I-3 - Taxation Act

Section 194 Disposition versions

2019-06-19

194. A taxpayer shall compute income from a farming business or fishing business for a taxation year in accordance with the cash method, by which the income from the business is deemed to be equal to the aggregate determined in the second paragraph minus the aggregate determined in the third paragraph, if the taxpayer makes, in relation to the year, a valid election under subsection 1 of section 28 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) after 19 December 2006 of the method provided for in that subsection 1 for computing the taxpayer’s income from a farming business or fishing business.

The first aggregate referred to in the first paragraph in respect of a farming business or fishing business for a taxation year is equal to the total of the following amounts:

(a)  all amounts received in the year or deemed by this Part to have been received in the year, in the course of carrying on the business described in the first paragraph, in payment of or on account of an amount that would be included in computing income from the business for that or any other taxation year if that income were not computed in accordance with this cash method;

(b)  in respect of a farming business, the amount specified by the taxpayer in respect of the business in his fiscal return filed under this Part for the year, not exceeding the amount by which the fair market value, at the end of the year, of inventory owned by him at that time in connection with the business exceeds the amount determined under subparagraph c for the year;

(c)  in respect of a farming business, the amount equal to the lesser of

i.  the taxpayer’s loss from the business for the year, computed without reference to this subparagraph and to subparagraph b, and

ii.  the value of inventory purchased by the taxpayer and owned by him in connection with the business at the end of the year;

(d)  the aggregate of all amounts each of which is an amount included in computing the taxpayer’s income for the year from the business because of section 94 or 485.13, the second paragraph of section 487 or section 487.0.3.

The second aggregate referred to in the first paragraph in respect of a farming business or fishing business for a taxation year is equal to the total of the following amounts:

(a)  all amounts, other than an amount described in section 198, that were paid in the year, or are deemed by this Part to have been paid in the year, in the course of carrying on the business,

i.  in the case of amounts paid, or deemed by this Part to have been paid, for the inventory relating to the business, in payment of or on account of an amount that would be deductible in computing the income from the business for the year or any other taxation year if that income were not computed in accordance with this cash method, and

ii.  in any other case, in payment of or on account of an amount that would be deductible in computing the income from the business for a preceding taxation year, the year or the following taxation year if that income were not computed in accordance with this cash method;

(a.1)  all amounts, other than an amount described in section 198, that would be deductible in computing the income from the business for the year if that income were not computed in accordance with this cash method, that are not deductible in computing the income from the business for any other taxation year, and that were paid in a preceding taxation year in the course of carrying on the business;

(b)  the aggregate of all amounts each of which is an amount included under subparagraph b or c of the second paragraph in computing the taxpayer’s income from the business for the preceding taxation year;

(c)  the aggregate of all amounts each of which is an amount deducted for the year under paragraph a of section 130, section 130.1, paragraph t of section 157, section 198, the first paragraph of section 487 or section 487.0.2 in respect of the business.

If a farming business or fishing business is carried on by several persons, an election referred to in the first paragraph is not valid for any of those persons in respect of the business unless each of them makes such an election in respect of the business.

Subparagraphs b and c of the second paragraph do not apply in computing the income of the taxpayer for the taxation year in which he died.

Chapter V.2 of Title II of Book I applies in relation to an election made under subsection 1 of section 28 of the Income Tax Act or in relation to an election made under this section before 20 December 2006.

1972, c. 23, s. 183; 1973, c. 17, s. 17; 1982, c. 5, s. 50; 1990, c. 59, s. 107; 1991, c. 25, s. 56; 1993, c. 16, s. 97; 1996, c. 39, s. 56; 2000, c. 5, s. 50; 2001, c. 7, s. 29; 2009, c. 5, s. 68; 2017, c. 1, s. 99; 2019, c. 14, s. 91.

2017-02-08

194. A taxpayer shall compute income from a farming business or fishing business for a taxation year in accordance with the cash method, by which the income from the business is deemed to be equal to the aggregate determined in the second paragraph minus the aggregate determined in the third paragraph, if the taxpayer makes, in relation to the year, a valid election under subsection 1 of section 28 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) after 19 December 2006 of the method provided for in that subsection 1 for computing the taxpayer’s income from a farming business or fishing business.

The first aggregate referred to in the first paragraph in respect of a farming business or fishing business for a taxation year is equal to the total of the following amounts:

(a)  all amounts received in the year or deemed by this Part to have been received in the year, in the course of carrying on the business described in the first paragraph, in payment of or on account of an amount that would be included in computing income from the business for that or any other taxation year if that income were not computed in accordance with this cash method;

(b)  in respect of a farming business, the amount specified by the taxpayer in respect of the business in his fiscal return filed under this Part for the year, not exceeding the amount by which the fair market value, at the end of the year, of inventory owned by him at that time in connection with the business exceeds the amount determined under subparagraph c for the year;

(c)  in respect of a farming business, the amount equal to the lesser of

i.  the taxpayer’s loss from the business for the year, computed without reference to this subparagraph and to subparagraph b, and

ii.  the value of inventory purchased by the taxpayer and owned by him in connection with the business at the end of the year;

(d)  the aggregate of all amounts each of which is an amount included in computing the taxpayer’s income for the year from the business because of section 94, 105 or 485.13, the second paragraph of section 487 or section 487.0.3.

