I-3 - Taxation Act

Section 726.6 Disposition versions

2019-06-19

726.6. In this Title, the expression

(a)  (subparagraph repealed);

(a.0.1)  (subparagraph repealed);

(a.0.2)  “qualified farm or fishing property”, of an individual (other than a trust that is not a personal trust) at any time, means a property that is owned at that time by the individual, the spouse of the individual or a partnership, an interest in which is an interest in a family farm or fishing partnership of the individual or the individual’s spouse and that is

i.  an immovable or a fishing boat that was used in the course of carrying on a farming or fishing business in Canada by

(1)  the individual,

(2)  where the individual is a personal trust, a beneficiary under the trust that is entitled to receive directly from the trust all or part of the income or capital of the trust,

(3)  the spouse, a child or the father or mother of an individual referred to in subparagraph 1 or 2,

(4)  a corporation, a share of the capital stock of which is a share of the capital stock of a family farm or fishing corporation of an individual referred to in any of subparagraphs 1 to 3, or

(5)  a partnership, an interest in which is an interest in a family farm or fishing partnership of an individual referred to in any of subparagraphs 1 to 3,

ii.  a share of the capital stock of a family farm or fishing corporation of the individual or the individual’s spouse,

iii.  an interest in a family farm or fishing partnership of the individual or the individual’s spouse, or

iv.  a property included in Class 14.1 of Schedule B to the Regulation respecting the Taxation Act (chapter I-3, r. 1), used in the course of carrying on a farming or fishing business in Canada by a person or partnership referred to in any of subparagraphs 1 to 5 of subparagraph i or by a personal trust from which the individual acquired the property;

(a.1)  “child” means a child within the meaning of subparagraph d of the first paragraph of section 451;

(a.2)  “investment expense” of an individual for a taxation year means an amount equal to the amount by which the aggregate of the amount included in computing the individual’s income for the year under section 313.10 and the amount included in computing the individual’s taxable income for the year under section 737.0.1 is exceeded by the aggregate of

i.  the aggregate of all amounts each of which is an amount deducted in computing his income for the year from property, except to the extent that the amount was otherwise taken into account in computing his investment expense or his investment income for the year, other than any such amount deducted under

(1)  section 147, 160, 163, 176, 176.4 or 178, in respect of borrowed money that was used by the individual, or that was used to acquire property that was used by the individual, to make a payment as consideration for an income-averaging annuity contract, to pay a premium under a registered retirement savings plan or to make a contribution to a registered pension plan, a pooled registered pension plan or a deferred profit sharing plan, or

(2)  section 177, the first paragraph of section 360 or section 371, 401, 413, 414, 418.1.10 or 418.7,

ii.  the aggregate of

(1)  all amounts each of which is an amount deducted under section 147, paragraph d of section 157 or section 160, 163, 176, 176.4, 178 or 179 in computing his income for the year from a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 147.2 or 176.3 in computing his income for the year in respect of an expense incurred by a partnership of which he was a specified member in the fiscal period thereof ending immediately before the partnership ceased to exist,

iii.  the aggregate of

(1)  all amounts, other than allowable capital losses, each of which is an amount deducted in computing his income for the year in respect of his share of any loss of a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 733.0.0.1 in computing his taxable income for the year,

iv.  50% of the aggregate of all amounts each of which is an amount deducted under section 371, 401, 413, 414, 418.1.10 or 418.7 in computing his income for the year in respect of expenses incurred and renounced under section 359.2, 359.2.1, 359.4 or 359.6 by a corporation or in respect of expenses incurred by a partnership of which he was a specified member in the fiscal period of the partnership in which the expense was incurred, other than any such expense that would be referred to in subparagraph i of paragraph a of section 726.4.10 if the reference therein to “30 June 1988” were a reference to “31 December 1988”,

v.  the aggregate of all amounts each of which is the amount of his loss for the year from property or from renting or leasing a rental property within the meaning of section 130R88 of the Regulation respecting the Taxation Act (chapter I-3, r. 1) or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member other than a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

vi.  the amount by which the aggregate of his net capital losses for other taxation years deducted under section 729 in computing his taxable income for the year exceeds the amount determined in respect of the individual for the year under subparagraph 1 of subparagraph ii of subparagraph b;

vii.  the amount deducted in computing the individual’s income for the year under section 336.6;

(a.3)  (subparagraph repealed);

