I-3 - Taxation Act

Section 101.8 Disposition versions

2006-03-01

101.8. For the purposes of this Part,

(a)  where a taxpayer, to acquire a property prescribed in respect of the taxpayer, is required under the terms of a contract entered into after 6 March 1996 to make a payment to the State, to Her Majesty in right of Canada or a province, other than Québec, or to a Canadian municipality in respect of costs incurred or to be incurred by the recipient of the payment, the taxpayer is deemed to have acquired the property at the later of the time the payment is made and the time at which those costs are incurred at a capital cost equal to the portion of that payment made by the taxpayer that can reasonably be regarded as being in respect of those costs;

(b)  where at any time after 6 March 1996 a taxpayer incurs a cost on account of capital for the building of, for the right to use or in respect of, a prescribed property, and the amount of the cost would, if this paragraph did not apply, not be included in the capital cost to the taxpayer of depreciable property of a prescribed class, the taxpayer is deemed to have acquired the property at that time at a capital cost equal to the amount of the cost;

(c)  where a taxpayer acquires an incorporeal property as a consequence of making a payment to which subparagraph a of this paragraph applies or incurring a cost to which subparagraph b of this paragraph applies,

i.  the property referred to in subparagraph a or b of this paragraph is deemed to include the incorporeal property, and

ii.  the portion of the capital cost referred to in subparagraph a or b of this paragraph that applies to the incorporeal property is deemed to be equal to the amount determined by the formula

A × B / C;

(d)  any property deemed by subparagraph a or b of this paragraph to have been acquired at any time by a taxpayer as a consequence of making a payment or incurring a cost is deemed

i.  to have been acquired for the purpose for which the payment was made or the cost was incurred, and

ii.  to be owned by the taxpayer at any subsequent time that the taxpayer benefits from the property.

In the formula provided for in subparagraph ii of subparagraph c of the first paragraph,

(a)  A is the lesser of the amount of the payment made or cost incurred and the amount described in subparagraph c of this paragraph;

(b)  B is the fair market value of the incorporeal property at the time the payment was made or the cost was incurred; and

(c)  C is the fair market value at the time the payment was made or the cost was incurred of all incorporeal properties acquired as a consequence of making the payment or incurring the cost.

1998, c. 16, s. 88; 2001, c. 7, s. 169; 2005, c. 1, s. 35.