I-3 - Taxation Act

Section 255 Disposition versions

2019-06-19

255. The taxpayer must, in computing the adjusted cost base of any property at a particular time, add to the cost of such property the following amounts:

MISCELLANEOUS CASES

(a)  the amount deemed to be a gain, under section 261;

(b)  where the property is substituted property, within the meaning of subparagraph a of the first paragraph of section 237, of the taxpayer, the amount by which the amount of the loss that was, because of the acquisition by the taxpayer of the property, a non-allowable loss referred to in that section 237 from a disposition of a property by a taxpayer exceeds, where the property disposed of was a share of the capital stock of a corporation, the amount that would, but for section 237, be deducted under section 741, 741.2 or 742 in computing the loss of any taxpayer from the disposition of the share;

(c)  where the property is an indemnity, within the meaning of sections 469 to 479, or is deemed to be such an indemnity under those sections, the amount to be added under subparagraph b of the first paragraph of section 471;

(c.1)  where the taxpayer is a taxable Canadian corporation and the property was disposed of by another taxable Canadian corporation to the taxpayer in circumstances such that paragraph f.1 does not apply to increase the adjusted cost base to the other corporation of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 239, as it read, before its repeal, in respect of that disposition, or 264.0.1 or is deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.1.1)  where the property was disposed of by a person, other than a person not resident in Canada or a person exempt from tax under this Part on the person’s taxable income, or by an eligible Canadian partnership, within the meaning of section 485, to the taxpayer in circumstances such that paragraph c.1 does not apply to increase the adjusted cost base to the taxpayer of the property, paragraph f.1 does not apply to increase the adjusted cost base to that person of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 264.0.1 or deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.2)  the reasonable costs incurred by the taxpayer before the particular time of surveying or valuing the property for the purpose of its acquisition or disposition to the extent that those costs are not otherwise deducted by the taxpayer in computing his income for any taxation year or attributable to any other property;

(c.3)  where the property is immovable property of the taxpayer, any amount required by paragraph b of section 277.2 to be added;

(c.4)  where the property is an interest in or a share of the capital stock of a flow-through entity within the meaning assigned by section 251.1 and the time is after 31 December 2004, an amount equal to the product obtained by multiplying the amount that would, if the definition of “exempt capital gains balance” in section 251.1 were read without reference to “that ends before 1 January 2005”, be the taxpayer’s exempt capital gains balance in respect of the entity for the taxpayer’s taxation year 2005 by the proportion that the fair market value at that time of the property is of the fair market value at that time of all the taxpayer’s interests in or shares of the capital stock of the entity;

(c.5)  any amount required under paragraph d of section 259, paragraph b of any of sections 259.1 to 259.3 and 296.1, subparagraph b.2 of the first paragraph of section 301, subparagraph b of the first paragraph of section 543.2 or paragraph b of section 553.2 to be added;

(c.6)  where the property is an interest in, or a share of the capital stock of, a flow-through entity described in any of paragraphs a, b, e and g to j of the definition of “flow-through entity” in the first paragraph of section 251.1, the time is before 1 January 2005 and immediately after that time the taxpayer disposed of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity, an amount equal to the product obtained by multiplying the amount by which the taxpayer’s exempt capital gains balance, within the meaning of the first paragraph of section 251.1, in relation to the entity for the taxpayer’s taxation year that includes that time exceeds the aggregate of all amounts each of which is the amount by which a capital gain is reduced under the provisions of Chapter II.1 for the year because of the taxpayer’s exempt capital gains balance in relation to the entity or, subject to section 255.1, twice an amount by which a taxable capital gain, or the income from a business, is reduced under the provisions of that chapter for the year because of the taxpayer’s exempt capital gains balance in relation to the entity, by the proportion that the fair market value at that time of the property is of the fair market value at that time of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity;

(c.7)  where the property was acquired under a derivative forward agreement, any amount that must be included in respect of the property under subparagraph i of paragraph z.7 of section 87 in computing the taxpayer’s income for a taxation year;

(c.8)  where the property is disposed of under a derivative forward agreement, any amount that must be included in respect of the property under subparagraph ii of paragraph z.7 of section 87 in computing the taxpayer’s income for the taxation year that includes the particular time;

SHARES OF A CORPORATION

(d)  where the property is a share of the capital stock of a corporation resident in Canada, the amount by which the aggregate of all amounts each of which is the amount of any dividend that is deemed to have been received by the taxpayer under section 504 before that time exceeds the portion of that aggregate that relates to dividends in respect of which the taxpayer may deduct an amount under section 738 in computing the taxpayer’s taxable income, except the portion of the dividends that, if paid as a separate dividend, would not be subject to section 308.1 because the amount of the separate dividend would not exceed the amount of the income earned or realized by any corporation after 31 December 1971 and before the safe-income determination time, in relation to the transaction or event or series of transactions or events as part of which the dividend is received, that can reasonably be considered to contribute to the capital gain that would have been realized on a disposition at fair market value of the share on which the dividend was received, if the disposition had occurred immediately before the dividend was paid;

(d.1)  where the property is a share of the capital stock of a corporation, the amount of any dividend deemed by paragraph c.1 of section 785.1 to have been received in respect of the share by the taxpayer before that time and while the taxpayer was resident in Canada;

(e)  where the property is a share of the capital stock of a corporation and the taxpayer, after 31 December 1971, makes a contribution of capital to the corporation otherwise than by way of a loan, by way of a disposition of shares of a foreign affiliate of a taxpayer to which section 540 applies or, subject to section 256, by way of a disposition of property in respect of which section 518 or 529 applies, that proportion of such contribution as cannot reasonably be regarded as a benefit conferred by the taxpayer on a person, other than the corporation, who was related to the taxpayer, that

i.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of such share, is of

ii.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of all the shares of the capital stock of such corporation owned by the taxpayer immediately after the contribution of capital;

(e.1)  where the property is a share of the capital stock of a corporation of which the taxpayer was, at any time, a specified shareholder, any expense incurred by the taxpayer in respect of land or a building of the corporation that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164;

(f)  where the property is a share of the capital stock of a corporation, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time and ending after 31 December 1971 by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the share was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were applied without reference to sections 49.2 and 58.0.1, as the latter section read before being repealed;

(f.1)  where the property is a share of the capital stock of a corporation, any amount required by paragraph b of section 238.3, or paragraph b of section 535, as it read, before its repeal, in respect of the disposition of that share, to be added;

(g)  where the property is a share of the capital stock of a foreign affiliate of the taxpayer, any amount required by Chapter IV of Title X to be added;

(g.1)  where the property is a share of the capital stock of a corporation, any amount required by subparagraph f of the second paragraph of section 832.23 to be added;

BOND AND SIMILAR OBLIGATION

(h)  the excess of the principal amount of a bond, debenture, bill, hypothecary claim, mortgage or similar obligation over the amount for which it has been issued, if such excess must be included, under sections 122 to 125, in computing the income of the taxpayer for a taxation year beginning before such particular time;

(h.0.0.1)  where the property is a particular commercial obligation, within the meaning assigned by section 485, payable to the taxpayer as consideration for the settlement or extinguishment of another commercial obligation payable to the taxpayer and the taxpayer’s loss from the disposition of the other obligation was reduced because of section 264.0.2, the proportion of the reduction that the principal amount of the particular obligation is of the aggregate of all amounts each of which is the principal amount of a commercial obligation payable to the taxpayer as consideration for the settlement or extinguishment of that other obligation;

INDEXED DEBT OBLIGATIONS

(h.0.1)  where the property is an indexed debt obligation, the amount referred to in paragraph a of section 125.0.1 in respect of the obligation and required to be included in computing the income of the taxpayer for a taxation year beginning before the particular time;

OFFSHORE INVESTMENT FUND PROPERTY

(h.1)  where the property is an offshore investment fund property within the meaning of section 597.1,

i.  any amount included in respect of the property by virtue of section 597.4 in computing the taxpayer’s income for a taxation year commencing before that time, or

ii.  where the taxpayer is a controlled foreign affiliate, within the meaning of section 572, of a person resident in Canada, the amount prescribed;

PARTNERSHIP

(i)  where the property is an interest in a partnership,

i.  an amount in respect of each fiscal period of the partnership ending after 31 December 1971 and before the particular time, equal to the taxpayer’s share, other than a share under an agreement referred to in section 608, of the income of the partnership from any source for that fiscal period, computed as if this Part were construed without reference to

(1)  sections 231.2 and 231.2.1, the fraction “1/2” in section 105, as it applied to a fiscal period of the partnership ending before 1 April 1977, and without reference to that or another fraction in sections 107, 231, 231.1, as it read before being repealed, and 265,

(1.1)  the second and third paragraphs of section 232 in respect of a property described in that third paragraph that is not the subject of a gifting arrangement, within the meaning of the first paragraph of section 1079.1, nor a tax shelter,

(2)  the reference to the fraction and the letter C in the formula provided for in the first paragraph of section 105.2, and

(3)  paragraphs l and z.4 of section 87, sections 89 to 91, 144, 144.1 and 145, paragraph j of section 157, as it read before being struck out, paragraph b of each of sections 200 and 201, Division XV of Chapter IV, section 425, paragraphs g and h of section 489, as they read before being struck out, the second paragraph of section 497, and the provisions of the Act respecting the application of the Taxation Act (S.C. 1972, c. 24), as they read before their repeal, in respect of income from the operation of new mines,

ii.  the share of the taxpayer in any capital dividend and any life insurance capital dividend received by the partnership before the particular time in respect of a share of the capital stock of a corporation while the partnership owned such share,

iii.  the share of the taxpayer in the amount by which any proceeds of a life insurance policy received by the partnership after 31 December 1971 and before the particular time by reason of the death of any person whose life was insured under the policy exceed the aggregate of all amounts each of which is

(1)  the adjusted cost basis (in this subparagraph iii having the meaning assigned by sections 976 and 976.1), immediately before the death, of the policy to the partnership, if the death occurs before 22 March 2016, or of the policyholder’s interest in the policy, if the death occurs after 21 March 2016,

(2)  if the death occurs after 21 March 2016, the amount by which the fair market value of consideration given in respect of a disposition of an interest in the policy by a policyholder (other than a taxable Canadian corporation) after 31 December 1999 and before 22 March 2016 exceeds the greater of the amount determined under subparagraph i of subparagraph a of the first paragraph of section 971, in respect of the disposition and the adjusted cost basis to the policyholder of the interest immediately before the disposition, or

(3)  if the death occurs after 21 March 2016, the amount by which the amount by which the lesser of the fair market value of consideration given in respect of a disposition, in respect of which section 971 applies, of an interest in the policy by a policyholder (other than a taxable Canadian corporation) after 31 December 1999 and before 22 March 2016 and the adjusted cost basis to the policyholder of the interest immediately before the disposition exceeds the amount determined under subparagraph i of subparagraph a of the first paragraph of section 971, in respect of the disposition, exceeds the absolute value of the negative amount, if any, that would be, in the absence of section 7.5, the adjusted cost basis, immediately before the death, of the interest in the policy,

iv.  where the taxpayer, after 31 December 1971, made a contribution of capital to the partnership otherwise than by way of a loan, that portion of such contribution as cannot reasonably be regarded as a benefit conferred on any other member of the partnership who was related to the taxpayer,

iv.1.  any amount, in respect of a particular amount described in section 486 or a specified amount described in section 486.1, that is paid by the taxpayer to the partnership, to the extent that the amount paid is not deductible in computing the taxpayer’s income,

v.  the value, at the time of the taxpayer’s death of the rights or property referred to in section 429 in respect of a partnership interest held by him immediately before his death, other than an interest referred to in section 612, where the particular time is immediately before the taxpayer’s death and the taxpayer was at the particular time a member of the partnership,

v.1.  any amount deemed by section 261.1 to be a gain of the taxpayer,

vi.  (subparagraph repealed),

vii.  any amount deemed by paragraph c of section 618 or section 642 to be a gain of the taxpayer,

vii.1.  a share of the taxpayer’s Canadian development expense or Canadian oil and gas property expense that was deducted at or before the particular time in computing the adjusted cost base to the taxpayer of the interest because of subparagraph ii of paragraph l of section 257 and in respect of which the taxpayer has elected under paragraph d of section 408 or paragraph b of section 418.2, as the case may be,

viii.  an amount deemed, before the particular time, by section 600.1, to be an amount referred to in paragraph b of section 399, in subparagraph i of paragraph b of section 412, in paragraph c of the said section 412, in subparagraph i of paragraph b of section 418.6 or in paragraph c of the said section 418.6 in respect of the taxpayer,

viii.1.  any amount deemed, before that time, under section 330.1 to be proceeds of disposition receivable by the taxpayer in respect of the disposition of a foreign resource property,

ix.  the amount by which the taxpayer’s share of the amount of any assistance or benefit that the partnership has received or has become entitled to receive after 31 December 1971 and before the particular time from a government, municipality or other public authority, whether as a grant, subsidy, forgivable loan, deduction from royalty or tax, investment allowance or any other form of assistance or benefit, in respect of or related to a Canadian resource property or an exploration or development expense incurred in Canada, exceeds such part of that share of the assistance or benefit as has been repaid before that time by the taxpayer pursuant to a legal obligation to repay all or any part of that share of that assistance or benefit,

x.  any amount required by sections 614 to 617 to be added before that particular time in computing the adjusted cost base to the taxpayer of the interest in the partnership,

xi.  where the taxpayer’s share of any income or loss of the partnership was, at any time, 10% or more, any expense incurred by the taxpayer in respect of land or a building of the partnership that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164, and

xii.  any amount required by subparagraph a of the first paragraph of section 726.9.6 to be added at that time in computing the adjusted cost base to the taxpayer of the interest;

TRUST

(j)  where the property is a capital interest in a trust, any amount that is included under section 580 or 582 in computing the taxpayer’s income for a taxation year that ends at or before the particular time, in respect of that interest, or that would have been so required to have been included for such a taxation year but for sections 316.1, 456 to 458, 462.1 to 462.24.1 and 466 to 467.1;

(j.1)  where the property is an interest in a segregated fund trust referred to in section 851.2,

i.  each amount deemed by section 851.3 to be an amount payable to the taxpayer before the particular time in respect of that interest,

ii.  each amount required by section 851.12 to be added before the particular time in respect of that interest,

iii.  each amount in respect of that interest that is a capital gain deemed to have been allocated under section 851.21 to the taxpayer before the particular time, and

iv.  each amount in respect of that interest that before the particular time was deemed under section 851.16 to have been a capital gain of the taxpayer;

(j.2)  where the property is a unit in a mutual fund trust, any amount required by section 1121.3 to be added in computing the adjusted cost base to the taxpayer of the unit;

(j.3)  where the property is a unit of a mutual fund trust, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the unit was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were applied without reference to section 58.0.1, as it read before being repealed;

LANDS

(k)  where the property is land of the taxpayer, any amount paid after 31 December 1971 and before the particular time by the taxpayer or by another taxpayer in respect of whom the taxpayer was a person, corporation or partnership described in subparagraph ii of paragraph c of section 165, pursuant to a legal obligation to pay interest on debt relating to the acquisition of land, within the meaning of paragraph c of section 165, or property taxes, not including an income or profits taxes or taxes imposed by reference to the transfer of property, paid by the taxpayer in respect of the property to a province or to a Canadian municipality, to the extent that the amount

i.  was not deductible by reason of section 164 in computing the taxpayer’s income from the land or from a business for any taxation year beginning before that time, or

ii.  was not deductible by reason of section 164 in computing the income of the other taxpayer if the amount was not included in or added to the cost to the other taxpayer of any property otherwise than by reason of paragraph e.1 or subparagraph xi of paragraph i;

(l)  where the property is land used in a farming business which he operates, an amount, with respect to each taxation year ending after 1971 and beginning before such time, equal to the loss of such taxpayer for such year, derived from such farming business, to the extent that such loss

i.  is not deductible in computing the income for that year under section 205,

ii.  is not deducted in computing the taxable income for the taxation year in which the taxpayer disposed of the property or any previous taxation year,

iii.  does not exceed the aggregate of the following amounts, to the extent that those amounts are included in computing the loss:

(1)  taxes, other than income or profits taxes or taxes imposed by reference to the transfer of the property, paid by the taxpayer in that year or payable by the taxpayer in respect of that year to a province or a Canadian municipality in respect of the property, and

(2)  interest, paid by the taxpayer in that year or payable by the taxpayer in respect of that year, pursuant to a legal obligation to pay interest on borrowed money used to acquire the property or on any amount as consideration payable for the property, and

iv.  does not exceed the amount obtained by subtracting from the proceeds of disposition of that property reduced by its adjusted cost base immediately before that time, computed without referring to this paragraph, the aggregate of his losses from his farming business for the taxation years prior to that year and which must be added, under this paragraph, in computing the adjusted cost base of such property;

(m)  (paragraph repealed).