The second aggregate referred to in the first paragraph in respect of a farming business or fishing business for a taxation year is equal to the total of the following amounts:

(a)  all amounts, other than an amount described in section 198, that were paid in the year, or are deemed by this Part to have been paid in the year, in the course of carrying on the business,

i.  in the case of amounts paid, or deemed by this Part to have been paid, for the inventory relating to the business, in payment of or on account of an amount that would be deductible in computing the income from the business for the year or any other taxation year if that income were not computed in accordance with this cash method, and

ii.  in any other case, in payment of or on account of an amount that would be deductible in computing the income from the business for a preceding taxation year, the year or the following taxation year if that income were not computed in accordance with this cash method;

(a.1)  all amounts, other than an amount described in section 198, that would be deductible in computing the income from the business for the year if that income were not computed in accordance with this cash method, that are not deductible in computing the income from the business for any other taxation year, and that were paid in a preceding taxation year in the course of carrying on the business;

(b)  the aggregate of all amounts each of which is an amount included under subparagraph b or c of the second paragraph in computing the taxpayer’s income from the business for the preceding taxation year;

(c)  the aggregate of all amounts each of which is an amount deducted for the year under paragraph a or b of section 130, section 130.1, paragraph t of section 157, section 188 or 198, the first paragraph of section 487 or section 487.0.2 or 487.0.2.1 in respect of the business.

If a farming business or fishing business is carried on by several persons, an election referred to in the first paragraph is not valid for any of those persons in respect of the business unless each of them makes such an election in respect of the business.

Subparagraphs b and c of the second paragraph do not apply in computing the income of the taxpayer for the taxation year in which he died.

Chapter V.2 of Title II of Book I applies in relation to an election made under subsection 1 of section 28 of the Income Tax Act or in relation to an election made under this section before 20 December 2006.

1972, c. 23, s. 183; 1973, c. 17, s. 17; 1982, c. 5, s. 50; 1990, c. 59, s. 107; 1991, c. 25, s. 56; 1993, c. 16, s. 97; 1996, c. 39, s. 56; 2000, c. 5, s. 50; 2001, c. 7, s. 29; 2009, c. 5, s. 68; 2017, c. 1, s. 99.

2009-05-15

194. A taxpayer shall compute income from a farming business or fishing business for a taxation year in accordance with the cash method, by which the income from the business is deemed to be equal to the aggregate determined in the second paragraph minus the aggregate determined in the third paragraph, if the taxpayer makes, in relation to the year, a valid election under subsection 1 of section 28 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) after 19 December 2006 of the method provided for in that subsection 1 for computing the taxpayer’s income from a farming business or fishing business.

The first aggregate referred to in the first paragraph in respect of a farming business or fishing business for a taxation year is equal to the total of the following amounts:

(a)  all amounts received in the year or deemed by this Part to have been received in the year, in the course of carrying on the business described in the first paragraph, in payment of or on account of an amount that would be included in computing income from the business for that or any other taxation year if that income were not computed in accordance with this cash method;

(b)  in respect of a farming business, the amount specified by the taxpayer in respect of the business in his fiscal return filed under this Part for the year, not exceeding the amount by which the fair market value, at the end of the year, of inventory owned by him at that time in connection with the business exceeds the amount determined under subparagraph c for the year;

(c)  in respect of a farming business, the amount equal to the lesser of

i.  the taxpayer’s loss from the business for the year, computed without reference to this subparagraph and to subparagraph b, and

ii.  the value of inventory purchased by the taxpayer and owned by him in connection with the business at the end of the year;

(d)  the aggregate of all amounts each of which is an amount included in computing the taxpayer’s income for the year from the business because of section 94, 105 or 485.13, the second paragraph of section 487 or section 487.0.3.

