I-3 - Taxation Act

Section 1054 Disposition versions

2009-05-15

1054. If the legal representative referred to in section 1055 disposes, in the circumstances described in that section, of one or more properties of the succession of the deceased taxpayer, the following rules apply despite any other provision of this Part:

(a)  except for the purposes of section 741 and this subparagraph, the portion, corresponding, subject to the second paragraph, to the lesser of the following amounts, of a capital loss from the disposition of a particular capital property referred to in paragraph a of section 1055 is deemed to be a capital loss of the deceased taxpayer from the disposition of the particular capital property by the taxpayer in the taxpayer’s last taxation year and not to be a capital loss of the succession from the disposition of that capital property:

i.  the total of

(1)  the amount of the valid election made after 19 December 2006 by the legal representative under paragraph c of subsection 6 of section 164 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) in relation to the disposition of the particular capital property, and

(2)  if the total of the amounts of the valid elections made by the legal representative under paragraph c of subsection 6 of section 164 of the Income Tax Act in relation to the aggregate of the dispositions of properties of the succession corresponds to the maximum total of the amounts that the legal representative may then elect in accordance with that paragraph c in relation to the aggregate of those dispositions, the portion—that is specified by the legal representative, in the prescribed documents required under subparagraph d, in relation to the capital loss from the disposition of the particular capital property and that is not so specified in relation to another capital loss—of the portion of the excess amount referred to in paragraph a of section 1055 that is greater than the amount by which the maximum total of the amounts that the legal representative may then elect in accordance with that paragraph c in relation to the aggregate of the dispositions of properties of the succession exceeds the aggregate of all amounts each of which is the amount by which the amount referred to in subparagraph 1 in relation to a disposition of a capital property referred to in paragraph a of section 1055 exceeds the amount referred to in subparagraph ii in relation to that disposition, and

ii.  the amount of the capital loss otherwise determined from the disposition of the particular capital property;

(b)  the portion, corresponding, subject to the third paragraph, to the lesser of the following amounts, of a deductible amount described in paragraph b of section 1055 from the disposition of all the depreciable properties of a particular prescribed class of the succession is deductible in computing the income of the deceased taxpayer for the year in which the taxpayer died and is not deductible in computing a loss of the succession for its first taxation year:

i.  the total of

(1)  the amount of the valid election made after 19 December 2006 by the legal representative under paragraph d of subsection 6 of section 164 of the Income Tax Act in relation to the disposition of depreciable properties of the particular prescribed class, and

(2)  if the total of the amounts of the valid elections made by the legal representative under paragraph d of subsection 6 of section 164 of the Income Tax Act in relation to the aggregate of the dispositions of properties of the succession corresponds to the maximum total of the amounts that the legal representative may then elect in accordance with that paragraph d in relation to the aggregate of those dispositions, the portion—that is specified by the legal representative, in the prescribed documents required under subparagraph d, in relation to the deductible amount described in paragraph b of section 1055 from the disposition of all the depreciable properties of the particular prescribed class and that is not so specified in relation to another deductible amount described in that paragraph b—of the amount by which the amount described in the fourth paragraph exceeds the portion of the maximum total of the amounts that the legal representative may then elect in accordance with that paragraph d in relation to the aggregate of the dispositions of properties of the succession that is greater than the aggregate of all amounts each of which is the amount by which the amount referred to in subparagraph 1 in relation to the deductible amount described in paragraph b of section 1055 from the disposition of all the depreciable properties of a prescribed class of the succession exceeds the amount referred to in subparagraph ii in relation to that deductible amount, and

ii.  the deductible amount described in paragraph b of section 1055, otherwise determined, from the disposition of all the depreciable properties of the particular prescribed class;

(c)  in computing the taxable income of the deceased taxpayer for a taxation year preceding the year in which he died, no amount may be deducted in respect of an amount referred to in subparagraph a or b;

(d)  the legal representative shall, within the prescribed time, file with the Minister an amended fiscal return in the name of the deceased taxpayer for the taxation year in which the taxpayer died and the prescribed documents.

However, if the aggregate of the amounts determined under subparagraph a of the first paragraph in relation to the disposition of the capital properties referred to in paragraph a of section 1055 would, but for this paragraph, be greater than the excess amount referred to in paragraph a of that section, the amount otherwise determined under subparagraph a of the first paragraph in respect of such a capital property must, if applicable, be reduced to the amount specified in relation to that capital property by the legal representative of the deceased taxpayer in the prescribed documents required under subparagraph d of the first paragraph or, if no amount is so specified, by the Minister, so that the aggregate is equal to the excess amount referred to in paragraph a of section 1055.

In addition, if the aggregate of the amounts determined under subparagraph b of the first paragraph in relation to the deductible amounts described in paragraph b of section 1055 would, but for this paragraph, be greater than the amount described in the fourth paragraph, the amount otherwise determined under subparagraph b of the first paragraph in respect of such a deductible amount must, if applicable, be reduced to the amount specified in relation to that deductible amount by the legal representative of the deceased taxpayer in the prescribed documents required under subparagraph d of the first paragraph or, if no amount is so specified, by the Minister, so that the aggregate is equal to the amount described in the fourth paragraph.

The amount referred to in subparagraph 2 of subparagraph i of subparagraph b of the first paragraph and the third paragraph is equal to the amount that would, but for this section, represent the total of the non-capital loss and the farm loss of the succession for its first taxation year.

Chapter V.2 of Title II of Book I applies in relation to an election made under subsection 6 of section 164 of the Income Tax Act or in relation to an election made under this section before 20 December 2006.

1972, c. 23, s. 778; 1974, c. 18, s. 34; 1985, c. 25, s. 157; 1987, c. 67, s. 189; 1988, c. 18, s. 125; 1998, c. 16, s. 251; 2001, c. 7, s. 152; 2009, c. 5, s. 495.

2006-03-01

1054. Where the legal representative referred to in section 1055 makes an election in the prescribed manner and within the prescribed time and, not later than the last date on which he must file the election, also files an amended fiscal return in the name of the deceased taxpayer for the taxation year in which he died, notwithstanding any other provision of this Act, the following rules apply:

(a)  such part of one or more capital losses from the disposition of capital properties referred to in paragraph a of section 1055, the total of which is not to exceed the excess referred to in that paragraph, as the legal representative so elects, is deemed, except for the purposes of section 741 and this paragraph, to be capital losses of the deceased taxpayer from the disposition of the capital properties by the taxpayer in the taxpayer’s last taxation year and not to be capital losses of the succession from the disposition of those capital properties;

(b)  such part of the deductible amount described in paragraph b of section 1055, not exceeding the amount that, but for this section, would be the aggregate of the non-capital loss and the farm loss of the succession for its first taxation year, as the legal representative so elects, shall be deductible in computing the income of the deceased taxpayer for his taxation year in which he died and shall not be an amount deductible in computing any loss of the succession for its first taxation year;

(c)  in computing the taxable income of the deceased taxpayer for a taxation year preceding the year in which he died, no amount may be deducted in respect of an amount referred to in paragraph a or b.

1972, c. 23, s. 778; 1974, c. 18, s. 34; 1985, c. 25, s. 157; 1987, c. 67, s. 189; 1988, c. 18, s. 125; 1998, c. 16, s. 251; 2001, c. 7, s. 152.