1972, c. 23, s. 237; 1973, c. 17, s. 23; 1974, c. 18, s. 13; 1975, c. 22, s. 42; 1977, c. 26, s. 24; 1978, c. 26, s. 43; 1979, c. 18, s. 20; 1980, c. 13, s. 19; 1982, c. 5, s. 58; 1984, c. 15, s. 62; 1985, c. 25, s. 45; 1986, c. 15, s. 54; 1986, c. 19, s. 42; 1990, c. 59, s. 119; 1993, c. 16, s. 113; 1994, c. 22, s. 123; 1995, c. 49, s. 61; 1996, c. 39, s. 72; 1997, c. 3, s. 71; 1997, c. 14, s. 54; 1997, c. 85, s. 58; 1998, c. 16, s. 104; 2000, c. 5, s. 68; 2001, c. 7, s. 31; 2001, c. 53, s. 47; 2003, c. 2, s. 86; 2004, c. 8, s. 49; 2005, c. 1, s. 81; 2006, c. 36, s. 31; 2009, c. 5, s. 87; 2011, c. 34, s. 27; 2015, c. 24, s. 52; 2015, c. 36, s. 15; 2017, c. 1, s. 110; 2019, c. 14, s. 103.

2017-02-08

255. The taxpayer must, in computing the adjusted cost base of any property at a particular time, add to the cost of such property the following amounts:

MISCELLANEOUS CASES

(a)  the amount deemed to be a gain, under section 261;

(b)  where the property is substituted property, within the meaning of subparagraph a of the first paragraph of section 237, of the taxpayer, the amount by which the amount of the loss that was, because of the acquisition by the taxpayer of the property, a non-allowable loss referred to in that section 237 from a disposition of a property by a taxpayer exceeds, where the property disposed of was a share of the capital stock of a corporation, the amount that would, but for section 237, be deducted under section 741, 741.2 or 742 in computing the loss of any taxpayer from the disposition of the share;

(c)  where the property is an indemnity, within the meaning of sections 469 to 479, or is deemed to be such an indemnity under those sections, the amount to be added under subparagraph b of the first paragraph of section 471;

(c.1)  where the taxpayer is a taxable Canadian corporation and the property was disposed of by another taxable Canadian corporation to the taxpayer in circumstances such that paragraph f.1 does not apply to increase the adjusted cost base to the other corporation of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 239, as it read, before its repeal, in respect of that disposition, or 264.0.1 or is deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.1.1)  where the property was disposed of by a person, other than a person not resident in Canada or a person exempt from tax under this Part on the person’s taxable income, or by an eligible Canadian partnership, within the meaning of section 485, to the taxpayer in circumstances such that paragraph c.1 does not apply to increase the adjusted cost base to the taxpayer of the property, paragraph f.1 does not apply to increase the adjusted cost base to that person of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 264.0.1 or deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.2)  the reasonable costs incurred by the taxpayer before the particular time of surveying or valuing the property for the purpose of its acquisition or disposition to the extent that those costs are not otherwise deducted by the taxpayer in computing his income for any taxation year or attributable to any other property;

(c.3)  where the property is immovable property of the taxpayer, any amount required by paragraph b of section 277.2 to be added;

(c.4)  where the property is an interest in or a share of the capital stock of a flow-through entity within the meaning assigned by section 251.1 and the time is after 31 December 2004, an amount equal to the product obtained by multiplying the amount that would, if the definition of “exempt capital gains balance” in section 251.1 were read without reference to “that ends before 1 January 2005”, be the taxpayer’s exempt capital gains balance in respect of the entity for the taxpayer’s taxation year 2005 by the proportion that the fair market value at that time of the property is of the fair market value at that time of all the taxpayer’s interests in or shares of the capital stock of the entity;

(c.5)  any amount required under paragraph d of section 259, paragraph b of any of sections 259.1 to 259.3 and 296.1, subparagraph b.2 of the first paragraph of section 301, subparagraph b of the first paragraph of section 543.2 or paragraph b of section 553.2 to be added;

(c.6)  where the property is an interest in, or a share of the capital stock of, a flow-through entity described in any of paragraphs a, b, e and g to j of the definition of “flow-through entity” in the first paragraph of section 251.1, the time is before 1 January 2005 and immediately after that time the taxpayer disposed of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity, an amount equal to the product obtained by multiplying the amount by which the taxpayer’s exempt capital gains balance, within the meaning of the first paragraph of section 251.1, in relation to the entity for the taxpayer’s taxation year that includes that time exceeds the aggregate of all amounts each of which is the amount by which a capital gain is reduced under the provisions of Chapter II.1 for the year because of the taxpayer’s exempt capital gains balance in relation to the entity or, subject to section 255.1, twice an amount by which a taxable capital gain, or the income from a business, is reduced under the provisions of that chapter for the year because of the taxpayer’s exempt capital gains balance in relation to the entity, by the proportion that the fair market value at that time of the property is of the fair market value at that time of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity;

(c.7)  where the property was acquired under a derivative forward agreement, any amount that must be included in respect of the property under subparagraph i of paragraph z.7 of section 87 in computing the taxpayer’s income for a taxation year;

(c.8)  where the property is disposed of under a derivative forward agreement, any amount that must be included in respect of the property under subparagraph ii of paragraph z.7 of section 87 in computing the taxpayer’s income for the taxation year that includes the particular time;

SHARES OF A CORPORATION

(d)  where the property is a share of the capital stock of a corporation resident in Canada, the amount by which the aggregate of all amounts each of which is the amount of any dividend that is deemed to have been received by the taxpayer under section 504 before that time exceeds the portion of that aggregate that relates to dividends in respect of which the taxpayer may deduct an amount under section 738 in computing the taxpayer’s taxable income, except the portion of the dividend that, if paid as a separate dividend, would not be subject to section 308.1 because the capital gain referred to in that section could reasonably be considered not to be attributable to anything other than income earned or realized by any corporation after 31 December 1971 and before the safe-income determination time, in relation to the transaction or event or series of transactions or events as part of which the dividend is received;

(d.1)  where the property is a share of the capital stock of a corporation, the amount of any dividend deemed by paragraph c.1 of section 785.1 to have been received in respect of the share by the taxpayer before that time and while the taxpayer was resident in Canada;

(e)  where the property is a share of the capital stock of a corporation and the taxpayer, after 31 December 1971, makes a contribution of capital to the corporation otherwise than by way of a loan, by way of a disposition of shares of a foreign affiliate of a taxpayer to which section 540 applies or, subject to section 256, by way of a disposition of property in respect of which section 518 or 529 applies, that proportion of such contribution as cannot reasonably be regarded as a benefit conferred by the taxpayer on a person, other than the corporation, who was related to the taxpayer, that

i.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of such share, is of

ii.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of all the shares of the capital stock of such corporation owned by the taxpayer immediately after the contribution of capital;

(e.1)  where the property is a share of the capital stock of a corporation of which the taxpayer was, at any time, a specified shareholder, any expense incurred by the taxpayer in respect of land or a building of the corporation that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164;

(f)  where the property is a share of the capital stock of a corporation, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time and ending after 31 December 1971 by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the share was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were applied without reference to sections 49.2 and 58.0.1, as the latter section read before being repealed;

(f.1)  where the property is a share of the capital stock of a corporation, any amount required by paragraph b of section 238.3, or paragraph b of section 535, as it read, before its repeal, in respect of the disposition of that share, to be added;

(g)  where the property is a share of the capital stock of a foreign affiliate of the taxpayer, any amount required by Chapter IV of Title X to be added;

(g.1)  where the property is a share of the capital stock of a corporation, any amount required by subparagraph f of the second paragraph of section 832.23 to be added;

BOND AND SIMILAR OBLIGATION

(h)  the excess of the principal amount of a bond, debenture, bill, hypothecary claim, mortgage or similar obligation over the amount for which it has been issued, if such excess must be included, under sections 122 to 125, in computing the income of the taxpayer for a taxation year beginning before such particular time;

(h.0.0.1)  where the property is a particular commercial obligation, within the meaning assigned by section 485, payable to the taxpayer as consideration for the settlement or extinguishment of another commercial obligation payable to the taxpayer and the taxpayer’s loss from the disposition of the other obligation was reduced because of section 264.0.2, the proportion of the reduction that the principal amount of the particular obligation is of the aggregate of all amounts each of which is the principal amount of a commercial obligation payable to the taxpayer as consideration for the settlement or extinguishment of that other obligation;

INDEXED DEBT OBLIGATIONS

(h.0.1)  where the property is an indexed debt obligation, the amount referred to in paragraph a of section 125.0.1 in respect of the obligation and required to be included in computing the income of the taxpayer for a taxation year beginning before the particular time;

OFFSHORE INVESTMENT FUND PROPERTY

(h.1)  where the property is an offshore investment fund property within the meaning of section 597.1,

i.  any amount included in respect of the property by virtue of section 597.4 in computing the taxpayer’s income for a taxation year commencing before that time, or

ii.  where the taxpayer is a controlled foreign affiliate, within the meaning of section 572, of a person resident in Canada, the amount prescribed;

PARTNERSHIP

(i)  where the property is an interest in a partnership,

i.  an amount in respect of each fiscal period of the partnership ending after 31 December 1971 and before the particular time, equal to the taxpayer’s share, other than a share under an agreement referred to in section 608, of the income of the partnership from any source for that fiscal period, computed as if this Part were construed without reference to

(1)  sections 231.2 and 231.2.1, the fraction “1/2” in section 105, as it applied to a fiscal period of the partnership ending before 1 April 1977, and without reference to that or another fraction in sections 107, 231, 231.1, as it read before being repealed, and 265,

(1.1)  the second and third paragraphs of section 232 in respect of a property described in that third paragraph that is not the subject of a gifting arrangement, within the meaning of the first paragraph of section 1079.1, nor a tax shelter,

(2)  the reference to the fraction and the letter C in the formula provided for in the first paragraph of section 105.2, and

(3)  paragraphs l and z.4 of section 87, sections 89 to 91, 144, 144.1 and 145, paragraph j of section 157, as it read before being struck out, paragraph b of each of sections 200 and 201, Division XV of Chapter IV, section 425, paragraphs g and h of section 489, as they read before being struck out, the second paragraph of section 497, and the provisions of the Act respecting the application of the Taxation Act (S.C. 1972, c. 24), as they read before their repeal, in respect of income from the operation of new mines,

ii.  the share of the taxpayer in any capital dividend and any life insurance capital dividend received by the partnership before the particular time in respect of a share of the capital stock of a corporation while the partnership owned such share,

iii.  the share of the taxpayer in the amount by which any proceeds of a life insurance policy received by the partnership after 31 December 1971 and before the particular time by reason of the death of any person whose life was insured under that policy exceed the adjusted cost basis of that policy, within the meaning of sections 976 and 976.1, to the partnership, immediately before that death,

iv.  where the taxpayer, after 31 December 1971, made a contribution of capital to the partnership otherwise than by way of a loan, that portion of such contribution as cannot reasonably be regarded as a benefit conferred on any other member of the partnership who was related to the taxpayer,

iv.1.  any amount, in respect of a particular amount described in section 486 or a specified amount described in section 486.1, that is paid by the taxpayer to the partnership, to the extent that the amount paid is not deductible in computing the taxpayer’s income,

v.  the value, at the time of the taxpayer’s death of the rights or property referred to in section 429 in respect of a partnership interest held by him immediately before his death, other than an interest referred to in section 612, where the particular time is immediately before the taxpayer’s death and the taxpayer was at the particular time a member of the partnership,

v.1.  any amount deemed by section 261.1 to be a gain of the taxpayer,

vi.  (subparagraph repealed),

vii.  any amount deemed by paragraph c of section 618 or section 642 to be a gain of the taxpayer,

vii.1.  a share of the taxpayer’s Canadian development expense or Canadian oil and gas property expense that was deducted at or before the particular time in computing the adjusted cost base to the taxpayer of the interest because of subparagraph ii of paragraph l of section 257 and in respect of which the taxpayer has elected under paragraph d of section 408 or paragraph b of section 418.2, as the case may be,

viii.  an amount deemed, before the particular time, by section 600.1, to be an amount referred to in paragraph b of section 399, in subparagraph i of paragraph b of section 412, in paragraph c of the said section 412, in subparagraph i of paragraph b of section 418.6 or in paragraph c of the said section 418.6 in respect of the taxpayer,

viii.1.  any amount deemed, before that time, under section 330.1 to be proceeds of disposition receivable by the taxpayer in respect of the disposition of a foreign resource property,

ix.  the amount by which the taxpayer’s share of the amount of any assistance or benefit that the partnership has received or has become entitled to receive after 31 December 1971 and before the particular time from a government, municipality or other public authority, whether as a grant, subsidy, forgivable loan, deduction from royalty or tax, investment allowance or any other form of assistance or benefit, in respect of or related to a Canadian resource property or an exploration or development expense incurred in Canada, exceeds such part of that share of the assistance or benefit as has been repaid before that time by the taxpayer pursuant to a legal obligation to repay all or any part of that share of that assistance or benefit,

x.  any amount required by sections 614 to 617 to be added before that particular time in computing the adjusted cost base to the taxpayer of the interest in the partnership,

xi.  where the taxpayer’s share of any income or loss of the partnership was, at any time, 10% or more, any expense incurred by the taxpayer in respect of land or a building of the partnership that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164, and

xii.  any amount required by subparagraph a of the first paragraph of section 726.9.6 to be added at that time in computing the adjusted cost base to the taxpayer of the interest;

TRUST

(j)  where the property is a capital interest in a trust, any amount that is included under section 580 or 582 in computing the taxpayer’s income for a taxation year that ends at or before the particular time, in respect of that interest, or that would have been so required to have been included for such a taxation year but for sections 316.1, 456 to 458, 462.1 to 462.24.1 and 466 to 467.1;

(j.1)  where the property is an interest in a segregated fund trust referred to in section 851.2,

i.  each amount deemed by section 851.3 to be an amount payable to the taxpayer before the particular time in respect of that interest,

ii.  each amount required by section 851.12 to be added before the particular time in respect of that interest,

iii.  each amount in respect of that interest that is a capital gain deemed to have been allocated under section 851.21 to the taxpayer before the particular time, and

iv.  each amount in respect of that interest that before the particular time was deemed under section 851.16 to have been a capital gain of the taxpayer;

(j.2)  where the property is a unit in a mutual fund trust, any amount required by section 1121.3 to be added in computing the adjusted cost base to the taxpayer of the unit;

(j.3)  where the property is a unit of a mutual fund trust, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the unit was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were applied without reference to section 58.0.1, as it read before being repealed;

LANDS

(k)  where the property is land of the taxpayer, any amount paid after 31 December 1971 and before the particular time by the taxpayer or by another taxpayer in respect of whom the taxpayer was a person, corporation or partnership described in subparagraph ii of paragraph c of section 165, pursuant to a legal obligation to pay interest on debt relating to the acquisition of land, within the meaning of paragraph c of section 165, or property taxes, not including an income or profits taxes or taxes imposed by reference to the transfer of property, paid by the taxpayer in respect of the property to a province or to a Canadian municipality, to the extent that the amount

i.  was not deductible by reason of section 164 in computing the taxpayer’s income from the land or from a business for any taxation year beginning before that time, or

ii.  was not deductible by reason of section 164 in computing the income of the other taxpayer if the amount was not included in or added to the cost to the other taxpayer of any property otherwise than by reason of paragraph e.1 or subparagraph xi of paragraph i;

(l)  where the property is land used in a farming business which he operates, an amount, with respect to each taxation year ending after 1971 and beginning before such time, equal to the loss of such taxpayer for such year, derived from such farming business, to the extent that such loss

i.  is not deductible in computing the income for that year under section 205,

ii.  is not deducted in computing the taxable income for the taxation year in which the taxpayer disposed of the property or any previous taxation year,

iii.  does not exceed the aggregate of the following amounts, to the extent that those amounts are included in computing the loss:

(1)  taxes, other than income or profits taxes or taxes imposed by reference to the transfer of the property, paid by the taxpayer in that year or payable by the taxpayer in respect of that year to a province or a Canadian municipality in respect of the property, and

(2)  interest, paid by the taxpayer in that year or payable by the taxpayer in respect of that year, pursuant to a legal obligation to pay interest on borrowed money used to acquire the property or on any amount as consideration payable for the property, and

iv.  does not exceed the amount obtained by subtracting from the proceeds of disposition of that property reduced by its adjusted cost base immediately before that time, computed without referring to this paragraph, the aggregate of his losses from his farming business for the taxation years prior to that year and which must be added, under this paragraph, in computing the adjusted cost base of such property;

(m)  (paragraph repealed).

