’s cessation of residence, a valid election under paragraph a of subsection 6 of section 128.1 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) after 19 December 2006 in respect of all the properties;

(b)  where, if a property in respect of which an election referred to in subparagraph a is made had been acquired by the individual at the emigration time at a cost equal to its fair market value at the emigration time and had been disposed of by the individual immediately before the particular time for proceeds of disposition equal to its fair market value immediately before the particular time, the application of section 238.4 would reduce the amount that would, but for that section and this section, be the individual’s loss from the disposition, the individual is deemed

i.  to have disposed of the property at the time of disposition, within the meaning assigned by subparagraph b of the first paragraph of section 785.2, in respect of the emigration time for proceeds of disposition equal to the aggregate of

(1)  the adjusted cost base to the individual of the property immediately before the time of disposition, and

(2)  the amount, if any, by which that reduction exceeds the lesser of the adjusted cost base to the individual of the property immediately before the time of disposition and the particular amount, if any, that the individual specifies in respect of the property, in accordance with subclause II of clause B of subparagraph i of paragraph b of subsection 6 of section 128.1 of the Income Tax Act, in the election referred to in subparagraph a for the purposes of that paragraph b, and

ii.  to have reacquired the property at the emigration time at a cost equal to the amount, if any, by which the amount determined under subparagraph 1 of subparagraph i exceeds the lesser of that reduction and the particular amount referred to in subparagraph 2 of that subparagraph i;

(c)  despite paragraph c of section 785.1 and subparagraph b of the first paragraph of section 785.2, if the individual makes a valid election under paragraph c of subsection 6 of section 128.1 of the Income Tax Act after 19 December 2006 in relation to each property that the individual owned throughout the period that began at the emigration time and that ends at the particular time and that is deemed by paragraph b of section 785.1 to have been disposed of because the individual became resident in Canada, the individual’s proceeds of disposition at the time of disposition, within the meaning assigned by subparagraph b of the first paragraph of section 785.2, and the individual’s cost of acquiring the property at the particular time, are deemed to be those proceeds and that cost, determined without reference to this subparagraph, minus the least of

i.  the amount that would, but for this subparagraph c, have been the individual’s gain from the disposition of the property deemed by subparagraph b of the first paragraph of section 785.2 to have occurred,

ii.  the fair market value of the property at the particular time, and

iii.  the amount that the individual specifies, in accordance with subparagraph iii of paragraph c of subsection 6 of section 128.1 of the Income Tax Act, in the election for the purposes of that paragraph c; and

(d)  notwithstanding sections 1010 to 1011, any assessment of tax that is payable under this Part by the individual for a taxation year that is before the year that includes the particular time and that is not before the year that includes the emigration time shall be made by the Minister as is necessary to give effect to an election referred to in this paragraph, except that no such assessment shall affect the computation of

i.  interest payable under this Part to or by a taxpayer in respect of any period that is before the day on which the taxpayer’s fiscal return for the taxation year that includes the particular time is filed, or

ii.  any penalty payable under this Part.

Chapter V.2 of Title II of Book I applies in relation to an election made under subsection 6 of section 128.1 of the Income Tax Act or in relation to an election made under this section before 20 December 2006.

2004, c. 8, s. 156; 2009, c. 5, s. 338.

2006-03-01

785.2.2. Where an individual, other than a trust, becomes resident in Canada at a particular time in a taxation year and the time, in this section referred to as the “emigration time”, before the particular time, at which the individual last ceased to be resident in Canada was after 1 October 1996, the following rules apply:

(a)  subject to paragraph b, if the individual so elects by notifying the Minister in writing on or before the individual’s filing-due date for the year, paragraphs b and c of section 785.2 do not apply to the individual’s cessation of residence at the emigration time in respect of all properties that were taxable Canadian properties of the individual throughout the period that began at the emigration time and that ends at the particular time;

(b)  where, if a property in respect of which an election under paragraph a is made had been acquired by the individual at the emigration time at a cost equal to its fair market value at the emigration time and had been disposed of by the individual immediately before the particular time for proceeds of disposition equal to its fair market value immediately before the particular time, the application of section 238.4 would reduce the amount that would, but for that section and this section, be the individual’s loss from the disposition, the individual is deemed

i.  to have disposed of the property at the time of disposition, within the meaning assigned by paragraph b of section 785.2, in respect of the emigration time for proceeds of disposition equal to the aggregate of

(1)  the adjusted cost base to the individual of the property immediately before the time of disposition, and

(2)  the amount, if any, by which that reduction exceeds the lesser of the adjusted cost base to the individual of the property immediately before the time of disposition and the amount, if any, that the individual specifies for the purposes of this paragraph in the election under paragraph a in respect of the property, and

ii.  to have reacquired the property at the emigration time at a cost equal to the amount, if any, by which the amount determined under subparagraph 1 of subparagraph i exceeds the lesser of that reduction and the amount specified by the individual in accordance with subparagraph 2 of that subparagraph i;

(c)  notwithstanding paragraph c of section 785.1 and paragraph b of section 785.2, if the individual so elects by notifying the Minister in writing on or before the individual’s filing-due date for the year, in respect of each property that the individual owned throughout the period that began at the emigration time and that ends at the particular time and that is deemed by paragraph b of section 785.1 to have been disposed of because the individual became resident in Canada, the individual’s proceeds of disposition at the time of disposition, within the meaning assigned by paragraph b of section 785.2, and the individual’s cost of acquiring the property at the particular time, are deemed to be those proceeds and that cost, determined without reference to this paragraph, minus the least of

i.  the amount that would, but for this paragraph, have been the individual’s gain from the disposition of the property deemed by paragraph b of section 785.2 to have occurred,

ii.  the fair market value of the property at the particular time, and

iii.  the amount that the individual specifies for the purposes of this paragraph in the election; and

(d)  notwithstanding sections 1010 to 1011, any assessment of tax that is payable under this Part by the individual for a taxation year that is before the year that includes the particular time and that is not before the year that includes the emigration time shall be made by the Minister as is necessary to give effect to an election under this section, except that no such assessment shall affect the computation of

i.  interest payable under this Part to or by a taxpayer in respect of any period that is before the day on which the taxpayer’s fiscal return for the taxation year that includes the particular time is filed, or

ii.  any penalty payable under this Part.

2004, c. 8, s. 156.