(a.4)  (subparagraph repealed);

(a.5)  “interest in a family farm or fishing partnership”, of an individual (other than a trust that is not a personal trust) at any time, means a partnership interest owned by the individual at that time if

i.  throughout any 24-month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to

(1)  property that was used by the partnership or any of the persons or partnerships described in the second paragraph, principally in the course of carrying on a farming or fishing business in Canada in which the individual, a beneficiary referred to in subparagraph b of the second paragraph or the spouse, a child or the father or mother of the individual or of such a beneficiary was actively engaged on a regular and continuous basis,

(2)  shares of the capital stock or indebtedness of one or more corporations of which all or substantially all of the fair market value of the property was attributable to property described in subparagraph 4,

(3)  a partnership interest in or indebtedness of one or more partnerships of which all or substantially all of the fair market value of the property was attributable to property described in subparagraph 4, or

(4)  property described in any of subparagraphs 1 to 3, and

ii.  at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in subparagraph 4 of subparagraph i;

(b)  “annual gains limit” of an individual for a taxation year means the amount, if any, by which

i.  the lesser of

(1)  the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses, and

(2)  the amount that would be determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified farm properties or qualified fishing properties, within the meaning of subparagraphs a and a.0.1, as they read before being struck out, qualified farm or fishing properties and qualified small business corporation shares, exceeds

ii.  the aggregate of

(1)  the amount by which the individual’s net capital losses for other taxation years deducted under section 729 in computing the individual’s taxable income for the year exceeds the amount by which the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses exceeds the amount determined under subparagraph i in respect of the individual for the year, and

(2)  the individual’s allowable business investment losses for the year;

(c)  “cumulative gains limit” of an individual at the end of a taxation year means the amount, if any, by which

i.  the aggregate of all amounts determined under subparagraph i of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984, exceeds

ii.  the aggregate of

(1)  all amounts determined under subparagraph ii of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984,

(2)  the amount deducted by the individual under subparagraph iii of subparagraph c of the first paragraph of section 28 in computing his income for the taxation year 1985,

(3)  all amounts deducted by the individual under this Title in computing his taxable income for preceding taxation years, and

(4)  the individual’s cumulative net investment loss at the end of the year;

(d)  “cumulative net investment loss” of an individual at the end of a taxation year means the amount by which

i.  the aggregate of all amounts each of which is the investment expense of the individual for the year or a preceding taxation year ending after 31 December 1987, exceeds

ii.  the aggregate of all amounts each of which is the investment income of the individual for the year or a preceding taxation year ending after 31 December 1987;

(e)  “investment income” of an individual for a taxation year means the aggregate of the following amounts:

i.  the aggregate of all amounts each of which is an amount included in computing his income for the year from property, other than an amount included under section 113, paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for that year before being struck out, including any amount so included under section 94 in respect of a property the income from which would be income from property, except to the extent that the amount was otherwise taken into account in computing his investment income or investment expense for the year,

ii.  the aggregate of all amounts, other than taxable capital gains, each of which is an amount included in computing his income for the year in respect of his share of the income of a partnership of which he was a specified member in the fiscal period thereof ending in the year, including his share of all amounts included in computing the income of the partnership under section 94,

iii.  50% of all amounts included in computing his income for the year under paragraphs c to e.1 of section 330,

iv.  the aggregate of all amounts each of which is the amount of his income for the year from property or from renting or leasing a rental property within the meaning of section 130R88 of the Regulation respecting the Taxation Act or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member, other than a partnership of which he was a specified member in the fiscal period thereof ending in the year, including any amount included in computing his income for the year under section 94 in respect of a rental property of the individual or the partnership or in respect of a property any income from which would be income from property,

v.  the amount by which the aggregate of all amounts, other than amounts in respect of an income-averaging annuity contract, an income-averaging annuity contract respecting income from artistic activities or an annuity contract purchased pursuant to a deferred profit sharing plan or a revoked plan, referred to in section 879, included in computing the individual’s income for the year under paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for the year before being struck out, exceeds the aggregate of all amounts deducted under paragraph f of section 336 in computing the individual’s income for the year; and

vi.  the amount by which the aggregate of all amounts included under paragraph b of section 28 in respect of capital gains and capital losses in computing his income for the year exceeds the amount determined in respect of the individual for the year under subparagraph i of subparagraph b.