1972, c. 23, s. 237; 1973, c. 17, s. 23; 1974, c. 18, s. 13; 1975, c. 22, s. 42; 1977, c. 26, s. 24; 1978, c. 26, s. 43; 1979, c. 18, s. 20; 1980, c. 13, s. 19; 1982, c. 5, s. 58; 1984, c. 15, s. 62; 1985, c. 25, s. 45; 1986, c. 15, s. 54; 1986, c. 19, s. 42; 1990, c. 59, s. 119; 1993, c. 16, s. 113; 1994, c. 22, s. 123; 1995, c. 49, s. 61; 1996, c. 39, s. 72; 1997, c. 3, s. 71; 1997, c. 14, s. 54; 1997, c. 85, s. 58; 1998, c. 16, s. 104; 2000, c. 5, s. 68; 2001, c. 7, s. 31; 2001, c. 53, s. 47; 2003, c. 2, s. 86; 2004, c. 8, s. 49; 2005, c. 1, s. 81; 2006, c. 36, s. 31; 2009, c. 5, s. 87; 2011, c. 34, s. 27; 2015, c. 24, s. 52; 2015, c. 36, s. 15; 2017, c. 1, s. 110.

2015-12-04

255. The taxpayer must, in computing the adjusted cost base of any property at a particular time, add to the cost of such property the following amounts:

MISCELLANEOUS CASES

(a)  the amount deemed to be a gain, under section 261;

(b)  where the property is substituted property, within the meaning of subparagraph a of the first paragraph of section 237, of the taxpayer, the amount by which the amount of the loss that was, because of the acquisition by the taxpayer of the property, a non-allowable loss referred to in that section 237 from a disposition of a property by a taxpayer exceeds, where the property disposed of was a share of the capital stock of a corporation, the amount that would, but for section 237, be deducted under section 741, 741.2 or 742 in computing the loss of any taxpayer from the disposition of the share;

(c)  where the property is an indemnity, within the meaning of sections 469 to 479, or is deemed to be such an indemnity under those sections, the amount to be added under subparagraph b of the first paragraph of section 471;

(c.1)  where the taxpayer is a taxable Canadian corporation and the property was disposed of by another taxable Canadian corporation to the taxpayer in circumstances such that paragraph f.1 does not apply to increase the adjusted cost base to the other corporation of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 239, as it read, before its repeal, in respect of that disposition, or 264.0.1 or is deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.1.1)  where the property was disposed of by a person, other than a person not resident in Canada or a person exempt from tax under this Part on the person’s taxable income, or by an eligible Canadian partnership, within the meaning of section 485, to the taxpayer in circumstances such that paragraph c.1 does not apply to increase the adjusted cost base to the taxpayer of the property, paragraph f.1 does not apply to increase the adjusted cost base to that person of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 264.0.1 or deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.2)  the reasonable costs incurred by the taxpayer before the particular time of surveying or valuing the property for the purpose of its acquisition or disposition to the extent that those costs are not otherwise deducted by the taxpayer in computing his income for any taxation year or attributable to any other property;

(c.3)  where the property is immovable property of the taxpayer, any amount required by paragraph b of section 277.2 to be added;

(c.4)  where the property is an interest in or a share of the capital stock of a flow-through entity within the meaning assigned by section 251.1 and the time is after 31 December 2004, an amount equal to the product obtained by multiplying the amount that would, if the definition of “exempt capital gains balance” in section 251.1 were read without reference to “that ends before 1 January 2005”, be the taxpayer’s exempt capital gains balance in respect of the entity for the taxpayer’s taxation year 2005 by the proportion that the fair market value at that time of the property is of the fair market value at that time of all the taxpayer’s interests in or shares of the capital stock of the entity;

(c.5)  any amount required under paragraph d of section 259, paragraph b of any of sections 259.1 to 259.3 and 296.1, subparagraph b.2 of the first paragraph of section 301, subparagraph b of the first paragraph of section 543.2 or paragraph b of section 553.2 to be added;

(c.6)  where the property is an interest in, or a share of the capital stock of, a flow-through entity described in any of paragraphs a, b, e and g to j of the definition of “flow-through entity” in the first paragraph of section 251.1, the time is before 1 January 2005 and immediately after that time the taxpayer disposed of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity, an amount equal to the product obtained by multiplying the amount by which the taxpayer’s exempt capital gains balance, within the meaning of the first paragraph of section 251.1, in relation to the entity for the taxpayer’s taxation year that includes that time exceeds the aggregate of all amounts each of which is the amount by which a capital gain is reduced under the provisions of Chapter II.1 for the year because of the taxpayer’s exempt capital gains balance in relation to the entity or, subject to section 255.1, twice an amount by which a taxable capital gain, or the income from a business, is reduced under the provisions of that chapter for the year because of the taxpayer’s exempt capital gains balance in relation to the entity, by the proportion that the fair market value at that time of the property is of the fair market value at that time of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity;

(c.7)  where the property was acquired under a derivative forward agreement, any amount that must be included in respect of the property under subparagraph i of paragraph z.7 of section 87 in computing the taxpayer’s income for a taxation year;

(c.8)  where the property is disposed of under a derivative forward agreement, any amount that must be included in respect of the property under subparagraph ii of paragraph z.7 of section 87 in computing the taxpayer’s income for the taxation year that includes the particular time;

SHARES OF A CORPORATION

(d)  where the property is a share of the capital stock of a corporation resident in Canada, the amount of every dividend deemed to have been received by the taxpayer under section 504;

(d.1)  where the property is a share of the capital stock of a corporation, the amount of any dividend deemed by paragraph c.1 of section 785.1 to have been received in respect of the share by the taxpayer before that time and while the taxpayer was resident in Canada;

(e)  where the property is a share of the capital stock of a corporation and the taxpayer, after 31 December 1971, makes a contribution of capital to the corporation otherwise than by way of a loan, by way of a disposition of shares of a foreign affiliate of a taxpayer to which section 540 applies or, subject to section 256, by way of a disposition of property in respect of which section 518 or 529 applies, that proportion of such contribution as cannot reasonably be regarded as a benefit conferred by the taxpayer on a person, other than the corporation, who was related to the taxpayer, that

i.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of such share, is of

ii.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of all the shares of the capital stock of such corporation owned by the taxpayer immediately after the contribution of capital;

(e.1)  where the property is a share of the capital stock of a corporation of which the taxpayer was, at any time, a specified shareholder, any expense incurred by the taxpayer in respect of land or a building of the corporation that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164;

(f)  where the property is a share of the capital stock of a corporation, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time and ending after 31 December 1971 by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the share was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were applied without reference to sections 49.2 and 58.0.1, as the latter section read before being repealed;

(f.1)  where the property is a share of the capital stock of a corporation, any amount required by paragraph b of section 238.3, or paragraph b of section 535, as it read, before its repeal, in respect of the disposition of that share, to be added;

(g)  where the property is a share of the capital stock of a foreign affiliate of the taxpayer, any amount required by Chapter IV of Title X to be added;

(g.1)  where the property is a share of the capital stock of a corporation, any amount required by subparagraph f of the second paragraph of section 832.23 to be added;

BOND AND SIMILAR OBLIGATION

(h)  the excess of the principal amount of a bond, debenture, bill, hypothecary claim, mortgage or similar obligation over the amount for which it has been issued, if such excess must be included, under sections 122 to 125, in computing the income of the taxpayer for a taxation year beginning before such particular time;

(h.0.0.1)  where the property is a particular commercial obligation, within the meaning assigned by section 485, payable to the taxpayer as consideration for the settlement or extinguishment of another commercial obligation payable to the taxpayer and the taxpayer’s loss from the disposition of the other obligation was reduced because of section 264.0.2, the proportion of the reduction that the principal amount of the particular obligation is of the aggregate of all amounts each of which is the principal amount of a commercial obligation payable to the taxpayer as consideration for the settlement or extinguishment of that other obligation;

INDEXED DEBT OBLIGATIONS

(h.0.1)  where the property is an indexed debt obligation, the amount referred to in paragraph a of section 125.0.1 in respect of the obligation and required to be included in computing the income of the taxpayer for a taxation year beginning before the particular time;

OFFSHORE INVESTMENT FUND PROPERTY

(h.1)  where the property is an offshore investment fund property within the meaning of section 597.1,

i.  any amount included in respect of the property by virtue of section 597.4 in computing the taxpayer’s income for a taxation year commencing before that time, or

ii.  where the taxpayer is a controlled foreign affiliate, within the meaning of section 572, of a person resident in Canada, the amount prescribed;

PARTNERSHIP

(i)  where the property is an interest in a partnership,

i.  an amount in respect of each fiscal period of the partnership ending after 31 December 1971 and before the particular time, equal to the taxpayer’s share, other than a share under an agreement referred to in section 608, of the income of the partnership from any source for that fiscal period, computed as if this Part were construed without reference to

(1)  sections 231.2 and 231.2.1, the fraction “1/2” in section 105, as it applied to a fiscal period of the partnership ending before 1 April 1977, and without reference to that or another fraction in sections 107, 231, 231.1, as it read before being repealed, and 265,

(2)  the reference to the fraction and the letter C in the formula provided for in the first paragraph of section 105.2, and

(3)  paragraphs l and z.4 of section 87, sections 89 to 91, 144, 144.1 and 145, paragraph j of section 157, as it read before being struck out, paragraph b of each of sections 200 and 201, Division XV of Chapter IV, section 425, paragraphs g and h of section 489, as they read before being struck out, the second paragraph of section 497, and the provisions of the Act respecting the application of the Taxation Act (S.C. 1972, c. 24), as they read before their repeal, in respect of income from the operation of new mines,

ii.  the share of the taxpayer in any capital dividend and any life insurance capital dividend received by the partnership before the particular time in respect of a share of the capital stock of a corporation while the partnership owned such share,

iii.  the share of the taxpayer in the amount by which any proceeds of a life insurance policy received by the partnership after 31 December 1971 and before the particular time by reason of the death of any person whose life was insured under that policy exceed the adjusted cost basis of that policy, within the meaning of sections 976 and 976.1, to the partnership, immediately before that death,

iv.  where the taxpayer, after 31 December 1971, made a contribution of capital to the partnership otherwise than by way of a loan, that portion of such contribution as cannot reasonably be regarded as a benefit conferred on any other member of the partnership who was related to the taxpayer,

iv.1.  any amount, in respect of a particular amount described in section 486 or a specified amount described in section 486.1, that is paid by the taxpayer to the partnership, to the extent that the amount paid is not deductible in computing the taxpayer’s income,

v.  the value, at the time of the taxpayer’s death of the rights or property referred to in section 429 in respect of a partnership interest held by him immediately before his death, other than an interest referred to in section 612, where the particular time is immediately before the taxpayer’s death and the taxpayer was at the particular time a member of the partnership,

v.1.  any amount deemed by section 261.1 to be a gain of the taxpayer,

vi.  (subparagraph repealed),

vii.  any amount deemed by paragraph c of section 618 or section 642 to be a gain of the taxpayer,

vii.1.  a share of the taxpayer’s Canadian development expense or Canadian oil and gas property expense that was deducted at or before the particular time in computing the adjusted cost base to the taxpayer of the interest because of subparagraph ii of paragraph l of section 257 and in respect of which the taxpayer has elected under paragraph d of section 408 or paragraph b of section 418.2, as the case may be,

viii.  an amount deemed, before the particular time, by section 600.1, to be an amount referred to in paragraph b of section 399, in subparagraph i of paragraph b of section 412, in paragraph c of the said section 412, in subparagraph i of paragraph b of section 418.6 or in paragraph c of the said section 418.6 in respect of the taxpayer,

ix.  the amount by which the taxpayer’s share of the amount of any assistance or benefit that the partnership has received or has become entitled to receive after 31 December 1971 and before the particular time from a government, municipality or other public authority, whether as a grant, subsidy, forgivable loan, deduction from royalty or tax, investment allowance or any other form of assistance or benefit, in respect of or related to a Canadian resource property or an exploration or development expense incurred in Canada, exceeds such part of that share of the assistance or benefit as has been repaid before that time by the taxpayer pursuant to a legal obligation to repay all or any part of that share of that assistance or benefit,

x.  any amount required by sections 614 to 617 to be added before that particular time in computing the adjusted cost base to the taxpayer of the interest in the partnership,

xi.  where the taxpayer’s share of any income or loss of the partnership was, at any time, 10% or more, any expense incurred by the taxpayer in respect of land or a building of the partnership that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164, and

xii.  any amount required by subparagraph a of the first paragraph of section 726.9.6 to be added at that time in computing the adjusted cost base to the taxpayer of the interest;

TRUST

(j)  where the property is a capital interest in a trust, any amount that is included under section 580 or 582 in computing the taxpayer’s income for a taxation year that ends at or before the particular time, in respect of that interest, or that would have been so required to have been included for such a taxation year but for sections 316.1, 456 to 458, 462.1 to 462.24.1 and 466 to 467.1;

(j.1)  where the property is an interest in a segregated fund trust referred to in section 851.2,

i.  each amount deemed by section 851.3 to be an amount payable to the taxpayer before the particular time in respect of that interest,

ii.  each amount required by section 851.12 to be added before the particular time in respect of that interest,

iii.  each amount in respect of that interest that is a capital gain deemed to have been allocated under section 851.21 to the taxpayer before the particular time, and

iv.  each amount in respect of that interest that before the particular time was deemed under section 851.16 to have been a capital gain of the taxpayer;

(j.2)  where the property is a unit in a mutual fund trust, any amount required by section 1121.3 to be added in computing the adjusted cost base to the taxpayer of the unit;

(j.3)  where the property is a unit of a mutual fund trust, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the unit was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were applied without reference to section 58.0.1, as it read before being repealed;

LANDS

(k)  where the property is land of the taxpayer, any amount paid after 31 December 1971 and before the particular time by the taxpayer or by another taxpayer in respect of whom the taxpayer was a person, corporation or partnership described in subparagraph ii of paragraph c of section 165, pursuant to a legal obligation to pay interest on debt relating to the acquisition of land, within the meaning of paragraph c of section 165, or property taxes, not including an income or profits taxes or taxes imposed by reference to the transfer of property, paid by the taxpayer in respect of the property to a province or to a Canadian municipality, to the extent that the amount

i.  was not deductible by reason of section 164 in computing the taxpayer’s income from the land or from a business for any taxation year beginning before that time, or

ii.  was not deductible by reason of section 164 in computing the income of the other taxpayer if the amount was not included in or added to the cost to the other taxpayer of any property otherwise than by reason of paragraph e.1 or subparagraph xi of paragraph i;

(l)  where the property is land used in a farming business which he operates, an amount, with respect to each taxation year ending after 1971 and beginning before such time, equal to the loss of such taxpayer for such year, derived from such farming business, to the extent that such loss

i.  is not deductible in computing the income for that year under section 205,

ii.  is not deducted in computing the taxable income for the taxation year in which the taxpayer disposed of the property or any previous taxation year,

iii.  does not exceed the aggregate of the following amounts, to the extent that those amounts are included in computing the loss:

(1)  taxes, other than income or profits taxes or taxes imposed by reference to the transfer of the property, paid by the taxpayer in that year or payable by the taxpayer in respect of that year to a province or a Canadian municipality in respect of the property, and

(2)  interest, paid by the taxpayer in that year or payable by the taxpayer in respect of that year, pursuant to a legal obligation to pay interest on borrowed money used to acquire the property or on any amount as consideration payable for the property, and

iv.  does not exceed the amount obtained by subtracting from the proceeds of disposition of that property reduced by its adjusted cost base immediately before that time, computed without referring to this paragraph, the aggregate of his losses from his farming business for the taxation years prior to that year and which must be added, under this paragraph, in computing the adjusted cost base of such property;

(m)  (paragraph repealed).

