I-3 - Taxation Act

Section 462 Disposition versions

2019-06-19

462. If, because of section 459, this section applies to a child of an individual in respect of a property transferred by the individual to the child, the following rules apply:

(a)  section 422 does not apply to the child in respect of the property;

(b)  subject to subparagraph e, if the property is a depreciable property of a prescribed class of the individual, land, a share of the capital stock of a family farm or fishing corporation of the individual or an interest in a family farm or fishing partnership of the individual, the child is deemed to have acquired the property at a cost equal to the individual’s proceeds of disposition of the property, as determined under paragraphs a and b of section 460 and section 461;

(c)  if the property was a depreciable property of a prescribed class of the individual and the capital cost of the property to the individual exceeds the capital cost of the property to the child, for the purposes of sections 93 to 104, 130 and 130.1 and regulations under section 130 or 130.1, the capital cost of the property to the child is deemed to be the amount that was the capital cost of the property to the individual immediately before the transfer and the excess is deemed to have been allowed to the child in respect of the property as depreciation in computing income for the taxation years that ended before the child acquired the property;

(d)  (paragraph repealed);

(e)  if the property was, immediately before the transfer, an interest in a family farm or fishing partnership of the individual, other than an interest to which section 636 applies, and the individual receives no consideration in respect of the transfer of the property and makes the election referred to in paragraph c of section 460 in respect of the transfer of the property, the following rules apply:

i.  the child is deemed to have acquired the property at the time of the transfer at a cost equal to the cost of the interest to the individual immediately before the time of the transfer, and

ii.  each amount required by section 255 or 257 to be added or deducted in computing the adjusted cost base of the property to the individual, immediately before the transfer, is deemed to be an amount required by that section 255 or 257 to be added or deducted in computing at any time at or after the time of the transfer, the adjusted cost base of the property to the child.

1973, c. 17, s. 52; 1979, c. 18, s. 38; 1990, c. 59, s. 174; 1994, c. 22, s. 184; 1996, c. 39, s. 128; 2003, c. 2, s. 125; 2005, c. 1, s. 109; 2007, c. 12, s. 63; 2017, c. 29, s. 71; 2019, c. 14, s. 132.

2017-12-07

462. If, because of section 459, this section applies to a child of an individual in respect of a property transferred by the individual to the child, the following rules apply:

(a)  section 422 does not apply to the child in respect of the property;

(b)  subject to subparagraph e, if the property is a depreciable property of a prescribed class of the individual, land, a share of the capital stock of a family farm or fishing corporation of the individual or an interest in a family farm or fishing partnership of the individual, the child is deemed to have acquired the property at a cost equal to the individual’s proceeds of disposition of the property, as determined under paragraphs a and b of section 460 and section 461;

(c)  if the property was a depreciable property of a prescribed class of the individual and the capital cost of the property to the individual exceeds the capital cost of the property to the child, for the purposes of sections 93 to 104, 130 and 130.1 and regulations under section 130 or 130.1, the capital cost of the property to the child is deemed to be the amount that was the capital cost of the property to the individual immediately before the transfer and the excess is deemed to have been allowed to the child in respect of the property as depreciation in computing income for the taxation years that ended before the child acquired the property;

(d)  if the property was, immediately before the transfer, an incorporeal capital property of the individual in respect of a business and the child does not continue to carry on the business, the child is deemed to have acquired a capital property, immediately after the transfer, at a cost equal to the individual’s proceeds of disposition of the property, as determined under paragraphs a and b of section 460 and section 461; however, if the child continues to carry on the business, the child is deemed to have acquired the incorporeal capital property and have disbursed an incorporeal capital amount equal to the aggregate of

i.  the individual’s proceeds of disposition of the property, as determined under paragraphs a and b of section 460 and section 461, and

ii.  4/3 of the amount by which that proportion of the excess determined under subparagraph a of the second paragraph of section 107 in respect of the individual’s business immediately before the transfer that the fair market value of the property, immediately before the transfer, is of the fair market value at that time of the aggregate of the individual’s incorporeal capital property in respect of the business, exceeds the amount included under paragraph a of section 105 in computing the individual’s income as a result of the disposition; and