The persons and partnerships referred to in subparagraph 1 of subparagraph i of subparagraph a.5 of the first paragraph are

(a)  the individual;

(b)  where the individual is a personal trust, a beneficiary of the trust;

(c)  a spouse, a child or the father or mother of the individual or of a beneficiary referred to in subparagraph b;

(d)  a corporation, a share of the capital stock of which was a share of the capital stock of a family farm or fishing corporation of the individual, of a beneficiary referred to in subparagraph b or of the spouse, a child or the father or mother of the individual or of such a beneficiary; or

(e)  a partnership, an interest in which was an interest in a family farm or fishing partnership of the individual, of a beneficiary referred to in subparagraph b or of the spouse, a child or the father or mother of the individual or of such a beneficiary.

1987, c. 67, s. 142; 1990, c. 59, s. 258; 1993, c. 16, s. 264; 1994, c. 22, s. 247; 1995, c. 49, s. 164; 1996, c. 39, s. 179; 1997, c. 3, s. 71; 1997, c. 14, s. 104; 1998, c. 16, s. 251; 2004, c. 8, s. 140; 2004, c. 21, s. 120; 2005, c. 1, s. 138; 2005, c. 23, s. 75; 2005, c. 38, s. 89; 2006, c. 13, s. 51; 2007, c. 12, s. 73; 2009, c. 15, s. 114; 2015, c. 21, s. 254; 2017, c. 29, s. 96; 2019, c. 14, s. 189.

2017-12-07

726.6. In this Title, the expression

(a)  (subparagraph repealed);

(a.0.1)  (subparagraph repealed);

(a.0.2)  “qualified farm or fishing property”, of an individual (other than a trust that is not a personal trust) at any time, means a property that is owned at that time by the individual, the spouse of the individual or a partnership, an interest in which is an interest in a family farm or fishing partnership of the individual or the individual’s spouse and that is

i.  an immovable or a fishing boat that was used in the course of carrying on a farming or fishing business in Canada by

(1)  the individual,

(2)  where the individual is a personal trust, a beneficiary under the trust that is entitled to receive directly from the trust all or part of the income or capital of the trust,

(3)  the spouse, a child or the father or mother of an individual referred to in subparagraph 1 or 2,

(4)  a corporation, a share of the capital stock of which is a share of the capital stock of a family farm or fishing corporation of an individual referred to in any of subparagraphs 1 to 3, or

(5)  a partnership, an interest in which is an interest in a family farm or fishing partnership of an individual referred to in any of subparagraphs 1 to 3,

ii.  a share of the capital stock of a family farm or fishing corporation of the individual or the individual’s spouse,

iii.  an interest in a family farm or fishing partnership of the individual or the individual’s spouse, or

iv.  an incorporeal capital property used in the course of carrying on a farming or fishing business in Canada by a person or partnership referred to in any of subparagraphs 1 to 5 of subparagraph i or by a personal trust from which the individual acquired the capital property;

(a.1)  “child” means a child within the meaning of subparagraph d of the first paragraph of section 451;

(a.2)  “investment expense” of an individual for a taxation year means an amount equal to the amount by which the aggregate of the amount included in computing the individual’s income for the year under section 313.10 and the amount included in computing the individual’s taxable income for the year under section 737.0.1 is exceeded by the aggregate of

i.  the aggregate of all amounts each of which is an amount deducted in computing his income for the year from property, except to the extent that the amount was otherwise taken into account in computing his investment expense or his investment income for the year, other than any such amount deducted under

(1)  section 147, 160, 163, 176, 176.4 or 178, in respect of borrowed money that was used by the individual, or that was used to acquire property that was used by the individual, to make a payment as consideration for an income-averaging annuity contract, to pay a premium under a registered retirement savings plan or to make a contribution to a registered pension plan, a pooled registered pension plan or a deferred profit sharing plan, or