1972, c. 23, s. 237; 1973, c. 17, s. 23; 1974, c. 18, s. 13; 1975, c. 22, s. 42; 1977, c. 26, s. 24; 1978, c. 26, s. 43; 1979, c. 18, s. 20; 1980, c. 13, s. 19; 1982, c. 5, s. 58; 1984, c. 15, s. 62; 1985, c. 25, s. 45; 1986, c. 15, s. 54; 1986, c. 19, s. 42; 1990, c. 59, s. 119; 1993, c. 16, s. 113; 1994, c. 22, s. 123; 1995, c. 49, s. 61; 1996, c. 39, s. 72; 1997, c. 3, s. 71; 1997, c. 14, s. 54; 1997, c. 85, s. 58; 1998, c. 16, s. 104; 2000, c. 5, s. 68; 2001, c. 7, s. 31; 2001, c. 53, s. 47; 2003, c. 2, s. 86; 2004, c. 8, s. 49; 2005, c. 1, s. 81; 2006, c. 36, s. 31; 2009, c. 5, s. 87; 2011, c. 34, s. 27; 2015, c. 24, s. 52; 2015, c. 36, s. 15.

2015-10-26

255. The taxpayer must, in computing the adjusted cost base of any property at a particular time, add to the cost of such property the following amounts:

MISCELLANEOUS CASES

(a)  the amount deemed to be a gain, under section 261;

(b)  where the property is substituted property, within the meaning of subparagraph a of the first paragraph of section 237, of the taxpayer, the amount by which the amount of the loss that was, because of the acquisition by the taxpayer of the property, a non-allowable loss referred to in that section 237 from a disposition of a property by a taxpayer exceeds, where the property disposed of was a share of the capital stock of a corporation, the amount that would, but for section 237, be deducted under section 741, 741.2 or 742 in computing the loss of any taxpayer from the disposition of the share;

(c)  where the property is an indemnity, within the meaning of sections 469 to 479, or is deemed to be such an indemnity under those sections, the amount to be added under subparagraph b of the first paragraph of section 471;

(c.1)  where the taxpayer is a taxable Canadian corporation and the property was disposed of by another taxable Canadian corporation to the taxpayer in circumstances such that paragraph f.1 does not apply to increase the adjusted cost base to the other corporation of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 239, as it read, before its repeal, in respect of that disposition, or 264.0.1 or is deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.1.1)  where the property was disposed of by a person, other than a person not resident in Canada or a person exempt from tax under this Part on the person’s taxable income, or by an eligible Canadian partnership, within the meaning of section 485, to the taxpayer in circumstances such that paragraph c.1 does not apply to increase the adjusted cost base to the taxpayer of the property, paragraph f.1 does not apply to increase the adjusted cost base to that person of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 264.0.1 or deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.2)  the reasonable costs incurred by the taxpayer before the particular time of surveying or valuing the property for the purpose of its acquisition or disposition to the extent that those costs are not otherwise deducted by the taxpayer in computing his income for any taxation year or attributable to any other property;

(c.3)  where the property is immovable property of the taxpayer, any amount required by paragraph b of section 277.2 to be added;

(c.4)  where the property is an interest in or a share of the capital stock of a flow-through entity within the meaning assigned by section 251.1 and the time is after 31 December 2004, an amount equal to the product obtained by multiplying the amount that would, if the definition of “exempt capital gains balance” in section 251.1 were read without reference to “that ends before 1 January 2005”, be the taxpayer’s exempt capital gains balance in respect of the entity for the taxpayer’s taxation year 2005 by the proportion that the fair market value at that time of the property is of the fair market value at that time of all the taxpayer’s interests in or shares of the capital stock of the entity;

(c.5)  any amount required under paragraph d of section 259, paragraph b of any of sections 259.1 to 259.3 and 296.1, subparagraph b.2 of the first paragraph of section 301, subparagraph b of the first paragraph of section 543.2 or paragraph b of section 553.2 to be added;

(c.6)  where the property is an interest in, or a share of the capital stock of, a flow-through entity described in any of paragraphs a, b and g to j of the definition of “flow-through entity” in the first paragraph of section 251.1, the time is before 1 January 2005 and immediately after that time the taxpayer disposed of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity, an amount equal to the product obtained by multiplying the amount by which the taxpayer’s exempt capital gains balance, within the meaning of the first paragraph of section 251.1, in relation to the entity for the taxpayer’s taxation year that includes that time exceeds the aggregate of all amounts each of which is the amount by which a capital gain is reduced under the provisions of Chapter II.1 for the year because of the taxpayer’s exempt capital gains balance in relation to the entity or, subject to section 255.1, twice an amount by which a taxable capital gain, or the income from a business, is reduced under the provisions of that chapter for the year because of the taxpayer’s exempt capital gains balance in relation to the entity, by the proportion that the fair market value at that time of the property is of the fair market value at that time of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity;

(c.7)  where the property was acquired under a derivative forward agreement, any amount that must be included in respect of the property under subparagraph i of paragraph z.7 of section 87 in computing the taxpayer’s income for a taxation year;

(c.8)  where the property is disposed of under a derivative forward agreement, any amount that must be included in respect of the property under subparagraph ii of paragraph z.7 of section 87 in computing the taxpayer’s income for the taxation year that includes the particular time;

SHARES OF A CORPORATION

(d)  where the property is a share of the capital stock of a corporation resident in Canada, the amount of every dividend deemed to have been received by the taxpayer under section 504;

(d.1)  where the property is a share of the capital stock of a corporation, the amount of any dividend deemed by paragraph c.1 of section 785.1 to have been received in respect of the share by the taxpayer before that time and while the taxpayer was resident in Canada;

(e)  where the property is a share of the capital stock of a corporation and the taxpayer, after 31 December 1971, makes a contribution of capital to the corporation otherwise than by way of a loan, by way of a disposition of shares of a foreign affiliate of a taxpayer to which section 540 applies or, subject to section 256, by way of a disposition of property in respect of which section 518 or 529 applies, that proportion of such contribution as cannot reasonably be regarded as a benefit conferred by the taxpayer on a person, other than the corporation, who was related to the taxpayer, that

i.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of such share, is of

ii.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of all the shares of the capital stock of such corporation owned by the taxpayer immediately after the contribution of capital;

(e.1)  where the property is a share of the capital stock of a corporation of which the taxpayer was, at any time, a specified shareholder, any expense incurred by the taxpayer in respect of land or a building of the corporation that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164;

(f)  where the property is a share of the capital stock of a corporation, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time and ending after 31 December 1971 by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the share was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were applied without reference to sections 49.2 and 58.0.1, as the latter section read before being repealed;

(f.1)  where the property is a share of the capital stock of a corporation, any amount required by paragraph b of section 238.3, or paragraph b of section 535, as it read, before its repeal, in respect of the disposition of that share, to be added;

(g)  where the property is a share of the capital stock of a foreign affiliate of the taxpayer, any amount required by section 587 to be added;

(g.1)  where the property is a share of the capital stock of a corporation, any amount required by subparagraph f of the second paragraph of section 832.23 to be added;

BOND AND SIMILAR OBLIGATION

(h)  the excess of the principal amount of a bond, debenture, bill, hypothecary claim, mortgage or similar obligation over the amount for which it has been issued, if such excess must be included, under sections 122 to 125, in computing the income of the taxpayer for a taxation year beginning before such particular time;

(h.0.0.1)  where the property is a particular commercial obligation, within the meaning assigned by section 485, payable to the taxpayer as consideration for the settlement or extinguishment of another commercial obligation payable to the taxpayer and the taxpayer’s loss from the disposition of the other obligation was reduced because of section 264.0.2, the proportion of the reduction that the principal amount of the particular obligation is of the aggregate of all amounts each of which is the principal amount of a commercial obligation payable to the taxpayer as consideration for the settlement or extinguishment of that other obligation;

INDEXED DEBT OBLIGATIONS

(h.0.1)  where the property is an indexed debt obligation, the amount referred to in paragraph a of section 125.0.1 in respect of the obligation and required to be included in computing the income of the taxpayer for a taxation year beginning before the particular time;

OFFSHORE INVESTMENT FUND PROPERTY

(h.1)  where the property is an offshore investment fund property within the meaning of section 597.1,

i.  any amount included in respect of the property by virtue of section 597.4 in computing the taxpayer’s income for a taxation year commencing before that time, or

ii.  where the taxpayer is a controlled foreign affiliate, within the meaning of section 572, of a person resident in Canada, the amount prescribed;

PARTNERSHIP

(i)  where the property is an interest in a partnership,

i.  an amount in respect of each fiscal period of the partnership ending after 31 December 1971 and before the particular time, equal to the taxpayer’s share, other than a share under an agreement referred to in section 608, of the income of the partnership from any source for that fiscal period, computed as if this Part were construed without reference to

(1)  section 231.2, the fraction “1/2” in section 105, as it applied to a fiscal period of the partnership ending before 1 April 1977, and without reference to that or another fraction in sections 107, 231, 231.1, as it read before being repealed, and 265,

(2)  the reference to the fraction and the letter C in the formula provided for in the first paragraph of section 105.2, and

(3)  paragraphs l and z.4 of section 87, sections 89 to 91, 144, 144.1 and 145, paragraph j of section 157, as it read before being struck out, paragraph b of each of sections 200 and 201, Division XV of Chapter IV, section 425, paragraphs g and h of section 489, as they read before being struck out, the second paragraph of section 497, and the provisions of the Act respecting the application of the Taxation Act (S.C. 1972, c. 24), as they read before their repeal, in respect of income from the operation of new mines,

ii.  the share of the taxpayer in any capital dividend and any life insurance capital dividend received by the partnership before the particular time in respect of a share of the capital stock of a corporation while the partnership owned such share,

iii.  the share of the taxpayer in the amount by which any proceeds of a life insurance policy received by the partnership after 31 December 1971 and before the particular time by reason of the death of any person whose life was insured under that policy exceed the adjusted cost basis of that policy, within the meaning of sections 976 and 976.1, to the partnership, immediately before that death,

iv.  where the taxpayer, after 31 December 1971, made a contribution of capital to the partnership otherwise than by way of a loan, that portion of such contribution as cannot reasonably be regarded as a benefit conferred on any other member of the partnership who was related to the taxpayer,

iv.1.  any amount, in respect of a particular amount described in section 486 or a specified amount described in section 486.1, that is paid by the taxpayer to the partnership, to the extent that the amount paid is not deductible in computing the taxpayer’s income,

v.  the value, at the time of the taxpayer’s death of the rights or property referred to in section 429 in respect of a partnership interest held by him immediately before his death, other than an interest referred to in section 612, where the particular time is immediately before the taxpayer’s death and the taxpayer was at the particular time a member of the partnership,

v.1.  any amount deemed by section 261.1 to be a gain of the taxpayer,

vi.  (subparagraph repealed),

vii.  any amount deemed by paragraph c of section 618 or section 642 to be a gain of the taxpayer,

vii.1.  a share of the taxpayer’s Canadian development expense or Canadian oil and gas property expense that was deducted at or before the particular time in computing the adjusted cost base to the taxpayer of the interest because of subparagraph ii of paragraph l of section 257 and in respect of which the taxpayer has elected under paragraph d of section 408 or paragraph b of section 418.2, as the case may be,

viii.  an amount deemed, before the particular time, by section 600.1, to be an amount referred to in paragraph b of section 399, in subparagraph i of paragraph b of section 412, in paragraph c of the said section 412, in subparagraph i of paragraph b of section 418.6 or in paragraph c of the said section 418.6 in respect of the taxpayer,

ix.  the amount by which the taxpayer’s share of the amount of any assistance or benefit that the partnership has received or has become entitled to receive after 31 December 1971 and before the particular time from a government, municipality or other public authority, whether as a grant, subsidy, forgivable loan, deduction from royalty or tax, investment allowance or any other form of assistance or benefit, in respect of or related to a Canadian resource property or an exploration or development expense incurred in Canada, exceeds such part of that share of the assistance or benefit as has been repaid before that time by the taxpayer pursuant to a legal obligation to repay all or any part of that share of that assistance or benefit,

x.  any amount required by sections 614 to 617 to be added before that particular time in computing the adjusted cost base to the taxpayer of the interest in the partnership,

xi.  where the taxpayer’s share of any income or loss of the partnership was, at any time, 10% or more, any expense incurred by the taxpayer in respect of land or a building of the partnership that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164, and

xii.  any amount required by subparagraph a of the first paragraph of section 726.9.6 to be added at that time in computing the adjusted cost base to the taxpayer of the interest;

TRUST

(j)  where the property is a capital interest in a trust to which section 596 applies, any amount required by section 597 to be added;

(j.1)  where the property is an interest in a segregated fund trust referred to in section 851.2,

i.  each amount deemed by section 851.3 to be an amount payable to the taxpayer before the particular time in respect of that interest,

ii.  each amount required by section 851.12 to be added before the particular time in respect of that interest,

iii.  each amount in respect of that interest that is a capital gain deemed to have been allocated under section 851.21 to the taxpayer before the particular time, and

iv.  each amount in respect of that interest that before the particular time was deemed under section 851.16 to have been a capital gain of the taxpayer;

(j.2)  where the property is a unit in a mutual fund trust, any amount required by section 1121.3 to be added in computing the adjusted cost base to the taxpayer of the unit;

(j.3)  where the property is a unit of a mutual fund trust, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the unit was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were applied without reference to section 58.0.1, as it read before being repealed;

LANDS

(k)  where the property is land of the taxpayer, any amount paid after 31 December 1971 and before the particular time by the taxpayer or by another taxpayer in respect of whom the taxpayer was a person, corporation or partnership described in subparagraph ii of paragraph c of section 165, pursuant to a legal obligation to pay interest on debt relating to the acquisition of land, within the meaning of paragraph c of section 165, or property taxes, not including an income or profits taxes or taxes imposed by reference to the transfer of property, paid by the taxpayer in respect of the property to a province or to a Canadian municipality, to the extent that the amount

i.  was not deductible by reason of section 164 in computing the taxpayer’s income from the land or from a business for any taxation year beginning before that time, or

ii.  was not deductible by reason of section 164 in computing the income of the other taxpayer if the amount was not included in or added to the cost to the other taxpayer of any property otherwise than by reason of paragraph e.1 or subparagraph xi of paragraph i;

(l)  where the property is land used in a farming business which he operates, an amount, with respect to each taxation year ending after 1971 and beginning before such time, equal to the loss of such taxpayer for such year, derived from such farming business, to the extent that such loss

i.  is not deductible in computing the income for that year under section 205,

ii.  is not deducted in computing the taxable income for the taxation year in which the taxpayer disposed of the property or any previous taxation year,

iii.  does not exceed the aggregate of the following amounts, to the extent that those amounts are included in computing the loss:

(1)  taxes, other than income or profits taxes or taxes imposed by reference to the transfer of the property, paid by the taxpayer in that year or payable by the taxpayer in respect of that year to a province or a Canadian municipality in respect of the property, and

(2)  interest, paid by the taxpayer in that year or payable by the taxpayer in respect of that year, pursuant to a legal obligation to pay interest on borrowed money used to acquire the property or on any amount as consideration payable for the property, and

iv.  does not exceed the amount obtained by subtracting from the proceeds of disposition of that property reduced by its adjusted cost base immediately before that time, computed without referring to this paragraph, the aggregate of his losses from his farming business for the taxation years prior to that year and which must be added, under this paragraph, in computing the adjusted cost base of such property;

(m)  (paragraph repealed).

