I-3 - Taxation Act

Section 524.0.1 Disposition versions

2019-06-19

524.0.1. (Repealed).

1994, c. 22, s. 197; 1995, c. 49, s. 139; 1996, c. 39, s. 147; 1997, c. 3, s. 71; 1997, c. 85, s. 89; 2003, c. 2, s. 135; 2005, c. 1, s. 119; 2015, c. 24, s. 81; 2019, c. 14, s. 151.

2015-10-26

524.0.1. Where incorporeal capital property in respect of a business of a taxpayer was disposed of by the taxpayer to a corporation and the election referred to in section 518 was made in respect of the property, the corporation shall, for the purpose of determining after the disposition time the amount to be included under paragraph a or b of section 105 in computing its income,

(a)  add to the amount otherwise determined under subparagraph c of the second paragraph of section 105.2, the amount determined by the formula

1/2 × [(A × B/C) - 2 (D - E)] + F +G; and

(b)  add to the amount otherwise determined under subparagraph a of the first and second paragraphs of section 107, the amount determined by the formula

(H × B/C) + I + J.

In the formulas in the first paragraph,

(a)  A is the amount determined in respect of the taxpayer’s business under subparagraph ii of subparagraph a of the second paragraph of section 107 immediately before the disposition time;

(b)  B is the fair market value immediately before the disposition time of the incorporeal capital property; and

(c)  C is the total of the fair market value immediately before the disposition time of all incorporeal capital property of the taxpayer in respect of the taxpayer’s business and each amount that was described in subparagraph b in respect of an earlier disposition made after the taxpayer’s adjustment time;

(d)  D is the amount that would be included under section 105 in computing the taxpayer’s income as a result of the disposition if the amounts determined under subparagraphs c and d of the second paragraph of section 105.2 were nil;

(e)  E is the amount that would be included under section 105 in computing the taxpayer’s income as a result of the disposition if the amount determined under subparagraph d of the second paragraph of section 105.2 were nil;

(e.1)  F is the total of all amounts each of which is an amount determined under subparagraph a of the first paragraph as it applied to the taxpayer in respect of a disposition to the corporation on or before the disposition time;

(e.2)  G is the total of all amounts each of which is an amount determined under paragraph b of section 560.3 as it applied to the taxpayer in respect of a winding-up before the disposition time;

(e.3)  H is the amount that would be determined under subparagraph a of the second paragraph of section 107 in respect of the taxpayer’s business at the beginning of the taxpayer’s subsequent taxation year if the taxpayer’s taxation year that includes the disposition time had ended immediately after the disposition time and if, in respect of the disposition, this Act were read without reference to section 524.0.2;

(e.4)  I is the total of all amounts each of which is an amount determined under subparagraph b of the first paragraph as it applied to the taxpayer in respect of a disposition to the corporation on or before the disposition time; and

(e.5)  J is the total of all amounts each of which is an amount determined under paragraph a of section 560.3 as it applied to the taxpayer in respect of a winding-up before the disposition time;

(f)  (subparagraph repealed);

(g)  (subparagraph repealed).

1994, c. 22, s. 197; 1995, c. 49, s. 139; 1996, c. 39, s. 147; 1997, c. 3, s. 71; 1997, c. 85, s. 89; 2003, c. 2, s. 135; 2005, c. 1, s. 119; 2015, c. 24, s. 81.

2006-03-01

524.0.1. Where incorporeal capital property in respect of a business of a taxpayer was disposed of by the taxpayer to a corporation and the election referred to in section 518 was made in respect of the property, for the purpose of determining, after the time of the disposition, the amount to be included under paragraph b of section 105 in computing the income of the corporation, the corporation shall add to the amount otherwise determined under subparagraph ii of subparagraph a of the second paragraph of section 107, the amount determined by the formula

[A × (B / C)] − 2 (D − E).

For the purposes of the formula in the first paragraph,

(a)  A is the amount determined in respect of the taxpayer’s business under subparagraph ii of subparagraph a of the second paragraph of section 107 immediately before the time of the disposition;

(b)  B is the fair market value immediately before that time of the incorporeal capital property;

(c)  C is the fair market value immediately before that time of the aggregate of the incorporeal capital property of the taxpayer in respect of the taxpayer’s business;

(d)  D is the amount that would be included under section 105 in computing the taxpayer’s income as a result of the disposition if the amounts determined under subparagraphs c and d of the second paragraph of section 105.2 were nil;

(e)  E is the amount that would be included under section 105 in computing the taxpayer’s income as a result of the disposition if the amount determined under subparagraph d of the second paragraph of section 105.2 were nil;

(f)  (subparagraph repealed);

(g)  (subparagraph repealed).

1994, c. 22, s. 197; 1995, c. 49, s. 139; 1996, c. 39, s. 147; 1997, c. 3, s. 71; 1997, c. 85, s. 89; 2003, c. 2, s. 135; 2005, c. 1, s. 119.