(2)  section 177, the first paragraph of section 360 or section 371, 401, 413, 414, 418.1.10 or 418.7,

ii.  the aggregate of

(1)  all amounts each of which is an amount deducted under section 147, paragraph d of section 157 or section 160, 163, 176, 176.4, 178 or 179 in computing his income for the year from a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 147.2 or 176.3 in computing his income for the year in respect of an expense incurred by a partnership of which he was a specified member in the fiscal period thereof ending immediately before the partnership ceased to exist,

iii.  the aggregate of

(1)  all amounts, other than allowable capital losses, each of which is an amount deducted in computing his income for the year in respect of his share of any loss of a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 733.0.0.1 in computing his taxable income for the year,

iv.  50% of the aggregate of all amounts each of which is an amount deducted under section 371, 401, 413, 414, 418.1.10 or 418.7 in computing his income for the year in respect of expenses incurred and renounced under section 359.2, 359.2.1, 359.4 or 359.6 by a corporation or in respect of expenses incurred by a partnership of which he was a specified member in the fiscal period of the partnership in which the expense was incurred, other than any such expense that would be referred to in subparagraph i of paragraph a of section 726.4.10 if the reference therein to “30 June 1988” were a reference to “31 December 1988”,

v.  the aggregate of all amounts each of which is the amount of his loss for the year from property or from renting or leasing a rental property within the meaning of section 130R88 of the Regulation respecting the Taxation Act (chapter I-3, r. 1) or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member other than a partnership of which he was a specified member in the fiscal year thereof ending in the year, and

vi.  the amount by which the aggregate of his net capital losses for other taxation years deducted under section 729 in computing his taxable income for the year exceeds the amount determined in respect of the individual for the year under subparagraph 1 of subparagraph ii of subparagraph b;

vii.  the amount deducted in computing the individual’s income for the year under section 336.6;

(a.3)  (subparagraph repealed);

(a.4)  (subparagraph repealed);

(a.5)  “interest in a family farm or fishing partnership”, of an individual (other than a trust that is not a personal trust) at any time, means a partnership interest owned by the individual at that time if

i.  throughout any 24-month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to

(1)  property that was used by the partnership or any of the persons or partnerships described in the third paragraph, principally in the course of carrying on a farming or fishing business in Canada in which the individual, a beneficiary referred to in subparagraph b of the third paragraph or the spouse, a child or the father or mother of the individual or of such a beneficiary was actively engaged on a regular and continuous basis,

(2)  shares of the capital stock or indebtedness of one or more corporations of which all or substantially all of the fair market value of the property was attributable to property described in subparagraph 4,

(3)  a partnership interest in or indebtedness of one or more partnerships of which all or substantially all of the fair market value of the property was attributable to property described in subparagraph 4, or

(4)  property described in any of subparagraphs 1 to 3, and

ii.  at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in subparagraph 4 of subparagraph i;

(b)  “annual gains limit” of an individual for a taxation year means the amount, if any, by which

i.  the lesser of

(1)  the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses, and

(2)  the amount that would be determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified farm properties or qualified fishing properties, within the meaning of subparagraphs a and a.0.1, as they read before being struck out, qualified farm or fishing properties and qualified small business corporation shares, exceeds

ii.  the aggregate of

(1)  the amount by which the individual’s net capital losses for other taxation years deducted under section 729 in computing the individual’s taxable income for the year exceeds the amount by which the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses exceeds the amount determined under subparagraph i in respect of the individual for the year, and

(2)  the individual’s allowable business investment losses for the year;

(c)  “cumulative gains limit” of an individual at the end of a taxation year means the amount, if any, by which

i.  the aggregate of all amounts determined under subparagraph i of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984, exceeds

ii.  the aggregate of

(1)  all amounts determined under subparagraph ii of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984,

(2)  the amount deducted by the individual under subparagraph iii of subparagraph c of the first paragraph of section 28 in computing his income for the taxation year 1985,

(3)  all amounts deducted by the individual under this Title in computing his taxable income for preceding taxation years, and

(4)  the individual’s cumulative net investment loss at the end of the year;

(d)  “cumulative net investment loss” of an individual at the end of a taxation year means the amount by which

i.  the aggregate of all amounts each of which is the investment expense of the individual for the year or a preceding taxation year ending after 31 December 1987, exceeds

ii.  the aggregate of all amounts each of which is the investment income of the individual for the year or a preceding taxation year ending after 31 December 1987;