1972, c. 23, s. 237; 1973, c. 17, s. 23; 1974, c. 18, s. 13; 1975, c. 22, s. 42; 1977, c. 26, s. 24; 1978, c. 26, s. 43; 1979, c. 18, s. 20; 1980, c. 13, s. 19; 1982, c. 5, s. 58; 1984, c. 15, s. 62; 1985, c. 25, s. 45; 1986, c. 15, s. 54; 1986, c. 19, s. 42; 1990, c. 59, s. 119; 1993, c. 16, s. 113; 1994, c. 22, s. 123; 1995, c. 49, s. 61; 1996, c. 39, s. 72; 1997, c. 3, s. 71; 1997, c. 14, s. 54; 1997, c. 85, s. 58; 1998, c. 16, s. 104; 2000, c. 5, s. 68; 2001, c. 7, s. 31; 2001, c. 53, s. 47; 2003, c. 2, s. 86; 2004, c. 8, s. 49; 2005, c. 1, s. 81; 2006, c. 36, s. 31; 2009, c. 5, s. 87; 2011, c. 34, s. 27; 2015, c. 24, s. 52.

2011-12-09

255. The taxpayer must, in computing the adjusted cost base of any property at a particular time, add to the cost of such property the following amounts:

MISCELLANEOUS CASES

(a)  the amount deemed to be a gain, under section 261;

(b)  where the property is substituted property, within the meaning of subparagraph a of the first paragraph of section 237, of the taxpayer, the amount by which the amount of the loss that was, because of the acquisition by the taxpayer of the property, a non-allowable loss referred to in that section 237 from a disposition of a property by a taxpayer exceeds, where the property disposed of was a share of the capital stock of a corporation, the amount that would, but for section 237, be deducted under section 741, 741.2 or 742 in computing the loss of any taxpayer from the disposition of the share;

(c)  where the property is an indemnity, within the meaning of sections 469 to 479, or is deemed to be such an indemnity under those sections, the amount to be added under subparagraph b of the first paragraph of section 471;

(c.1)  where the taxpayer is a taxable Canadian corporation and the property was disposed of by another taxable Canadian corporation to the taxpayer in circumstances such that paragraph f.1 does not apply to increase the adjusted cost base to the other corporation of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 239, as it read, before its repeal, in respect of that disposition, or 264.0.1 or is deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.1.1)  where the property was disposed of by a person, other than a person not resident in Canada or a person exempt from tax under this Part on the person’s taxable income, or by an eligible Canadian partnership, within the meaning of section 485, to the taxpayer in circumstances such that paragraph c.1 does not apply to increase the adjusted cost base to the taxpayer of the property, paragraph f.1 does not apply to increase the adjusted cost base to that person of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 264.0.1 or deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.2)  the reasonable costs incurred by the taxpayer before the particular time of surveying or valuing the property for the purpose of its acquisition or disposition to the extent that those costs are not otherwise deducted by the taxpayer in computing his income for any taxation year or attributable to any other property;

(c.3)  where the property is immovable property of the taxpayer, any amount required by paragraph b of section 277.2 to be added;

(c.4)  where the property is an interest in or a share of the capital stock of a flow-through entity within the meaning assigned by section 251.1 and the time is after 31 December 2004, an amount equal to the product obtained by multiplying the amount that would, if the definition of “exempt capital gains balance” in section 251.1 were read without reference to “that ends before 1 January 2005”, be the taxpayer’s exempt capital gains balance in respect of the entity for the taxpayer’s taxation year 2005 by the proportion that the fair market value at that time of the property is of the fair market value at that time of all the taxpayer’s interests in or shares of the capital stock of the entity;

(c.5)  any amount required under paragraph d of section 259, paragraph b of any of sections 259.1 to 259.3 and 296.1, subparagraph b.2 of the first paragraph of section 301, subparagraph b of the first paragraph of section 543.2 or paragraph b of section 553.2 to be added;

(c.6)  where the property is an interest in, or a share of the capital stock of, a flow-through entity described in any of paragraphs a, b and g to j of the definition of “flow-through entity” in the first paragraph of section 251.1, the time is before 1 January 2005 and immediately after that time the taxpayer disposed of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity, an amount equal to the product obtained by multiplying the amount by which the taxpayer’s exempt capital gains balance, within the meaning of the first paragraph of section 251.1, in relation to the entity for the taxpayer’s taxation year that includes that time exceeds the aggregate of all amounts each of which is the amount by which a capital gain is reduced under the provisions of Chapter II.1 for the year because of the taxpayer’s exempt capital gains balance in relation to the entity or, subject to section 255.1, twice an amount by which a taxable capital gain, or the income from a business, is reduced under the provisions of that chapter for the year because of the taxpayer’s exempt capital gains balance in relation to the entity, by the proportion that the fair market value at that time of the property is of the fair market value at that time of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity;

SHARES OF A CORPORATION

(d)  where the property is a share of the capital stock of a corporation resident in Canada, the amount of every dividend deemed to have been received by the taxpayer under section 504;

(d.1)  where the property is a share of the capital stock of a corporation, the amount of any dividend deemed by paragraph c.1 of section 785.1 to have been received in respect of the share by the taxpayer before that time and while the taxpayer was resident in Canada;

(e)  where the property is a share of the capital stock of a corporation and the taxpayer, after 31 December 1971, makes a contribution of capital to the corporation otherwise than by way of a loan, by way of a disposition of shares of a foreign affiliate of a taxpayer to which section 540 applies or, subject to section 256, by way of a disposition of property in respect of which section 518 or 529 applies, that proportion of such contribution as cannot reasonably be regarded as a benefit conferred by the taxpayer on a person, other than the corporation, who was related to the taxpayer, that

i.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of such share, is of

ii.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of all the shares of the capital stock of such corporation owned by the taxpayer immediately after the contribution of capital;

(e.1)  where the property is a share of the capital stock of a corporation of which the taxpayer was, at any time, a specified shareholder, any expense incurred by the taxpayer in respect of land or a building of the corporation that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164;

(f)  where the property is a share of the capital stock of a corporation, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time and ending after 31 December 1971 by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the share was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were applied without reference to sections 49.2 and 58.0.1, as the latter section read before being repealed;

(f.1)  where the property is a share of the capital stock of a corporation, any amount required by paragraph b of section 238.3, or paragraph b of section 535, as it read, before its repeal, in respect of the disposition of that share, to be added;

(g)  where the property is a share of the capital stock of a foreign affiliate of the taxpayer, any amount required by section 587 to be added;

(g.1)  where the property is a share of the capital stock of a corporation, any amount required by subparagraph f of the second paragraph of section 832.23 to be added;

BOND AND SIMILAR OBLIGATION

(h)  the excess of the principal amount of a bond, debenture, bill, hypothecary claim, mortgage or similar obligation over the amount for which it has been issued, if such excess must be included, under sections 122 to 125, in computing the income of the taxpayer for a taxation year beginning before such particular time;

(h.0.0.1)  where the property is a particular commercial obligation, within the meaning assigned by section 485, payable to the taxpayer as consideration for the settlement or extinguishment of another commercial obligation payable to the taxpayer and the taxpayer’s loss from the disposition of the other obligation was reduced because of section 264.0.2, the proportion of the reduction that the principal amount of the particular obligation is of the aggregate of all amounts each of which is the principal amount of a commercial obligation payable to the taxpayer as consideration for the settlement or extinguishment of that other obligation;

INDEXED DEBT OBLIGATIONS

(h.0.1)  where the property is an indexed debt obligation, the amount referred to in paragraph a of section 125.0.1 in respect of the obligation and required to be included in computing the income of the taxpayer for a taxation year beginning before the particular time;

OFFSHORE INVESTMENT FUND PROPERTY

(h.1)  where the property is an offshore investment fund property within the meaning of section 597.1,

i.  any amount included in respect of the property by virtue of section 597.4 in computing the taxpayer’s income for a taxation year commencing before that time, or

ii.  where the taxpayer is a controlled foreign affiliate, within the meaning of section 572, of a person resident in Canada, the amount prescribed;

PARTNERSHIP

(i)  where the property is an interest in a partnership,

i.  an amount in respect of each fiscal period of the partnership ending after 31 December 1971 and before the particular time, equal to the taxpayer’s share, other than a share under an agreement referred to in section 608, of the income of the partnership from any source for that fiscal period, computed as if this Part were construed without reference to

(1)  section 231.2, the fraction “1/2” in section 105, as it applied to a fiscal period of the partnership ending before 1 April 1977, and without reference to that or another fraction in sections 107, 231, 231.1, as it read before being repealed, and 265,

(2)  the reference to the fraction and the letter C in the formula provided for in the first paragraph of section 105.2, and

(3)  paragraphs l and z.4 of section 87, sections 89 to 91, 144, 144.1 and 145, paragraph j of section 157, as it read before being struck out, paragraph b of each of sections 200 and 201, Division XV of Chapter IV, section 425, paragraphs g and h of section 489, as they read before being struck out, the second paragraph of section 497, and the provisions of the Act respecting the application of the Taxation Act (S.C. 1972, c. 24), as they read before their repeal, in respect of income from the operation of new mines,

ii.  the share of the taxpayer in any capital dividend and any life insurance capital dividend received by the partnership before the particular time in respect of a share of the capital stock of a corporation while the partnership owned such share,

iii.  the share of the taxpayer in the amount by which any proceeds of a life insurance policy received by the partnership after 31 December 1971 and before the particular time by reason of the death of any person whose life was insured under that policy exceed the adjusted cost basis of that policy, within the meaning of sections 976 and 976.1, to the partnership, immediately before that death,

iv.  where the taxpayer, after 31 December 1971, made a contribution of capital to the partnership otherwise than by way of a loan, that portion of such contribution as cannot reasonably be regarded as a benefit conferred on any other member of the partnership who was related to the taxpayer,

v.  the value, at the time of the taxpayer’s death of the rights or property referred to in section 429 in respect of a partnership interest held by him immediately before his death, other than an interest referred to in section 612, where the particular time is immediately before the taxpayer’s death and the taxpayer was at the particular time a member of the partnership,

v.1.  any amount deemed by section 261.1 to be a gain of the taxpayer,

vi.  (subparagraph repealed),

vii.  any amount deemed by paragraph c of section 618 or section 642 to be a gain of the taxpayer,

vii.1.  a share of the taxpayer’s Canadian development expense or Canadian oil and gas property expense that was deducted at or before the particular time in computing the adjusted cost base to the taxpayer of the interest because of subparagraph ii of paragraph l of section 257 and in respect of which the taxpayer has elected under paragraph d of section 408 or paragraph b of section 418.2, as the case may be,

viii.  an amount deemed, before the particular time, by section 600.1, to be an amount referred to in paragraph b of section 399, in subparagraph i of paragraph b of section 412, in paragraph c of the said section 412, in subparagraph i of paragraph b of section 418.6 or in paragraph c of the said section 418.6 in respect of the taxpayer,

ix.  the amount by which the taxpayer’s share of the amount of any assistance or benefit that the partnership has received or has become entitled to receive after 31 December 1971 and before the particular time from a government, municipality or other public authority, whether as a grant, subsidy, forgivable loan, deduction from royalty or tax, investment allowance or any other form of assistance or benefit, in respect of or related to a Canadian resource property or an exploration or development expense incurred in Canada, exceeds such part of that share of the assistance or benefit as has been repaid before that time by the taxpayer pursuant to a legal obligation to repay all or any part of that share of that assistance or benefit,

x.  any amount required by sections 614 to 617 to be added before that particular time in computing the adjusted cost base to the taxpayer of the interest in the partnership,

xi.  where the taxpayer’s share of any income or loss of the partnership was, at any time, 10% or more, any expense incurred by the taxpayer in respect of land or a building of the partnership that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164, and

xii.  any amount required by subparagraph a of the first paragraph of section 726.9.6 to be added at that time in computing the adjusted cost base to the taxpayer of the interest;

TRUST

(j)  where the property is a capital interest in a trust to which section 596 applies, any amount required by section 597 to be added;

(j.1)  where the property is an interest in a segregated fund trust referred to in section 851.2,

i.  each amount deemed by section 851.3 to be an amount payable to the taxpayer before the particular time in respect of that interest,

ii.  each amount required by section 851.12 to be added before the particular time in respect of that interest,

iii.  each amount in respect of that interest that is a capital gain deemed to have been allocated under section 851.21 to the taxpayer before the particular time, and

iv.  each amount in respect of that interest that before the particular time was deemed under section 851.16 to have been a capital gain of the taxpayer;

(j.2)  where the property is a unit in a mutual fund trust, any amount required by section 1121.3 to be added in computing the adjusted cost base to the taxpayer of the unit;

(j.3)  where the property is a unit of a mutual fund trust, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the unit was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were applied without reference to section 58.0.1, as it read before being repealed;

LANDS

(k)  where the property is land of the taxpayer, any amount paid after 31 December 1971 and before the particular time by the taxpayer or by another taxpayer in respect of whom the taxpayer was a person, corporation or partnership described in subparagraph ii of paragraph c of section 165, pursuant to a legal obligation to pay interest on debt relating to the acquisition of land, within the meaning of paragraph c of section 165, or property taxes, not including an income or profits taxes or taxes imposed by reference to the transfer of property, paid by the taxpayer in respect of the property to a province or to a Canadian municipality, to the extent that the amount

i.  was not deductible by reason of section 164 in computing the taxpayer’s income from the land or from a business for any taxation year beginning before that time, or

ii.  was not deductible by reason of section 164 in computing the income of the other taxpayer if the amount was not included in or added to the cost to the other taxpayer of any property otherwise than by reason of paragraph e.1 or subparagraph xi of paragraph i;

(l)  where the property is land used in a farming business which he operates, an amount, with respect to each taxation year ending after 1971 and beginning before such time, equal to the loss of such taxpayer for such year, derived from such farming business, to the extent that such loss

i.  is not deductible in computing the income for that year under section 205,

ii.  is not deducted in computing the taxable income for the taxation year in which the taxpayer disposed of the property or any previous taxation year,

iii.  does not exceed the aggregate of the following amounts, to the extent that those amounts are included in computing the loss:

(1)  taxes, other than income or profits taxes or taxes imposed by reference to the transfer of the property, paid by the taxpayer in that year or payable by the taxpayer in respect of that year to a province or a Canadian municipality in respect of the property, and

(2)  interest, paid by the taxpayer in that year or payable by the taxpayer in respect of that year, pursuant to a legal obligation to pay interest on borrowed money used to acquire the property or on any amount as consideration payable for the property, and

iv.  does not exceed the amount obtained by subtracting from the proceeds of disposition of that property reduced by its adjusted cost base immediately before that time, computed without referring to this paragraph, the aggregate of his losses from his farming business for the taxation years prior to that year and which must be added, under this paragraph, in computing the adjusted cost base of such property;

(m)  (paragraph repealed).

