I-3 - Taxation Act

Section 605.1 Disposition versions

2019-06-19

605.1. For the purposes of this Part, where at a particular time a person resident in Canada becomes a member of a partnership, or a person who is a member of a partnership becomes resident in Canada, and immediately before the particular time no member of the partnership is resident in Canada, the following rules apply for the purpose of computing the partnership’s income for fiscal periods ending after the particular time:

(a)  where, at or before the particular time, the partnership held depreciable property of a prescribed class, other than taxable Canadian property,

i.  no amount shall be included in determining the amounts under subparagraphs i, ii.1 and ii.2 of subparagraph e of the first paragraph of section 93 and under subparagraphs c to f of the second paragraph of that section in respect of the acquisition or disposition before the particular time of the property, and

ii.  where the property is the partnership’s property at the particular time, the property is deemed to have been acquired, immediately after the particular time, by the partnership at a capital cost equal to the lesser of its fair market value and its capital cost to the partnership otherwise determined;

(b)  in the case of the partnership’s property that is inventory, other than inventory of a business carried on in Canada, or non-depreciable capital property, other than taxable Canadian property, of the partnership at the particular time, its cost to the partnership is deemed to be, immediately after the particular time, equal to the lesser of its fair market value and its cost to the partnership otherwise determined; and

(c)  any loss in respect of the disposition of a property, other than inventory of a business carried on in Canada or taxable Canadian property, by the partnership before the particular time is deemed to be nil;

(d)  (paragraph repealed).

1995, c. 49, s. 149; 1997, c. 3, s. 71; 2001, c. 53, s. 87; 2005, c. 1, s. 121; 2019, c. 14, s. 161.

2006-03-01

605.1. For the purposes of this Part, where at a particular time a person resident in Canada becomes a member of a partnership, or a person who is a member of a partnership becomes resident in Canada, and immediately before the particular time no member of the partnership is resident in Canada, the following rules apply for the purpose of computing the partnership’s income for fiscal periods ending after the particular time:

(a)  where, at or before the particular time, the partnership held depreciable property of a prescribed class, other than taxable Canadian property,

i.  no amount shall be included in determining the amounts under subparagraphs i, ii.1 and ii.2 of subparagraph e of the first paragraph of section 93 and under subparagraphs c to f of the second paragraph of that section in respect of the acquisition or disposition before the particular time of the property, and

ii.  where the property is the partnership’s property at the particular time, the property is deemed to have been acquired, immediately after the particular time, by the partnership at a capital cost equal to the lesser of its fair market value and its capital cost to the partnership otherwise determined;

(b)  in the case of the partnership’s property that is inventory, other than inventory of a business carried on in Canada, or non-depreciable capital property, other than taxable Canadian property, of the partnership at the particular time, its cost to the partnership is deemed to be, immediately after the particular time, equal to the lesser of its fair market value and its cost to the partnership otherwise determined;

(c)  any loss in respect of the disposition of a property, other than inventory of a business carried on in Canada or taxable Canadian property, by the partnership before the particular time is deemed to be nil; and

(d)  where 4/3 of the eligible incorporeal capital amount in respect of a business carried on at the particular time outside Canada by the partnership exceeds the total of the fair market value of each incorporeal capital property in respect of the business at that time, the partnership is deemed to have, immediately after that time, disposed of incorporeal capital property in respect of the business for proceeds equal to the excess and to have received those proceeds.

1995, c. 49, s. 149; 1997, c. 3, s. 71; 2001, c. 53, s. 87; 2005, c. 1, s. 121.