(e)  “investment income” of an individual for a taxation year means the aggregate of the following amounts:

i.  the aggregate of all amounts each of which is an amount included in computing his income for the year from property, other than an amount included under section 113, paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for that year before being struck out, including any amount so included under section 94 in respect of a property the income from which would be income from property, except to the extent that the amount was otherwise taken into account in computing his investment income or investment expense for the year,

ii.  the aggregate of all amounts, other than taxable capital gains, each of which is an amount included in computing his income for the year in respect of his share of the income of a partnership of which he was a specified member in the fiscal period thereof ending in the year, including his share of all amounts included in computing the income of the partnership under section 94,

iii.  50% of all amounts included in computing his income for the year under paragraphs c to e.1 of section 330,

iv.  the aggregate of all amounts each of which is the amount of his income for the year from property or from renting or leasing a rental property within the meaning of section 130R88 of the Regulation respecting the Taxation Act or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member, other than a partnership of which he was a specified member in the fiscal year thereof ending in the year, including any amount included in computing his income for the year under section 94 in respect of a rental property of the individual or the partnership or in respect of a property any income from which would be income from property,

v.  the amount by which the aggregate of all amounts, other than amounts in respect of an income-averaging annuity contract, an income-averaging annuity contract respecting income from artistic activities or an annuity contract purchased pursuant to a deferred profit sharing plan or a revoked plan, referred to in section 879, included in computing the individual’s income for the year under paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for the year before being struck out, exceeds the aggregate of all amounts deducted under paragraph f of section 336 in computing the individual’s income for the year; and

vi.  the amount by which the aggregate of all amounts included under paragraph b of section 28 in respect of capital gains and capital losses in computing his income for the year exceeds the amount determined in respect of the individual for the year under subparagraph i of subparagraph b.

For the purposes of subparagraph iv of subparagraph a.0.2 of the first paragraph, an incorporeal capital property is deemed to include a capital property in respect of which paragraph b of section 437 or subparagraph d of the first paragraph of section 462 applies.

The persons and partnerships referred to in subparagraph 1 of subparagraph i of subparagraph a.5 of the first paragraph are

(a)  the individual;

(b)  where the individual is a personal trust, a beneficiary of the trust;

(c)  a spouse, a child or the father or mother of the individual or of a beneficiary referred to in subparagraph b;

(d)  a corporation, a share of the capital stock of which was a share of the capital stock of a family farm or fishing corporation of the individual, of a beneficiary referred to in subparagraph b or of the spouse, a child or the father or mother of the individual or of such a beneficiary; or

(e)  a partnership, an interest in which was an interest in a family farm or fishing partnership of the individual, of a beneficiary referred to in subparagraph b or of the spouse, a child or the father or mother of the individual or of such a beneficiary.

1987, c. 67, s. 142; 1990, c. 59, s. 258; 1993, c. 16, s. 264; 1994, c. 22, s. 247; 1995, c. 49, s. 164; 1996, c. 39, s. 179; 1997, c. 3, s. 71; 1997, c. 14, s. 104; 1998, c. 16, s. 251; 2004, c. 8, s. 140; 2004, c. 21, s. 120; 2005, c. 1, s. 138; 2005, c. 23, s. 75; 2005, c. 38, s. 89; 2006, c. 13, s. 51; 2007, c. 12, s. 73; 2009, c. 15, s. 114; 2015, c. 21, s. 254; 2017, c. 29, s. 96.

2015-10-21

726.6. In this Title, the expression

(a)  “qualified farm property” of an individual, other than a trust that is not a personal trust, at any time means a property owned at that time by the individual or his spouse, or by a partnership, an interest in which is an interest in a family farm partnership of the individual or his spouse that is

i.  an immovable that was used in the course of carrying on the business of farming in Canada by

(1)  the individual,

(2)  if the individual is a personal trust, a beneficiary under the trust that is entitled to receive directly from the trust all or part of the income or capital of the trust,

(3)  the spouse, a child, the father or the mother of a person referred to in subparagraph 1 or 2,

(4)  a corporation, a share of the capital stock of which is a share of the capital stock of a family farm corporation of an individual referred to in any of subparagraphs 1 to 3, or

(5)  a partnership, an interest in which is an interest in a family farm partnership of an individual referred to in any of subparagraphs 1 to 3,

ii.  a share of the capital stock of a family farm corporation of the individual or his spouse,

iii.  an interest in a family farm partnership of the individual or his spouse, or

iv.  an incorporeal capital property used, in the course of carrying on the business of farming in Canada, by a person or partnership referred to in subparagraphs 1 to 5 of subparagraph i or by a personal trust from which the individual acquired capital property;