The second aggregate referred to in the first paragraph in respect of a farming business or fishing business for a taxation year is equal to the total of the following amounts:

(a)  all amounts, other than an amount described in section 198, that were paid in the year, or are deemed by this Part to have been paid in the year, in the course of carrying on the business,

i.  in the case of amounts paid, or deemed by this Part to have been paid, for the inventory relating to the business, in payment of or on account of an amount that would be deductible in computing the income from the business for the year or any other taxation year if that income were not computed in accordance with this cash method, and

ii.  in any other case, in payment of or on account of an amount that would be deductible in computing the income from the business for a preceding taxation year, the year or the following taxation year if that income were not computed in accordance with this cash method;

(a.1)  all amounts, other than an amount described in section 198, that would be deductible in computing the income from the business for the year if that income were not computed in accordance with this cash method, that are not deductible in computing the income from the business for any other taxation year, and that were paid in a preceding taxation year in the course of carrying on the business;

(b)  the aggregate of all amounts each of which is an amount included under subparagraph b or c of the second paragraph in computing the taxpayer’s income from the business for the preceding taxation year;

(c)  the aggregate of all amounts each of which is an amount deducted for the year under paragraph a or b of section 130, section 130.1, paragraph t of section 157, section 188 or 198, the first paragraph of section 487 or section 487.0.2 in respect of the business.

If a farming business or fishing business is carried on by several persons, an election referred to in the first paragraph is not valid for any of those persons in respect of the business unless each of them makes such an election in respect of the business.

Subparagraphs b and c of the second paragraph do not apply in computing the income of the taxpayer for the taxation year in which he died.

Chapter V.2 of Title II of Book I applies in relation to an election made under subsection 1 of section 28 of the Income Tax Act or in relation to an election made under this section before 20 December 2006.

1972, c. 23, s. 183; 1973, c. 17, s. 17; 1982, c. 5, s. 50; 1990, c. 59, s. 107; 1991, c. 25, s. 56; 1993, c. 16, s. 97; 1996, c. 39, s. 56; 2000, c. 5, s. 50; 2001, c. 7, s. 29; 2009, c. 5, s. 68.

2006-03-01

194. A taxpayer may elect to compute his income from a farming business or fishing business for a taxation year in accordance with the cash method, by which the income from the business is deemed equal to the aggregate determined in the second paragraph minus the aggregate determined in the third paragraph.

The first aggregate referred to in the first paragraph in respect of a farming business or fishing business for a taxation year is equal to the total of the following amounts:

(a)  all amounts received in the year or deemed by this Part to have been received in the year, in the course of carrying on the business described in the first paragraph, in payment of or on account of an amount that would be included in computing income from the business for that or any other taxation year if that income were not computed in accordance with this cash method;

(b)  in respect of a farming business, the amount specified by the taxpayer in respect of the business in his fiscal return filed under this Part for the year, not exceeding the amount by which the fair market value, at the end of the year, of inventory owned by him at that time in connection with the business exceeds the amount determined under subparagraph c for the year;

(c)  in respect of a farming business, the amount equal to the lesser of

i.  the taxpayer’s loss from the business for the year, computed without reference to this subparagraph and to subparagraph b, and

ii.  the value of inventory purchased by the taxpayer and owned by him in connection with the business at the end of the year;

(d)  the aggregate of all amounts each of which is an amount included in computing the taxpayer’s income for the year from the business because of section 94, 105 or 485.13, the second paragraph of section 487 or section 487.0.3.

The second aggregate referred to in the first paragraph in respect of a farming business or fishing business for a taxation year is equal to the total of the following amounts:

(a)  all amounts, other than an amount described in section 198, that were paid in the year, or are deemed by this Part to have been paid in the year, in the course of carrying on the business,

i.  in the case of amounts paid, or deemed by this Part to have been paid, for the inventory relating to the business, in payment of or on account of an amount that would be deductible in computing the income from the business for the year or any other taxation year if that income were not computed in accordance with this cash method, and

ii.  in any other case, in payment of or on account of an amount that would be deductible in computing the income from the business for a preceding taxation year, the year or the following taxation year if that income were not computed in accordance with this cash method;

(a.1)  all amounts, other than an amount described in section 198, that would be deductible in computing the income from the business for the year if that income were not computed in accordance with this cash method, that are not deductible in computing the income from the business for any other taxation year, and that were paid in a preceding taxation year in the course of carrying on the business;

(b)  the aggregate of all amounts each of which is an amount included under subparagraph b or c of the second paragraph in computing the taxpayer’s income from the business for the preceding taxation year;

(c)  the aggregate of all amounts each of which is an amount deducted for the year under paragraph a or b of section 130, section 130.1, paragraph t of section 157, section 188 or 198, the first paragraph of section 487 or section 487.0.2 in respect of the business.

Where a farming business or fishing business is carried on by several persons, the election mentioned in the first paragraph shall not apply for any of these persons, in respect of the business, unless each of them makes the same election, in respect of the business.

Subparagraphs b and c of the second paragraph do not apply in computing the income of the taxpayer for the taxation year in which he died.

1972, c. 23, s. 183; 1973, c. 17, s. 17; 1982, c. 5, s. 50; 1990, c. 59, s. 107; 1991, c. 25, s. 56; 1993, c. 16, s. 97; 1996, c. 39, s. 56; 2000, c. 5, s. 50; 2001, c. 7, s. 29.