1972, c. 23, s. 237; 1973, c. 17, s. 23; 1974, c. 18, s. 13; 1975, c. 22, s. 42; 1977, c. 26, s. 24; 1978, c. 26, s. 43; 1979, c. 18, s. 20; 1980, c. 13, s. 19; 1982, c. 5, s. 58; 1984, c. 15, s. 62; 1985, c. 25, s. 45; 1986, c. 15, s. 54; 1986, c. 19, s. 42; 1990, c. 59, s. 119; 1993, c. 16, s. 113; 1994, c. 22, s. 123; 1995, c. 49, s. 61; 1996, c. 39, s. 72; 1997, c. 3, s. 71; 1997, c. 14, s. 54; 1997, c. 85, s. 58; 1998, c. 16, s. 104; 2000, c. 5, s. 68; 2001, c. 7, s. 31; 2001, c. 53, s. 47; 2003, c. 2, s. 86; 2004, c. 8, s. 49; 2005, c. 1, s. 81; 2006, c. 36, s. 31; 2009, c. 5, s. 87; 2011, c. 34, s. 27.

2009-05-15

255. The taxpayer must, in computing the adjusted cost base of any property at a particular time, add to the cost of such property the following amounts:

MISCELLANEOUS CASES

(a)  the amount deemed to be a gain, under section 261;

(b)  where the property is substituted property, within the meaning of subparagraph a of the first paragraph of section 237, of the taxpayer, the amount by which the amount of the loss that was, because of the acquisition by the taxpayer of the property, a non-allowable loss referred to in that section 237 from a disposition of a property by a taxpayer exceeds, where the property disposed of was a share of the capital stock of a corporation, the amount that would, but for section 237, be deducted under section 741, 741.2 or 742 in computing the loss of any taxpayer from the disposition of the share;

(c)  where the property is an indemnity, within the meaning of sections 469 to 479, or is deemed to be such an indemnity under those sections, the amount to be added under subparagraph b of the first paragraph of section 471;

(c.1)  where the taxpayer is a taxable Canadian corporation and the property was disposed of by another taxable Canadian corporation to the taxpayer in circumstances such that paragraph f.1 does not apply to increase the adjusted cost base to the other corporation of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 239, as it read, before its repeal, in respect of that disposition, or 264.0.1 or is deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.1.1)  where the property was disposed of by a person, other than a person not resident in Canada or a person exempt from tax under this Part on the person’s taxable income, or by an eligible Canadian partnership, within the meaning of section 485, to the taxpayer in circumstances such that paragraph c.1 does not apply to increase the adjusted cost base to the taxpayer of the property, paragraph f.1 does not apply to increase the adjusted cost base to that person of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 264.0.1 or deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.2)  the reasonable costs incurred by the taxpayer before the particular time of surveying or valuing the property for the purpose of its acquisition or disposition to the extent that those costs are not otherwise deducted by the taxpayer in computing his income for any taxation year or attributable to any other property;

(c.3)  where the property is immovable property of the taxpayer, any amount required by paragraph b of section 277.2 to be added;

(c.4)  where the property is an interest in or a share of the capital stock of a flow-through entity within the meaning assigned by section 251.1 and the time is after 31 December 2004, an amount equal to the product obtained by multiplying the amount that would, if the definition of “exempt capital gains balance” in section 251.1 were read without reference to “that ends before 1 January 2005”, be the taxpayer’s exempt capital gains balance in respect of the entity for the taxpayer’s taxation year 2005 by the proportion that the fair market value at that time of the property is of the fair market value at that time of all the taxpayer’s interests in or shares of the capital stock of the entity;

(c.5)  any amount required under paragraph d of section 259, paragraph b of any of sections 259.1 to 259.3 and 296.1, subparagraph b.2 of the first paragraph of section 301, subparagraph b of the first paragraph of section 543.2 or paragraph b of section 553.2 to be added;

(c.6)  where the property is an interest in, or a share of the capital stock of, a flow-through entity described in any of paragraphs a, b and g to j of the definition of “flow-through entity” in the first paragraph of section 251.1, the time is before 1 January 2005 and immediately after that time the taxpayer disposed of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity, an amount equal to the product obtained by multiplying the amount by which the taxpayer’s exempt capital gains balance, within the meaning of the first paragraph of section 251.1, in relation to the entity for the taxpayer’s taxation year that includes that time exceeds the aggregate of all amounts each of which is the amount by which a capital gain is reduced under the provisions of Chapter II.1 for the year because of the taxpayer’s exempt capital gains balance in relation to the entity or, subject to section 255.1, twice an amount by which a taxable capital gain, or the income from a business, is reduced under the provisions of that chapter for the year because of the taxpayer’s exempt capital gains balance in relation to the entity, by the proportion that the fair market value at that time of the property is of the fair market value at that time of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity;

SHARES OF A CORPORATION

(d)  where the property is a share of the capital stock of a corporation resident in Canada, the amount of every dividend deemed to have been received by the taxpayer under section 504;

(d.1)  where the property is a share of the capital stock of a corporation, the amount of any dividend deemed by paragraph c.1 of section 785.1 to have been received in respect of the share by the taxpayer before that time and while the taxpayer was resident in Canada;

(e)  where the property is a share of the capital stock of a corporation and the taxpayer, after 31 December 1971, makes a contribution of capital to the corporation otherwise than by way of a loan, by way of a disposition of shares of a foreign affiliate of a taxpayer to which section 540 applies or, subject to section 256, by way of a disposition of property in respect of which section 518 or 529 applies, that proportion of such contribution as cannot reasonably be regarded as a benefit conferred by the taxpayer on a person, other than the corporation, who was related to the taxpayer, that

i.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of such share, is of

ii.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of all the shares of the capital stock of such corporation owned by the taxpayer immediately after the contribution of capital;

(e.1)  where the property is a share of the capital stock of a corporation of which the taxpayer was, at any time, a specified shareholder, any expense incurred by the taxpayer in respect of land or a building of the corporation that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164;

(f)  where the property is a share of the capital stock of a corporation, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time and ending after 31 December 1971 by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the share was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were read without reference to sections 49.2 and 58.0.1;

(f.1)  where the property is a share of the capital stock of a corporation, any amount required by paragraph b of section 238.3, or paragraph b of section 535, as it read, before its repeal, in respect of the disposition of that share, to be added;

(g)  where the property is a share of the capital stock of a foreign affiliate of the taxpayer, any amount required by section 587 to be added;

(g.1)  where the property is a share of the capital stock of a corporation, any amount required by subparagraph f of the second paragraph of section 832.23 to be added;

BOND AND SIMILAR OBLIGATION

(h)  the excess of the principal amount of a bond, debenture, bill, hypothecary claim, mortgage or similar obligation over the amount for which it has been issued, if such excess must be included, under sections 122 to 125, in computing the income of the taxpayer for a taxation year beginning before such particular time;

(h.0.0.1)  where the property is a particular commercial obligation, within the meaning assigned by section 485, payable to the taxpayer as consideration for the settlement or extinguishment of another commercial obligation payable to the taxpayer and the taxpayer’s loss from the disposition of the other obligation was reduced because of section 264.0.2, the proportion of the reduction that the principal amount of the particular obligation is of the aggregate of all amounts each of which is the principal amount of a commercial obligation payable to the taxpayer as consideration for the settlement or extinguishment of that other obligation;

INDEXED DEBT OBLIGATIONS

(h.0.1)  where the property is an indexed debt obligation, the amount referred to in paragraph a of section 125.0.1 in respect of the obligation and required to be included in computing the income of the taxpayer for a taxation year beginning before the particular time;

OFFSHORE INVESTMENT FUND PROPERTY

(h.1)  where the property is an offshore investment fund property within the meaning of section 597.1,

i.  any amount included in respect of the property by virtue of section 597.4 in computing the taxpayer’s income for a taxation year commencing before that time, or

ii.  where the taxpayer is a controlled foreign affiliate, within the meaning of section 572, of a person resident in Canada, the amount prescribed;

PARTNERSHIP

(i)  where the property is an interest in a partnership,

i.  an amount in respect of each fiscal period of the partnership ending after 31 December 1971 and before the particular time, equal to the taxpayer’s share, other than a share under an agreement referred to in section 608, of the income of the partnership from any source for that fiscal period, computed as if this Part were construed without reference to

(1)  section 231.2, the fraction “1/2” in section 105, as it applied to a fiscal period of the partnership ending before 1 April 1977, and without reference to that or another fraction in sections 107, 231, 231.1, as it read before being repealed, and 265,

(2)  the reference to the fraction and the letter C in the formula provided for in the first paragraph of section 105.2, and

(3)  paragraphs l and z.4 of section 87, sections 89 to 91, 144, 144.1 and 145, paragraph j of section 157, as it read before being struck out, paragraph b of each of sections 200 and 201, Division XV of Chapter IV, section 425, paragraphs g and h of section 489, as they read before being struck out, the second paragraph of section 497, and the provisions of the Act respecting the application of the Taxation Act (S.C. 1972, c. 24), as they read before their repeal, in respect of income from the operation of new mines,

ii.  the share of the taxpayer in any capital dividend and any life insurance capital dividend received by the partnership before the particular time in respect of a share of the capital stock of a corporation while the partnership owned such share,

iii.  the share of the taxpayer in the amount by which any proceeds of a life insurance policy received by the partnership after 31 December 1971 and before the particular time by reason of the death of any person whose life was insured under that policy exceed the adjusted cost basis of that policy, within the meaning of sections 976 and 976.1, to the partnership, immediately before that death,

iv.  where the taxpayer, after 31 December 1971, made a contribution of capital to the partnership otherwise than by way of a loan, that portion of such contribution as cannot reasonably be regarded as a benefit conferred on any other member of the partnership who was related to the taxpayer,

v.  the value, at the time of the taxpayer’s death of the rights or property referred to in section 429 in respect of a partnership interest held by him immediately before his death, other than an interest referred to in section 612, where the particular time is immediately before the taxpayer’s death and the taxpayer was at the particular time a member of the partnership,

v.1.  any amount deemed by section 261.1 to be a gain of the taxpayer,

vi.  (subparagraph repealed);

vii.  any amount deemed by paragraph c of section 618 or section 642 to be a gain of the taxpayer,

vii.1.  a share of the taxpayer’s Canadian development expense or Canadian oil and gas property expense that was deducted at or before the particular time in computing the adjusted cost base to the taxpayer of the interest because of subparagraph ii of paragraph l of section 257 and in respect of which the taxpayer has elected under paragraph d of section 408 or paragraph b of section 418.2, as the case may be,

viii.  an amount deemed, before the particular time, by section 600.1, to be an amount referred to in paragraph b of section 399, in subparagraph i of paragraph b of section 412, in paragraph c of the said section 412, in subparagraph i of paragraph b of section 418.6 or in paragraph c of the said section 418.6 in respect of the taxpayer,

ix.  the amount by which the taxpayer’s share of the amount of any assistance or benefit that the partnership has received or has become entitled to receive after 31 December 1971 and before the particular time from a government, municipality or other public authority, whether as a grant, subsidy, forgivable loan, deduction from royalty or tax, investment allowance or any other form of assistance or benefit, in respect of or related to a Canadian resource property or an exploration or development expense incurred in Canada, exceeds such part of that share of the assistance or benefit as has been repaid before that time by the taxpayer pursuant to a legal obligation to repay all or any part of that share of that assistance or benefit,

x.  any amount required by sections 614 to 617 to be added before that particular time in computing the adjusted cost base to the taxpayer of the interest in the partnership,

xi.  where the taxpayer’s share of any income or loss of the partnership was, at any time, 10% or more, any expense incurred by the taxpayer in respect of land or a building of the partnership that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164, and

xii.  any amount required by subparagraph a of the first paragraph of section 726.9.6 to be added at that time in computing the adjusted cost base to the taxpayer of the interest;

TRUST

(j)  where the property is a capital interest in a trust to which section 596 applies, any amount required by section 597 to be added;

(j.1)  where the property is an interest in a segregated fund trust referred to in section 851.2,

i.  each amount deemed by section 851.3 to be an amount payable to the taxpayer before the particular time in respect of that interest,

ii.  each amount required by section 851.12 to be added before the particular time in respect of that interest,

iii.  each amount in respect of that interest that is a capital gain deemed to have been allocated under section 851.21 to the taxpayer before the particular time, and

iv.  each amount in respect of that interest that before the particular time was deemed under section 851.16 to have been a capital gain of the taxpayer;

(j.2)  where the property is a unit in a mutual fund trust, any amount required by section 1121.3 to be added in computing the adjusted cost base to the taxpayer of the unit;

(j.3)  where the property is a unit of a mutual fund trust, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the unit was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were read without reference to section 58.0.1;

LANDS

(k)  where the property is land of the taxpayer, any amount paid after 31 December 1971 and before the particular time by the taxpayer or by another taxpayer in respect of whom the taxpayer was a person, corporation or partnership described in subparagraph ii of paragraph c of section 165, pursuant to a legal obligation to pay interest on debt relating to the acquisition of land, within the meaning of paragraph c of section 165, or property taxes, not including an income or profits taxes or taxes imposed by reference to the transfer of property, paid by the taxpayer in respect of the property to a province or to a Canadian municipality, to the extent that the amount

i.  was not deductible by reason of section 164 in computing the taxpayer’s income from the land or from a business for any taxation year beginning before that time, or

ii.  was not deductible by reason of section 164 in computing the income of the other taxpayer if the amount was not included in or added to the cost to the other taxpayer of any property otherwise than by reason of paragraph e.1 or subparagraph xi of paragraph i;

(l)  where the property is land used in a farming business which he operates, an amount, with respect to each taxation year ending after 1971 and beginning before such time, equal to the loss of such taxpayer for such year, derived from such farming business, to the extent that such loss

i.  is not deductible in computing the income for that year under section 205,

ii.  is not deducted in computing the taxable income for the taxation year in which the taxpayer disposed of the property or any previous taxation year,

iii.  does not exceed the aggregate of the following amounts, to the extent that those amounts are included in computing the loss:

(1)  taxes, other than income or profits taxes or taxes imposed by reference to the transfer of the property, paid by the taxpayer in that year or payable by the taxpayer in respect of that year to a province or a Canadian municipality in respect of the property, and

(2)  interest, paid by the taxpayer in that year or payable by the taxpayer in respect of that year, pursuant to a legal obligation to pay interest on borrowed money used to acquire the property or on any amount as consideration payable for the property, and

iv.  does not exceed the amount obtained by subtracting from the proceeds of disposition of that property reduced by its adjusted cost base immediately before that time, computed without referring to this paragraph, the aggregate of his losses from his farming business for the taxation years prior to that year and which must be added, under this paragraph, in computing the adjusted cost base of such property;

(m)  (paragraph repealed).