(a.0.1)  “qualified fishing property” of an individual, other than a trust that is not a personal trust, at any time means a property owned at that time by the individual, the spouse of the individual or a partnership, an interest in which is an interest in a family fishing partnership of the individual or the individual’s spouse that is

i.  an immovable or a fishing boat that was used in the course of carrying on a fishing business in Canada by

(1)  the individual,

(2)  if the individual is a personal trust, a beneficiary under the trust that is entitled to receive directly from the trust all or part of the income or capital of the trust,

(3)  the spouse, a child or the father or mother of a person referred to in subparagraph 1 or 2,

(4)  a corporation, a share of the capital stock of which is a share of the capital stock of a family fishing corporation of an individual referred to in any of subparagraphs 1 to 3, or

(5)  a partnership, an interest in which is an interest in a family fishing partnership of an individual referred to in any of subparagraphs 1 to 3,

ii.  a share of the capital stock of a family fishing corporation of the individual or the individual’s spouse,

iii.  an interest in a family fishing partnership of the individual or the individual’s spouse, or

iv.  an incorporeal capital property used in the course of carrying on a fishing business in Canada by a person or a partnership referred to in any of subparagraphs 1 to 5 of subparagraph i or by a personal trust from which the individual acquired the capital property;

(a.1)  “child” means a child within the meaning of subparagraph d of the first paragraph of section 451;

(a.2)  “investment expense” of an individual for a taxation year means an amount equal to the amount by which the aggregate of the amount included in computing the individual’s income for the year under section 313.10 and the amount included in computing the individual’s taxable income for the year under section 737.0.1 is exceeded by the aggregate of

i.  the aggregate of all amounts each of which is an amount deducted in computing his income for the year from property, except to the extent that the amount was otherwise taken into account in computing his investment expense or his investment income for the year, other than any such amount deducted under

(1)  section 147, 160, 163, 176, 176.4 or 178, in respect of borrowed money that was used by the individual, or that was used to acquire property that was used by the individual, to make a payment as consideration for an income-averaging annuity contract, to pay a premium under a registered retirement savings plan or to make a contribution to a registered pension plan, a pooled registered pension plan or a deferred profit sharing plan, or

(2)  section 177, the first paragraph of section 360 or section 371, 401, 413, 414, 418.1.10 or 418.7,

ii.  the aggregate of

(1)  all amounts each of which is an amount deducted under section 147, paragraph d of section 157 or section 160, 163, 176, 176.4, 178 or 179 in computing his income for the year from a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 147.2 or 176.3 in computing his income for the year in respect of an expense incurred by a partnership of which he was a specified member in the fiscal period thereof ending immediately before the partnership ceased to exist,

iii.  the aggregate of

(1)  all amounts, other than allowable capital losses, each of which is an amount deducted in computing his income for the year in respect of his share of any loss of a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 733.0.0.1 in computing his taxable income for the year,

iv.  50% of the aggregate of all amounts each of which is an amount deducted under section 371, 401, 413, 414, 418.1.10 or 418.7 in computing his income for the year in respect of expenses incurred and renounced under section 359.2, 359.2.1, 359.4 or 359.6 by a corporation or in respect of expenses incurred by a partnership of which he was a specified member in the fiscal period of the partnership in which the expense was incurred, other than any such expense that would be referred to in subparagraph i of paragraph a of section 726.4.10 if the reference therein to “30 June 1988” were a reference to “31 December 1988”,

v.  the aggregate of all amounts each of which is the amount of his loss for the year from property or from renting or leasing a rental property within the meaning of section 130R88 of the Regulation respecting the Taxation Act (chapter I-3, r. 1) or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member other than a partnership of which he was a specified member in the fiscal year thereof ending in the year, and

vi.  the amount by which the aggregate of his net capital losses for other taxation years deducted under section 729 in computing his taxable income for the year exceeds the amount determined in respect of the individual for the year under subparagraph 1 of subparagraph ii of subparagraph b;

vii.  the amount deducted in computing the individual’s income for the year under section 336.6;

(a.3)  “interest in a family farm partnership” of an individual, other than a trust that is not a personal trust, at any time means an interest owned by the individual at that time in a partnership where

i.  throughout any 24-month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to

(1)  property that has been used by the partnership or any of the persons referred to in the third paragraph, principally in the course of carrying on the business of farming in Canada in which the individual, a beneficiary referred to in subparagraph b of the third paragraph or a spouse, a child or the father or mother of the individual or of such a beneficiary was actively engaged on a regular and continuous basis,

