I-3 - Taxation Act

Section 299 Disposition versions

2006-03-01

299. Where a taxpayer establishes that a debt owing to him at the end of a taxation year, other than a debt resulting from the disposition of a personal-use property, is a bad debt for the year, he is deemed, if he so elects in the taxpayer’s fiscal return filed under this Part for the year, to have disposed of it at that time for proceeds equal to nil and to have reacquired it immediately thereafter at a cost equal to nil.

The same rule applies where the taxpayer is the owner, at the end of a taxation year, of a share other than a share received by him as consideration in respect of the disposition of personal-use property, of the capital stock of

(a)  a corporation that has during the year become a bankrupt;

(b)  a corporation referred to in section 6 of the Winding-up Act (Revised Statutes of Canada, 1985, chapter W-11) that is insolvent within the meaning of that Act and in respect of which a winding-up order under that Act has been made in the year; or

(c)  a corporation that is insolvent at the end of the year if, at that time,

i.  neither the corporation nor a corporation controlled by it carries on business,

ii.  the fair market value of the share is nil, and

iii.  it is reasonable to expect that the corporation will be dissolved or wound up and will not recommence to carry on any business.

1972, c. 23, s. 275; 1979, c. 18, s. 22; 1987, c. 67, s. 72; 1990, c. 59, s. 136; 1993, c. 16, s. 121; 1995, c. 49, s. 236; 1996, c. 39, s. 92; 1997, c. 3, s. 71.