(e)  if the property was, immediately before the transfer, an interest in a family farm or fishing partnership of the individual, other than an interest to which section 636 applies, and the individual receives no consideration in respect of the transfer of the property and makes the election referred to in paragraph c of section 460 in respect of the transfer of the property, the following rules apply:

i.  the child is deemed to have acquired the property at the time of the transfer at a cost equal to the cost of the interest to the individual immediately before the time of the transfer, and

ii.  each amount required by section 255 or 257 to be added or deducted in computing the adjusted cost base of the property to the individual, immediately before the transfer, is deemed to be an amount required by that section 255 or 257 to be added or deducted in computing at any time at or after the time of the transfer, the adjusted cost base of the property to the child.

For the purpose of determining, at any subsequent time, the eligible incorporeal capital amount of the child referred to in subparagraph d of the first paragraph in respect of the business the child continues to carry on, an amount equal to 3/4 of the amount determined under subparagraph ii of that subparagraph d is to be added to the aggregate otherwise determined under subparagraph i of subparagraph a of the second paragraph of section 107.

For the purpose of determining, after the time of the transfer, the amount deemed to be the child’s capital gain and the amount to be included in computing the child’s income, in respect of any disposition of the property, that proportion of the amount determined under subparagraph ii of subparagraph a of the second paragraph of section 107 in respect of the business immediately before the time of the transfer that the fair market value of the property transferred immediately before that time is of the fair market value, immediately before that time, of the aggregate of the incorporeal capital property of the individual in respect of the business, is to be added to the amount otherwise determined under that subparagraph ii in respect of the business.

1973, c. 17, s. 52; 1979, c. 18, s. 38; 1990, c. 59, s. 174; 1994, c. 22, s. 184; 1996, c. 39, s. 128; 2003, c. 2, s. 125; 2005, c. 1, s. 109; 2007, c. 12, s. 63; 2017, c. 29, s. 71.

2007-11-07

462. If, because of section 459, this section applies to a child of an individual in respect of a property transferred by the individual to the child, the following rules apply:

(a)  section 422 does not apply to the child in respect of the property;

(b)  subject to subparagraph e, if the property is a depreciable property of a prescribed class of the individual, land, a share of the capital stock of a family farm corporation of the individual, a share of the capital stock of a family fishing corporation of the individual, an interest in a family farm partnership of the individual or an interest in a family fishing partnership of the individual, the child is deemed to have acquired the property at a cost equal to the individual’s proceeds of disposition of the property, as determined under paragraphs a and b of section 460 and section 461;

(c)  if the property was a depreciable property of a prescribed class of the individual and the capital cost of the property to the individual exceeds the capital cost of the property to the child, for the purposes of sections 93 to 104, 130 and 130.1 and regulations under section 130 or 130.1, the capital cost of the property to the child is deemed to be the amount that was the capital cost of the property to the individual immediately before the transfer and the excess is deemed to have been allowed to the child in respect of the property as depreciation in computing income for the taxation years that ended before the child acquired the property;

(d)  if the property was, immediately before the transfer, an incorporeal capital property of the individual in respect of a business and the child does not continue to carry on the business, the child is deemed to have acquired a capital property, immediately after the transfer, at a cost equal to the individual’s proceeds of disposition of the property, as determined under paragraphs a and b of section 460 and section 461; however, if the child continues to carry on the business, the child is deemed to have acquired the incorporeal capital property and have disbursed an incorporeal capital amount equal to the aggregate of

i.  the individual’s proceeds of disposition of the property, as determined under paragraphs a and b of section 460 and section 461, and

ii.  4/3 of the amount by which that proportion of the excess determined under subparagraph a of the second paragraph of section 107 in respect of the individual’s business immediately before the transfer that the fair market value of the property, immediately before the transfer, is of the fair market value at that time of the aggregate of the individual’s incorporeal capital property in respect of the business, exceeds the amount included under paragraph a of section 105 in computing the individual’s income as a result of the disposition; and

(e)  if the property was, immediately before the transfer, an interest in a family farm partnership of the individual or an interest in a family fishing partnership of the individual, other than an interest to which section 636 applies, and the individual receives no consideration in respect of the transfer of the property and makes the election referred to in paragraph c of section 460 in respect of the transfer of the property, the following rules apply:

i.  the child is deemed to have acquired the property at the time of the transfer at a cost equal to the cost of the interest to the individual immediately before the time of the transfer, and

ii.  each amount required by section 255 or 257 to be added or deducted in computing the adjusted cost base of the property to the individual, immediately before the transfer, is deemed to be an amount required by that section 255 or 257 to be added or deducted in computing at any time at or after the time of the transfer, the adjusted cost base of the property to the child.