(2)  shares of the capital stock or indebtedness of one or more corporations all or substantially all of the fair market value of the property of which was attributable to properties described in subparagraph 3,

(2.1)  a partnership interest in or indebtedness of one or more partnerships all or substantially all of the fair market value of the property of which was attributable to property described in subparagraph 3, or

(3)  properties described in any of subparagraphs 1 to 2.1, and

ii.  at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in subparagraph 3 of subparagraph i;

(a.4)  “interest in a family fishing partnership” of an individual, other than a trust that is not a personal trust, at any time means a partnership interest owned by the individual at that time if

i.  throughout any 24-month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to

(1)  property that was used by the partnership or any of the persons referred to in the third paragraph, principally in the course of carrying on a fishing business in Canada in which the individual, a beneficiary referred to in subparagraph b of the third paragraph or the spouse, a child or the father or mother of the individual or of such a beneficiary was actively engaged on a regular and continuous basis,

(2)  shares of the capital stock or indebtedness of one or more corporations all or substantially all of the fair market value of the property of which was attributable to property described in subparagraph 4,

(3)  a partnership interest in or indebtedness of one or more partnerships all or substantially all of the fair market value of the property of which was attributable to property described in subparagraph 4, or

(4)  property described in any of subparagraphs 1 to 3, and

ii.  at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in subparagraph 4 of subparagraph i;

(b)  “annual gains limit” of an individual for a taxation year means the amount, if any, by which

i.  the lesser of

(1)  the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses, and

(2)  the amount that would be determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses if the only properties referred to in that paragraph were qualified farm properties disposed of by the individual after 31 December 1984, qualified small business corporation shares disposed of by the individual after 17 June 1987 and qualified fishing properties disposed of by the individual after 10 December 2002, exceeds

ii.  the aggregate of

(1)  the amount by which the individual’s net capital losses for other taxation years deducted under section 729 in computing the individual’s taxable income for the year exceeds the amount by which the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses exceeds the amount determined under subparagraph i in respect of the individual for the year, and

(2)  the individual’s allowable business investment losses for the year;

(c)  “cumulative gains limit” of an individual at the end of a taxation year means the amount, if any, by which

i.  the aggregate of all amounts determined under subparagraph i of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984, exceeds

ii.  the aggregate of

(1)  all amounts determined under subparagraph ii of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984,

(2)  the amount deducted by the individual under subparagraph iii of subparagraph c of the first paragraph of section 28 in computing his income for the taxation year 1985,

(3)  all amounts deducted by the individual under this Title in computing his taxable income for preceding taxation years, and

(4)  the individual’s cumulative net investment loss at the end of the year;

(d)  “cumulative net investment loss” of an individual at the end of a taxation year means the amount by which

i.  the aggregate of all amounts each of which is the investment expense of the individual for the year or a preceding taxation year ending after 31 December 1987, exceeds

ii.  the aggregate of all amounts each of which is the investment income of the individual for the year or a preceding taxation year ending after 31 December 1987;

(e)  “investment income” of an individual for a taxation year means the aggregate of the following amounts:

i.  the aggregate of all amounts each of which is an amount included in computing his income for the year from property, other than an amount included under section 113, paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for that year before being struck out, including any amount so included under section 94 in respect of a property the income from which would be income from property, except to the extent that the amount was otherwise taken into account in computing his investment income or investment expense for the year,

ii.  the aggregate of all amounts, other than taxable capital gains, each of which is an amount included in computing his income for the year in respect of his share of the income of a partnership of which he was a specified member in the fiscal period thereof ending in the year, including his share of all amounts included in computing the income of the partnership under section 94,

iii.  50% of all amounts included in computing his income for the year under paragraphs c to e.1 of section 330,

iv.  the aggregate of all amounts each of which is the amount of his income for the year from property or from renting or leasing a rental property within the meaning of section 130R88 of the Regulation respecting the Taxation Act or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member, other than a partnership of which he was a specified member in the fiscal year thereof ending in the year, including any amount included in computing his income for the year under section 94 in respect of a rental property of the individual or the partnership or in respect of a property any income from which would be income from property,

v.  the amount by which the aggregate of all amounts, other than amounts in respect of an income-averaging annuity contract, an income-averaging annuity contract respecting income from artistic activities or an annuity contract purchased pursuant to a deferred profit sharing plan or a revoked plan, referred to in section 879, included in computing the individual’s income for the year under paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for the year before being struck out, exceeds the aggregate of all amounts deducted under paragraph f of section 336 in computing the individual’s income for the year; and

vi.  the amount by which the aggregate of all amounts included under paragraph b of section 28 in respect of capital gains and capital losses in computing his income for the year exceeds the amount determined in respect of the individual for the year under subparagraph i of subparagraph b.

