I-3 - Taxation Act

Section 440 Disposition versions

2009-05-15

440. Notwithstanding section 436, where property referred to therein is, as a consequence of the death of an individual who was resident in Canada immediately before his death, transferred or distributed to his spouse who was resident in Canada immediately before the individual’s death or to a trust created by the individual’s will, which was resident in Canada immediately after the time when the property was indefeasibly vested in the trust, if it can be shown, within the period ending 36 months after the death of the individual or, where written application therefor has been made to the Minister by the individual’s legal representative before the expiry of that period, within such longer period as the Minister considers reasonable, that the property has become vested indefeasibly in the spouse or trust,

(a)  subject to subparagraph a.1, the individual is deemed to have, immediately before his death, disposed of the property and received proceeds of disposition therefor equal to the following amount, and the spouse or the trust is deemed to have acquired the property at the time of the death at a cost equal to those proceeds:

i.  where the property was depreciable property of a prescribed class, the lesser of the capital cost and the cost amount to the individual of the property immediately before his death, and

ii.  in any other case, the adjusted cost base of the property to the individual immediately before his death;

(a.1)  where the property is an interest in a partnership, other than an interest to which section 636 applies,

i.  the individual is deemed, except for the purposes of section 632, not to have disposed of the property as a consequence of his death,

ii.  the spouse or the trust is deemed to have acquired the property at the time of the death at a cost equal to its cost to the individual, and

iii.  each amount added or deducted under section 255 or 257, as the case may be, in computing the adjusted cost base to the individual of the property is deemed to be required by that section 255 or 257 to be added or deducted in computing the adjusted cost base to the spouse or the trust of the property; and

(b)  section 439 applies to depreciable property of a prescribed class as if the reference therein to section 436 were a reference to subparagraph a of the first paragraph of section 440;

(c)  (subparagraph repealed).

The first paragraph applies only where the will creating the trust entitles the spouse to receive all of the income of the trust that arises before the spouse’s death, and no person except the spouse may receive or otherwise obtain enjoyment of any of the income or capital of the trust.

1972, c. 23, s. 366; 1973, c. 17, s. 47; 1975, c. 22, s. 97; 1984, c. 15, s. 97; 1986, c. 19, s. 98; 1993, c. 16, s. 183; 1994, c. 22, s. 169; 1995, c. 49, s. 126; 1997, c. 3, s. 71; 2009, c. 5, s. 145.

2006-03-01

440. Notwithstanding section 436, where property referred to therein is, as a consequence of the death of an individual who was resident in Canada immediately before his death, transferred or assigned to his spouse who was resident in Canada immediately before the individual’s death or to a trust created by the individual’s will, which was resident in Canada immediately after the time when the property was indefeasibly vested in the trust, if it can be shown, within the period ending 36 months after the death of the individual or, where written application therefor has been made to the Minister by the individual’s legal representative before the expiry of that period, within such longer period as the Minister considers reasonable, that the property has become vested indefeasibly in the spouse or trust,

(a)  subject to subparagraph a.1, the individual is deemed to have, immediately before his death, disposed of the property and received proceeds of disposition therefor equal to the following amount, and the spouse or the trust is deemed to have acquired the property at the time of the death at a cost equal to those proceeds:

i.  where the property was depreciable property of a prescribed class, the lesser of the capital cost and the cost amount to the individual of the property immediately before his death, and

ii.  in any other case, the adjusted cost base of the property to the individual immediately before his death;

(a.1)  where the property is an interest in a partnership, other than an interest to which section 636 applies,

i.  the individual is deemed, except for the purposes of section 632, not to have disposed of the property as a consequence of his death,

ii.  the spouse or the trust is deemed to have acquired the property at the time of the death at a cost equal to its cost to the individual, and

iii.  each amount added or deducted under section 255 or 257, as the case may be, in computing the adjusted cost base to the individual of the property is deemed to be required by that section 255 or 257 to be added or deducted in computing the adjusted cost base to the spouse or the trust of the property; and

(b)  section 439 applies to depreciable property of a prescribed class as if the reference therein to section 436 were a reference to subparagraph a of the first paragraph of section 440;

(c)  (subparagraph repealed).

The first paragraph applies only where the will creating the trust entitles the spouse to receive all of the income of the trust that arises before the spouse’s death, and no person except the spouse may receive or otherwise obtain enjoyment of any of the income or capital of the trust.

1972, c. 23, s. 366; 1973, c. 17, s. 47; 1975, c. 22, s. 97; 1984, c. 15, s. 97; 1986, c. 19, s. 98; 1993, c. 16, s. 183; 1994, c. 22, s. 169; 1995, c. 49, s. 126; 1997, c. 3, s. 71.