I-3 - Taxation Act

Section 259 Disposition versions

2006-03-01

259. When at a particular time after 1971 a taxpayer owns a property or a group of identical properties acquired after 1971 and acquires thereafter one or several other properties called “new property” in this section, identical to the first, the following rules apply to determine, at a later date, the adjusted cost base of each such identical property:

(a)  the taxpayer is deemed to have disposed immediately before the particular time of each first property for an amount equal to its adjusted cost base;

(b)  the taxpayer is deemed to have acquired each such identical first and new property at the particular time at a mean cost equal to the quotient obtained by dividing the aggregate of the adjusted cost bases of the first properties immediately before the particular time and the cost of the new property,

i.  by the number of such identical properties owned by the taxpayer immediately after such particular time, or

ii.  in the case of identical properties that are bonds, debentures, bills or notes, or other similar obligations issued by a debtor, by the quotient obtained by dividing the aggregate of the principal amounts of all such properties immediately after the particular time by the principal amount of the identical property;

(c)  the taxpayer shall deduct, after the particular time, in computing the adjusted cost base to the taxpayer of each such first and new identical property, an amount equal to the quotient obtained by dividing the aggregate of all amounts deducted under paragraph b.1 of section 257 in computing immediately before the particular time the adjusted cost base to the taxpayer of the first properties

i.  by the number of such identical properties owned by the taxpayer immediately after the particular time, or

ii.  in the case of properties referred to in subparagraph ii of paragraph b, by the quotient determined under that subparagraph in respect of the acquisition; and

(d)  the taxpayer shall add, after the particular time, in computing the adjusted cost base to the taxpayer of each such first and new identical property the amount determined under paragraph c in respect of the identical property.

1972, c. 23, s. 239; 1975, c. 22, s. 46; 1990, c. 59, s. 121; 1996, c. 39, s. 75.