I-3 - Taxation Act

Section 259.2 Disposition versions

2006-03-01

259.2. The rules provided in the second paragraph apply where

(a)  at any time in a taxation year a person or partnership, in this section referred to as “the vendor”, disposes of a specified property to another person or partnership, in this section referred to as “the transferee” ;

(b)  immediately before that time, the vendor and the transferee did not deal with each other at arm’s length or would not have dealt with each other at arm’s length had this section applied with reference to subparagraph k of the first paragraph of section 485.3;

(c)  paragraph b would apply in respect of the disposition if each right referred to in paragraph b of section 20 that is a right of the transferee to acquire the specified property from the vendor or a right of the transferee to acquire other property as part of a transaction or event or series of transactions or events that includes the disposition were not taken into account; and

(d)  the proceeds of the disposition are not determined under any of the provisions referred to in section 259.1.

The rules to which the first paragraph refers are as follows:

(a)  the transferee shall deduct after that time, in computing the adjusted cost base to the transferee of the property, the amount by which the aggregate of all amounts deducted under paragraph b.1 of section 257 in computing, immediately before that time, the adjusted cost base to the vendor of the property exceeds the amount that would be the vendor’s capital gain for the year from the disposition if this Part were read without reference to subparagraph b of the first paragraph of section 234 and section 638; and

(b)  the transferee shall add after that time, in computing the adjusted cost base to the transferee of the property, the amount determined under paragraph a in respect of the disposition.

1996, c. 39, s. 76; 1997, c. 3, s. 71; 2001, c. 7, s. 34.