1972, c. 23, s. 237; 1973, c. 17, s. 23; 1974, c. 18, s. 13; 1975, c. 22, s. 42; 1977, c. 26, s. 24; 1978, c. 26, s. 43; 1979, c. 18, s. 20; 1980, c. 13, s. 19; 1982, c. 5, s. 58; 1984, c. 15, s. 62; 1985, c. 25, s. 45; 1986, c. 15, s. 54; 1986, c. 19, s. 42; 1990, c. 59, s. 119; 1993, c. 16, s. 113; 1994, c. 22, s. 123; 1995, c. 49, s. 61; 1996, c. 39, s. 72; 1997, c. 3, s. 71; 1997, c. 14, s. 54; 1997, c. 85, s. 58; 1998, c. 16, s. 104; 2000, c. 5, s. 68; 2001, c. 7, s. 31; 2001, c. 53, s. 47; 2003, c. 2, s. 86; 2004, c. 8, s. 49; 2005, c. 1, s. 81; 2006, c. 36, s. 31; 2009, c. 5, s. 87.

2006-12-06

255. The taxpayer must, in computing the adjusted cost base of any property at a particular time, add to the cost of such property the following amounts:

MISCELLANEOUS CASES

(a)  the amount deemed to be a gain, under section 261;

(b)  where the property is substituted property, within the meaning of subparagraph a of the first paragraph of section 237, of the taxpayer, the amount by which the amount of the loss that was, because of the acquisition by the taxpayer of the property, a non-allowable loss referred to in that section 237 from a disposition of a property by a taxpayer exceeds, where the property disposed of was a share of the capital stock of a corporation, the amount that would, but for section 237, be deducted under section 741, 741.2 or 742 in computing the loss of any taxpayer from the disposition of the share;

(c)  where the property is an indemnity within the meaning of sections 469 to 479, or is deemed to be such an indemnity under such sections, the amount to be included in the adjusted cost base of that property under paragraph b of section 471;

(c.1)  where the taxpayer is a taxable Canadian corporation and the property was disposed of by another taxable Canadian corporation to the taxpayer in circumstances such that paragraph f.1 does not apply to increase the adjusted cost base to the other corporation of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 239, as it read, before its repeal, in respect of that disposition, or 264.0.1 or is deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.1.1)  where the property was disposed of by a person, other than a person not resident in Canada or a person exempt from tax under this Part on the person’s taxable income, or by an eligible Canadian partnership, within the meaning of section 485, to the taxpayer in circumstances such that paragraph c.1 does not apply to increase the adjusted cost base to the taxpayer of the property, paragraph f.1 does not apply to increase the adjusted cost base to that person of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 264.0.1 or deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.2)  the reasonable costs incurred by the taxpayer before the particular time of surveying or valuing the property for the purpose of its acquisition or disposition to the extent that those costs are not otherwise deducted by the taxpayer in computing his income for any taxation year or attributable to any other property;

(c.3)  where the property is immovable property of the taxpayer, any amount required by paragraph b of section 277.2 to be added;

(c.4)  where the property is an interest in or a share of the capital stock of a flow-through entity within the meaning assigned by section 251.1 and the time is after 31 December 2004, an amount equal to the product obtained by multiplying the amount that would, if the definition of “exempt capital gains balance” in section 251.1 were read without reference to “that ends before 1 January 2005”, be the taxpayer’s exempt capital gains balance in respect of the entity for the taxpayer’s taxation year 2005 by the proportion that the fair market value at that time of the property is of the fair market value at that time of all the taxpayer’s interests in or shares of the capital stock of the entity;

(c.5)  any amount required under paragraph d of section 259, paragraph b of any of sections 259.1 to 259.3 and 296.1, subparagraph b.2 of the first paragraph of section 301, subparagraph b of the first paragraph of section 543.2 or paragraph b of section 553.2 to be added;

(c.6)  where the property is an interest in, or a share of the capital stock of, a flow-through entity described in any of paragraphs a, b and g to j of the definition of “flow-through entity” in the first paragraph of section 251.1, the time is before 1 January 2005 and immediately after that time the taxpayer disposed of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity, an amount equal to the product obtained by multiplying the amount by which the taxpayer’s exempt capital gains balance, within the meaning of the first paragraph of section 251.1, in relation to the entity for the taxpayer’s taxation year that includes that time exceeds the aggregate of all amounts each of which is the amount by which a capital gain is reduced under the provisions of Chapter II.1 for the year because of the taxpayer’s exempt capital gains balance in relation to the entity or, subject to section 255.1, twice an amount by which a taxable capital gain, or the income from a business, is reduced under the provisions of that chapter for the year because of the taxpayer’s exempt capital gains balance in relation to the entity, by the proportion that the fair market value at that time of the property is of the fair market value at that time of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity;

SHARES OF A CORPORATION

(d)  where the property is a share of the capital stock of a corporation resident in Canada, the amount of every dividend deemed to have been received by the taxpayer under section 504;

(d.1)  where the property is a share of the capital stock of a corporation, the amount of any dividend deemed by paragraph c.1 of section 785.1 to have been received in respect of the share by the taxpayer before that time and while the taxpayer was resident in Canada;

(e)  where the property is a share of the capital stock of a corporation and the taxpayer, after 31 December 1971, makes a contribution of capital to the corporation otherwise than by way of a loan, by way of a disposition of shares of a foreign affiliate of a taxpayer to which section 540 applies or, subject to section 256, by way of a disposition of property in respect of which section 518 or 529 applies, that proportion of such contribution as cannot reasonably be regarded as a benefit conferred by the taxpayer on a person, other than the corporation, who was related to the taxpayer, that

i.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of such share, is of

ii.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of all the shares of the capital stock of such corporation owned by the taxpayer immediately after the contribution of capital;

(e.1)  where the property is a share of the capital stock of a corporation of which the taxpayer was, at any time, a specified shareholder, any expense incurred by the taxpayer in respect of land or a building of the corporation that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164;

(f)  where the property is a share of the capital stock of a corporation, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time and ending after 31 December 1971 by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the share was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were read without reference to sections 49.2 and 58.0.1;

(f.1)  where the property is a share of the capital stock of a corporation, any amount required by paragraph b of section 238.3, or paragraph b of section 535, as it read, before its repeal, in respect of the disposition of that share, to be added;

(g)  where the property is a share of the capital stock of a foreign affiliate of the taxpayer, any amount required by section 587 to be added;

(g.1)  where the property is a share of the capital stock of a corporation, any amount required by subparagraph f of the second paragraph of section 832.23 to be added;

BOND AND SIMILAR OBLIGATION

(h)  the excess of the principal amount of a bond, debenture, bill, hypothecary claim, mortgage or similar obligation over the amount for which it has been issued, if such excess must be included, under sections 122 to 125, in computing the income of the taxpayer for a taxation year beginning before such particular time;

(h.0.0.1)  where the property is a particular commercial obligation, within the meaning assigned by section 485, payable to the taxpayer as consideration for the settlement or extinguishment of another commercial obligation payable to the taxpayer and the taxpayer’s loss from the disposition of the other obligation was reduced because of section 264.0.2, the proportion of the reduction that the principal amount of the particular obligation is of the aggregate of all amounts each of which is the principal amount of a commercial obligation payable to the taxpayer as consideration for the settlement or extinguishment of that other obligation;

INDEXED DEBT OBLIGATIONS

(h.0.1)  where the property is an indexed debt obligation, the amount referred to in paragraph a of section 125.0.1 in respect of the obligation and required to be included in computing the income of the taxpayer for a taxation year beginning before the particular time;

OFFSHORE INVESTMENT FUND PROPERTY

(h.1)  where the property is an offshore investment fund property within the meaning of section 597.1,

i.  any amount included in respect of the property by virtue of section 597.4 in computing the taxpayer’s income for a taxation year commencing before that time, or

ii.  where the taxpayer is a controlled foreign affiliate, within the meaning of section 572, of a person resident in Canada, the amount prescribed;

PARTNERSHIP

(i)  where the property is an interest in a partnership,

i.  an amount in respect of each fiscal period of the partnership ending after 31 December 1971 and before the particular time, equal to the taxpayer’s share, other than a share under an agreement referred to in section 608, of the income of the partnership from any source for that fiscal period, computed as if this Part were construed without reference to

(1)  section 231.2, the fraction “1/2” in section 105, as it applied to a fiscal period of the partnership ending before 1 April 1977, and without reference to that or another fraction in sections 107, 231, 231.1, as it read before being repealed, and 265,

(2)  the reference to the fraction and the letter C in the formula provided for in the first paragraph of section 105.2, and

(3)  paragraphs l and z.4 of section 87, sections 89 to 91, 144, 144.1 and 145, paragraph j of section 157, as it read before being struck out, paragraph b of each of sections 200 and 201, Division XV of Chapter IV, section 425, paragraphs g and h of section 489, as they read before being struck out, the second paragraph of section 497, and the provisions of the Act respecting the application of the Taxation Act (1972, chapter 24), as they read before their repeal, in respect of income from the operation of new mines,

ii.  the share of the taxpayer in any capital dividend and any life insurance capital dividend received by the partnership before the particular time in respect of a share of the capital stock of a corporation while the partnership owned such share,

iii.  the share of the taxpayer in the amount by which any proceeds of a life insurance policy received by the partnership after 31 December 1971 and before the particular time by reason of the death of any person whose life was insured under that policy exceed the adjusted cost basis of that policy, within the meaning of sections 976 and 976.1, to the partnership, immediately before that death,

iv.  where the taxpayer, after 31 December 1971, made a contribution of capital to the partnership otherwise than by way of a loan, that portion of such contribution as cannot reasonably be regarded as a benefit conferred on any other member of the partnership who was related to the taxpayer,

v.  the value, at the time of the taxpayer’s death of the rights or property referred to in section 429 in respect of a partnership interest held by him immediately before his death, other than an interest referred to in section 612, where the particular time is immediately before the taxpayer’s death and the taxpayer was at the particular time a member of the partnership,

v.1.  any amount deemed by section 261.1 to be a gain of the taxpayer,

vi.  (subparagraph repealed),

vii.  any amount deemed by paragraph c of section 618 or section 642 to be a gain of the taxpayer,

vii.1.  a share of the taxpayer’s Canadian development expense or Canadian oil and gas property expense that was deducted at or before the particular time in computing the adjusted cost base to the taxpayer of the interest because of subparagraph ii of paragraph l of section 257 and in respect of which the taxpayer has elected under paragraph d of section 408 or paragraph b of section 418.2, as the case may be,

viii.  an amount deemed, before the particular time, by section 600.1, to be an amount referred to in paragraph b of section 399, in subparagraph i of paragraph b of section 412, in paragraph c of the said section 412, in subparagraph i of paragraph b of section 418.6 or in paragraph c of the said section 418.6 in respect of the taxpayer,

ix.  the amount by which the taxpayer’s share of the amount of any assistance or benefit that the partnership has received or has become entitled to receive after 31 December 1971 and before the particular time from a government, municipality or other public authority, whether as a grant, subsidy, forgivable loan, deduction from royalty or tax, investment allowance or any other form of assistance or benefit, in respect of or related to a Canadian resource property or an exploration or development expense incurred in Canada, exceeds such part of that share of the assistance or benefit as has been repaid before that time by the taxpayer pursuant to a legal obligation to repay all or any part of that share of that assistance or benefit,

x.  any amount required by sections 614 to 617 to be added before that particular time in computing the adjusted cost base to the taxpayer of the interest in the partnership,

xi.  where the taxpayer’s share of any income or loss of the partnership was, at any time, 10% or more, any expense incurred by the taxpayer in respect of land or a building of the partnership that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164, and

xii.  any amount required by subparagraph a of the first paragraph of section 726.9.6 to be added at that time in computing the adjusted cost base to the taxpayer of the interest;

TRUST

(j)  where the property is a capital interest in a trust to which section 596 applies, any amount required by section 597 to be added;

(j.1)  where the property is an interest in a segregated fund trust referred to in section 851.2,

i.  each amount deemed by section 851.3 to be an amount payable to the taxpayer before the particular time in respect of that interest,

ii.  each amount required by section 851.12 to be added before the particular time in respect of that interest,

iii.  each amount in respect of that interest that is a capital gain deemed to have been allocated under section 851.21 to the taxpayer before the particular time, and

iv.  each amount in respect of that interest that before the particular time was deemed under section 851.16 to have been a capital gain of the taxpayer;

(j.2)  where the property is a unit in a mutual fund trust, any amount required by section 1121.3 to be added in computing the adjusted cost base to the taxpayer of the unit;

(j.3)  where the property is a unit of a mutual fund trust, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the unit was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were read without reference to section 58.0.1;

LANDS

(k)  where the property is land of the taxpayer, any amount paid after 31 December 1971 and before the particular time by the taxpayer or by another taxpayer in respect of whom the taxpayer was a person, corporation or partnership described in subparagraph ii of paragraph c of section 165, pursuant to a legal obligation to pay interest on debt relating to the acquisition of land, within the meaning of paragraph c of section 165, or property taxes, not including an income or profits taxes or taxes imposed by reference to the transfer of property, paid by the taxpayer in respect of the property to a province or to a Canadian municipality, to the extent that the amount

i.  was not deductible by reason of section 164 in computing the taxpayer’s income from the land or from a business for any taxation year beginning before that time, or

ii.  was not deductible by reason of section 164 in computing the income of the other taxpayer if the amount was not included in or added to the cost to the other taxpayer of any property otherwise than by reason of paragraph e.1 or subparagraph xi of paragraph i;

(l)  where the property is land used in a farming business which he operates, an amount, with respect to each taxation year ending after 1971 and beginning before such time, equal to the loss of such taxpayer for such year, derived from such farming business, to the extent that such loss

i.  is not deductible in computing the income for that year under section 205,

ii.  is not deducted in computing the taxable income for the taxation year in which the taxpayer disposed of the property or any previous taxation year,

iii.  does not exceed the aggregate of the following amounts, to the extent that those amounts are included in computing the loss:

(1)  taxes, other than income or profits taxes or taxes imposed by reference to the transfer of the property, paid by the taxpayer in that year or payable by the taxpayer in respect of that year to a province or a Canadian municipality in respect of the property, and

(2)  interest, paid by the taxpayer in that year or payable by the taxpayer in respect of that year, pursuant to a legal obligation to pay interest on borrowed money used to acquire the property or on any amount as consideration payable for the property, and

iv.  does not exceed the amount obtained by subtracting from the proceeds of disposition of that property reduced by its adjusted cost base immediately before that time, computed without referring to this paragraph, the aggregate of his losses from his farming business for the taxation years prior to that year and which must be added, under this paragraph, in computing the adjusted cost base of such property;

(m)  (paragraph repealed).

1972, c. 23, s. 237; 1973, c. 17, s. 23; 1974, c. 18, s. 13; 1975, c. 22, s. 42; 1977, c. 26, s. 24; 1978, c. 26, s. 43; 1979, c. 18, s. 20; 1980, c. 13, s. 19; 1982, c. 5, s. 58; 1984, c. 15, s. 62; 1985, c. 25, s. 45; 1986, c. 15, s. 54; 1986, c. 19, s. 42; 1990, c. 59, s. 119; 1993, c. 16, s. 113; 1994, c. 22, s. 123; 1995, c. 49, s. 61; 1996, c. 39, s. 72; 1997, c. 3, s. 71; 1997, c. 14, s. 54; 1997, c. 85, s. 58; 1998, c. 16, s. 104; 2000, c. 5, s. 68; 2001, c. 7, s. 31; 2001, c. 53, s. 47; 2003, c. 2, s. 86; 2004, c. 8, s. 49; 2005, c. 1, s. 81; 2006, c. 36, s. 31.