For the purpose of determining, at any subsequent time, the eligible incorporeal capital amount of the child referred to in subparagraph d of the first paragraph in respect of the business the child continues to carry on, an amount equal to 3/4 of the amount determined under subparagraph ii of that subparagraph d is to be added to the aggregate otherwise determined under subparagraph i of subparagraph a of the second paragraph of section 107.

For the purpose of determining, after the time of the transfer, the amount deemed to be the child’s capital gain and the amount to be included in computing the child’s income, in respect of any disposition of the property, that proportion of the amount determined under subparagraph ii of subparagraph a of the second paragraph of section 107 in respect of the business immediately before the time of the transfer that the fair market value of the property transferred immediately before that time is of the fair market value, immediately before that time, of the aggregate of the incorporeal capital property of the individual in respect of the business, is to be added to the amount otherwise determined under that subparagraph ii in respect of the business.

1973, c. 17, s. 52; 1979, c. 18, s. 38; 1990, c. 59, s. 174; 1994, c. 22, s. 184; 1996, c. 39, s. 128; 2003, c. 2, s. 125; 2005, c. 1, s. 109; 2007, c. 12, s. 63.

2006-03-01

462. In the case provided for in section 459,

(a)  sections 422 to 424 do not apply in computing the proceeds of disposition of the property mentioned therein;

(b)  the child is deemed to acquire that property, except if it is incorporeal capital property, for an amount equal to the proceeds of its disposition as computed under sections 459 to 461; if however it is depreciable property of a prescribed class the capital cost of which, to the individual mentioned in section 459, exceeds that amount, the following rules apply for the purposes of sections 93 to 104, 130 and 130.1 and the regulations made under paragraph a of section 130 of section 130.1:

i.  the capital cost of the property to the child is deemed to be the capital cost of the property to the individual, and

ii.  the excess is deemed to have been allowed to the child as depreciation for the taxation years preceding that acquisition; and

(c)  where the property is incorporeal capital property, the child is deemed to acquire, immediately after the transfer, capital property at a cost equal to the proceeds of disposition of the property as computed under sections 459 to 461; however, if the child continues to carry on the business, he is deemed to acquire incorporeal capital property and to disburse therefor an incorporeal capital amount equal to the aggregate of

i.  the proceeds of disposition of that property as computed under sections 459 to 461, and

ii.  4/3 of the amount by which that proportion of the excess determined under subparagraph a of the second paragraph of section 107 in respect of the individual’s business immediately before the transfer that the fair market value of the property, immediately before the time of the transfer, is of the fair market value at that time of the aggregate of the individual’s incorporeal capital property in respect of the business exceeds the amount included under paragraph a of section 105 in computing the income of the individual as a result of the disposition.

For the purpose of determining, at any subsequent time, the eligible incorporeal capital amount of the child referred to in subparagraph c of the first paragraph in respect of the business he continues to carry on, an amount equal to 3/4 of the amount determined under subparagraph ii of that subparagraph c shall be added to the aggregate otherwise determined under subparagraph i of subparagraph a of the second paragraph of section 107.

For the purpose of determining after the time of the transfer the amount required by paragraph b of section 105 to be included in computing the income of the child referred to in subparagraph c of the first paragraph, in respect of any subsequent disposition of the 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 in respect of the child that proportion of the amount determined under that subparagraph ii in respect of the business of the individual immediately before the time of the transfer that the fair market value of the property transferred immediately before the time of the transfer is of the fair market value of the property at that time of the aggregate of the incorporeal capital property of the individual in respect of the business.

1973, c. 17, s. 52; 1979, c. 18, s. 38; 1990, c. 59, s. 174; 1994, c. 22, s. 184; 1996, c. 39, s. 128; 2003, c. 2, s. 125; 2005, c. 1, s. 109.