2006-03-01

255. The taxpayer must, in computing the adjusted cost base of any property at a particular time, add to the cost of such property the following amounts:

MISCELLANEOUS CASES

(a)  the amount deemed to be a gain, under section 261;

(b)  where the property is substituted property, within the meaning of subparagraph a of the first paragraph of section 237, of the taxpayer, the amount by which the amount of the loss that was, because of the acquisition by the taxpayer of the property, a non-allowable loss referred to in that section 237 from a disposition of a property by a taxpayer exceeds, where the property disposed of was a share of the capital stock of a corporation, the amount that would, but for section 237, be deducted under section 741, 741.2 or 742 in computing the loss of any taxpayer from the disposition of the share;

(c)  where the property is an indemnity within the meaning of sections 469 to 479, or is deemed to be such an indemnity under such sections, the amount to be included in the adjusted cost base of that property under paragraph b of section 471;

(c.1)  where the taxpayer is a taxable Canadian corporation and the property was disposed of by another taxable Canadian corporation to the taxpayer in circumstances such that paragraph f.1 does not apply to increase the adjusted cost base to the other corporation of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 239, as it read, before its repeal, in respect of that disposition, or 264.0.1 or is deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.1.1)  where the property was disposed of by a person, other than a person not resident in Canada or a person exempt from tax under this Part on the person’s taxable income, or by an eligible Canadian partnership, within the meaning of section 485, to the taxpayer in circumstances such that paragraph c.1 does not apply to increase the adjusted cost base to the taxpayer of the property, paragraph f.1 does not apply to increase the adjusted cost base to that person of shares of the capital stock of the taxpayer and the capital loss from the disposition was not allowable under section 264.0.1 or deemed under paragraph a of section 535, as it read, before its repeal, in respect of that disposition, to be nil, the amount that would otherwise be the capital loss from the disposition;

(c.2)  the reasonable costs incurred by the taxpayer before the particular time of surveying or valuing the property for the purpose of its acquisition or disposition to the extent that those costs are not otherwise deducted by the taxpayer in computing his income for any taxation year or attributable to any other property;

(c.3)  where the property is immovable property of the taxpayer, any amount required by paragraph b of section 277.2 to be added;

(c.4)  where the property is an interest in or a share of the capital stock of a flow-through entity within the meaning assigned by section 251.1 and the time is after 31 December 2004, an amount equal to the product obtained by multiplying the amount that would, if the definition of "exempt capital gains balance" in section 251.1 were read without reference to "that ends before 1 January 2005", be the taxpayer’s exempt capital gains balance in respect of the entity for the taxpayer’s taxation year 2005 by the proportion that the fair market value at that time of the property is of the fair market value at that time of all the taxpayer’s interests in or shares of the capital stock of the entity;

(c.5)  any amount required under paragraph d of section 259, paragraph b of any of sections 259.1 to 259.3 and 296.1, subparagraph b.2 of the first paragraph of section 301, subparagraph b of the first paragraph of section 543.2 or paragraph b of section 553.2 to be added;

(c.6)  where the property is an interest in, or a share of the capital stock of, a flow-through entity described in any of paragraphs a, b and g to j of the definition of "flow-through entity" in the first paragraph of section 251.1, the time is before 1 January 2005 and immediately after that time the taxpayer disposed of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity, an amount equal to the product obtained by multiplying the amount by which the taxpayer’s exempt capital gains balance, within the meaning of the first paragraph of section 251.1, in relation to the entity for the taxpayer’s taxation year that includes that time exceeds the aggregate of all amounts each of which is the amount by which a capital gain is reduced under the provisions of Chapter II.1 for the year because of the taxpayer’s exempt capital gains balance in relation to the entity or, subject to section 255.1, twice an amount by which a taxable capital gain, or the income from a business, is reduced under the provisions of that chapter for the year because of the taxpayer’s exempt capital gains balance in relation to the entity, by the proportion that the fair market value at that time of the property is of the fair market value at that time of the aggregate of the taxpayer’s interests in, and shares of the capital stock of, the entity;

SHARES OF A CORPORATION

(d)  where the property is a share of the capital stock of a corporation resident in Canada, the amount of every dividend deemed to have been received by the taxpayer under section 504;

(d.1)  where the property is a share of the capital stock of a corporation, the amount of any dividend deemed by paragraph c.1 of section 785.1 to have been received in respect of the share by the taxpayer before that time and while the taxpayer was resident in Canada;

(e)  where the property is a share of the capital stock of a corporation and the taxpayer, after 31 December 1971, makes a contribution of capital to the corporation otherwise than by way of a loan, by way of a disposition of shares of a foreign affiliate of a taxpayer to which section 540 applies or, subject to section 256, by way of a disposition of property in respect of which section 518 or 529 applies, that proportion of such contribution as cannot reasonably be regarded as a benefit conferred by the taxpayer on a person, other than the corporation, who was related to the taxpayer, that

i.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of such share, is of

ii.  the amount that may reasonably be regarded as the increase, as the result of such contribution of capital, in the fair market value of all the shares of the capital stock of such corporation owned by the taxpayer immediately after the contribution of capital;

(e.1)  where the property is a share of the capital stock of a corporation of which the taxpayer was, at any time, a specified shareholder, any expense incurred by the taxpayer in respect of land or a building of the corporation that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164;

(f)  where the property is a share of the capital stock of a corporation, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time and ending after 31 December 1971 by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the share was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were read without reference to sections 49.2 and 58.0.1;

(f.1)  where the property is a share of the capital stock of a corporation, any amount required by paragraph b of section 238.3, or paragraph b of section 535, as it read, before its repeal, in respect of the disposition of that share, to be added;

(g)  where the property is a share of the capital stock of a foreign affiliate of the taxpayer, any amount required by section 587 to be added;

(g.1)  where the property is a share of the capital stock of a corporation, any amount required by subparagraph f of the second paragraph of section 832.23 to be added;

BOND AND SIMILAR OBLIGATION

(h)  the excess of the principal amount of a bond, debenture, bill, hypothecary claim, mortgage or similar obligation over the amount for which it has been issued, if such excess must be included, under sections 122 to 125, in computing the income of the taxpayer for a taxation year beginning before such particular time;

(h.0.0.1)  where the property is a particular commercial obligation, within the meaning assigned by section 485, payable to the taxpayer as consideration for the settlement or extinguishment of another commercial obligation payable to the taxpayer and the taxpayer’s loss from the disposition of the other obligation was reduced because of section 264.0.2, the proportion of the reduction that the principal amount of the particular obligation is of the aggregate of all amounts each of which is the principal amount of a commercial obligation payable to the taxpayer as consideration for the settlement or extinguishment of that other obligation;

INDEXED DEBT OBLIGATIONS

(h.0.1)  where the property is an indexed debt obligation, the amount referred to in paragraph a of section 125.0.1 in respect of the obligation and required to be included in computing the income of the taxpayer for a taxation year beginning before the particular time;

OFFSHORE INVESTMENT FUND PROPERTY

(h.1)  where the property is an offshore investment fund property within the meaning of section 597.1,

i.  any amount included in respect of the property by virtue of section 597.4 in computing the taxpayer’s income for a taxation year commencing before that time, or

ii.  where the taxpayer is a controlled foreign affiliate, within the meaning of section 572, of a person resident in Canada, the amount prescribed;

PARTNERSHIP

(i)  where the property is an interest in a partnership,

i.  an amount in respect of each fiscal period of the partnership ending after 31 December 1971 and before the particular time, equal to the taxpayer’s share, other than a share under an agreement referred to in section 608, of the income of the partnership from any source for that fiscal period, computed as if this Part were construed without reference to

(1)  the fraction "1/2" in section 105, as it applied to each fiscal period of the partnership ending before 1 April 1977, and without reference to that or another fraction in sections 107, 231, 231.1, as it read before being repealed, 231.2 and 265,

(2)  the reference to the fraction and the letter C in the formula provided for in the first paragraph of section 105.2, and

(3)  paragraphs l and z.4 of section 87, sections 89 to 91, 144, 144.1 and 145, paragraph j of section 157, as it read before being struck out, paragraph b of each of sections 200 and 201, Division XV of Chapter IV, section 425, paragraphs g and h of section 489, as they read before being struck out, the second paragraph of section 497, and the provisions of the Act respecting the application of the Taxation Act (1972, chapter 24), as they read before their repeal, in respect of income from the operation of new mines,

ii.  the share of the taxpayer in any capital dividend and any life insurance capital dividend received by the partnership before the particular time in respect of a share of the capital stock of a corporation while the partnership owned such share,

iii.  the share of the taxpayer in the amount by which any proceeds of a life insurance policy received by the partnership after 31 December 1971 and before the particular time by reason of the death of any person whose life was insured under that policy exceed the adjusted cost basis of that policy, within the meaning of sections 976 and 976.1, to the partnership, immediately before that death,

iv.  where the taxpayer, after 31 December 1971, made a contribution of capital to the partnership otherwise than by way of a loan, that portion of such contribution as cannot reasonably be regarded as a benefit conferred on any other member of the partnership who was related to the taxpayer,

v.  the value, at the time of the taxpayer’s death of the rights or property referred to in section 429 in respect of a partnership interest held by him immediately before his death, other than an interest referred to in section 612, where the particular time is immediately before the taxpayer’s death and the taxpayer was at the particular time a member of the partnership,

v.1.  any amount deemed by section 261.1 to be a gain of the taxpayer,

vi.  (paragraph repealed),

vii.  any amount deemed by paragraph c of section 618 or section 642 to be a gain of the taxpayer,

vii.1.  a share of the taxpayer’s Canadian development expense or Canadian oil and gas property expense that was deducted at or before the particular time in computing the adjusted cost base to the taxpayer of the interest because of subparagraph ii of paragraph l of section 257 and in respect of which the taxpayer has elected under paragraph d of section 408 or paragraph b of section 418.2, as the case may be,

viii.  an amount deemed, before the particular time, by section 600.1, to be an amount referred to in paragraph b of section 399, in subparagraph i of paragraph b of section 412, in paragraph c of the said section 412, in subparagraph i of paragraph b of section 418.6 or in paragraph c of the said section 418.6 in respect of the taxpayer,

ix.  the amount by which the taxpayer’s share of the amount of any assistance or benefit that the partnership has received or has become entitled to receive after 31 December 1971 and before the particular time from a government, municipality or other public authority, whether as a grant, subsidy, forgivable loan, deduction from royalty or tax, investment allowance or any other form of assistance or benefit, in respect of or related to a Canadian resource property or an exploration or development expense incurred in Canada, exceeds such part of that share of the assistance or benefit as has been repaid before that time by the taxpayer pursuant to a legal obligation to repay all or any part of that share of that assistance or benefit,

x.  any amount required by sections 614 to 617 to be added before that particular time in computing the adjusted cost base to the taxpayer of the interest in the partnership,

xi.  where the taxpayer’s share of any income or loss of the partnership was, at any time, 10% or more, any expense incurred by the taxpayer in respect of land or a building of the partnership that was not deductible in computing the taxpayer’s income for any taxation year commencing before that time by reason of section 135.4 or 164, and

xii.  any amount required by subparagraph a of the first paragraph of section 726.9.6 to be added at that time in computing the adjusted cost base to the taxpayer of the interest;

TRUST

(j)  where the property is a capital interest in a trust to which section 596 applies, any amount required by section 597 to be added;

(j.1)  where the property is an interest in a segregated fund trust referred to in section 851.2,

i.  each amount deemed by section 851.3 to be an amount payable to the taxpayer before the particular time in respect of that interest,

ii.  each amount required by section 851.12 to be added before the particular time in respect of that interest,

iii.  each amount in respect of that interest that is a capital gain deemed to have been allocated under section 851.21 to the taxpayer before the particular time, and

iv.  each amount in respect of that interest that before the particular time was deemed under section 851.16 to have been a capital gain of the taxpayer;

(j.2)  where the property is a unit in a mutual fund trust, any amount required by section 1121.3 to be added in computing the adjusted cost base to the taxpayer of the unit;

(j.3)  where the property is a unit of a mutual fund trust, the amount of the benefit that, in respect of the acquisition of the property by the taxpayer, is deemed by Division VI of Chapter II of Title II to have been received in any taxation year beginning before the particular time by the taxpayer or by a person that did not deal at arm’s length with the taxpayer or, if the unit was acquired after 27 February 2000, the amount of the benefit that would have been so deemed to have been received if that Division VI were read without reference to section 58.0.1;

LANDS

(k)  where the property is land of the taxpayer, any amount paid after 31 December 1971 and before the particular time by the taxpayer or by another taxpayer in respect of whom the taxpayer was a person, corporation or partnership described in subparagraph ii of paragraph c of section 165, pursuant to a legal obligation to pay interest on debt relating to the acquisition of land, within the meaning of paragraph c of section 165, or property taxes, not including an income or profits taxes or taxes imposed by reference to the transfer of property, paid by the taxpayer in respect of the property to a province or to a Canadian municipality, to the extent that the amount

i.  was not deductible by reason of section 164 in computing the taxpayer’s income from the land or from a business for any taxation year beginning before that time, or

ii.  was not deductible by reason of section 164 in computing the income of the other taxpayer if the amount was not included in or added to the cost to the other taxpayer of any property otherwise than by reason of paragraph e.1 or subparagraph xi of paragraph i;

(l)  where the property is land used in a farming business which he operates, an amount, with respect to each taxation year ending after 1971 and beginning before such time, equal to the loss of such taxpayer for such year, derived from such farming business, to the extent that such loss

i.  is not deductible in computing the income for that year under section 205,

ii.  is not deducted in computing the taxable income for the taxation year in which the taxpayer disposed of the property or any previous taxation year,

iii.  does not exceed the aggregate of the following amounts, to the extent that those amounts are included in computing the loss:

(1)  taxes, other than income or profits taxes or taxes imposed by reference to the transfer of the property, paid by the taxpayer in that year or payable by the taxpayer in respect of that year to a province or a Canadian municipality in respect of the property, and

(2)  interest, paid by the taxpayer in that year or payable by the taxpayer in respect of that year, pursuant to a legal obligation to pay interest on borrowed money used to acquire the property or on any amount as consideration payable for the property, and

iv.  does not exceed the amount obtained by subtracting from the proceeds of disposition of that property reduced by its adjusted cost base immediately before that time, computed without referring to this paragraph, the aggregate of his losses from his farming business for the taxation years prior to that year and which must be added, under this paragraph, in computing the adjusted cost base of such property;

(m)  (paragraph repealed).

1972, c. 23, s. 237; 1973, c. 17, s. 23; 1974, c. 18, s. 13; 1975, c. 22, s. 42; 1977, c. 26, s. 24; 1978, c. 26, s. 43; 1979, c. 18, s. 20; 1980, c. 13, s. 19; 1982, c. 5, s. 58; 1984, c. 15, s. 62; 1985, c. 25, s. 45; 1986, c. 15, s. 54; 1986, c. 19, s. 42; 1990, c. 59, s. 119; 1993, c. 16, s. 113; 1994, c. 22, s. 123; 1995, c. 49, s. 61; 1996, c. 39, s. 72; 1997, c. 3, s. 71; 1997, c. 14, s. 54; 1997, c. 85, s. 58; 1998, c. 16, s. 104; 2000, c. 5, s. 68; 2001, c. 7, s. 31; 2001, c. 53, s. 47; 2003, c. 2, s. 86; 2004, c. 8, s. 49; 2005, c. 1, s. 81.