For the purposes of subparagraph iv of subparagraphs a and a.0.1 of the first paragraph, an incorporeal capital property is deemed to include a capital property in respect of which paragraph b of section 437 or subparagraph d of the first paragraph of section 462 applies.

The persons referred to in subparagraph 1 of subparagraph i of subparagraphs a.3 and a.4 of the first paragraph are

(a)  the individual;

(b)  where the individual is a personal trust, a beneficiary of the trust;

(c)  a spouse, a child or the father or mother of the individual or of a beneficiary referred to in subparagraph b;

(d)  a corporation, a share of the capital stock of which is a share of the capital stock of a family farm corporation or a share of the capital stock of a family fishing corporation of the individual, of a beneficiary referred to in subparagraph b or the spouse, a child or the father or mother of the individual or of such a beneficiary; or

(e)  a partnership, an interest in which is an interest in a family farm partnership or an interest in a family fishing partnership of the individual, of a beneficiary referred to in subparagraph b or the spouse, a child or the father or mother of the individual or of such a beneficiary.

1987, c. 67, s. 142; 1990, c. 59, s. 258; 1993, c. 16, s. 264; 1994, c. 22, s. 247; 1995, c. 49, s. 164; 1996, c. 39, s. 179; 1997, c. 3, s. 71; 1997, c. 14, s. 104; 1998, c. 16, s. 251; 2004, c. 8, s. 140; 2004, c. 21, s. 120; 2005, c. 1, s. 138; 2005, c. 23, s. 75; 2005, c. 38, s. 89; 2006, c. 13, s. 51; 2007, c. 12, s. 73; 2009, c. 15, s. 114; 2015, c. 21, s. 254.

2009-06-04

726.6. In this Title, the expression

(a)  “qualified farm property” of an individual, other than a trust that is not a personal trust, at any time means a property owned at that time by the individual or his spouse, or by a partnership, an interest in which is an interest in a family farm partnership of the individual or his spouse that is

i.  an immovable that has been used principally in the course of carrying on a business of farming in Canada, by

(1)  the individual,

(2)  if the individual is a personal trust, a beneficiary under the trust that is entitled to receive directly from the trust all or part of the income or capital of the trust,

(3)  the spouse, a child, the father or the mother of a person referred to in subparagraph 1 or 2,

(4)  a corporation, a share of the capital stock of which is a share of the capital stock of a family farm corporation of an individual referred to in any of subparagraphs 1 to 3, or

(5)  a partnership, an interest in which is an interest in a family farm partnership of an individual referred to in any of subparagraphs 1 to 3,

ii.  a share of the capital stock of a family farm corporation of the individual or his spouse,

iii.  an interest in a family farm partnership of the individual or his spouse, or

iv.  an incorporeal capital property used, in the course of carrying on the business of farming in Canada, by a person or partnership referred to in subparagraphs 1 to 5 of subparagraph i or by a personal trust from which the individual acquired capital property;

(a.0.1)  “qualified fishing property” of an individual, other than a trust that is not a personal trust, at any time means a property owned at that time by the individual, the spouse of the individual or a partnership, an interest in which is an interest in a family fishing partnership of the individual or the individual’s spouse that is

i.  an immovable or a fishing boat that was used principally in the course of carrying on a fishing business in Canada by

(1)  the individual,

(2)  if the individual is a personal trust, a beneficiary under the trust that is entitled to receive directly from the trust all or part of the income or capital of the trust,

(3)  the spouse, a child or the father or mother of a person referred to in subparagraph 1 or 2,

(4)  a corporation, a share of the capital stock of which is a share of the capital stock of a family fishing corporation of an individual referred to in any of subparagraphs 1 to 3, or

(5)  a partnership, an interest in which is an interest in a family fishing partnership of an individual referred to in any of subparagraphs 1 to 3,

ii.  a share of the capital stock of a family fishing corporation of the individual or the individual’s spouse,

iii.  an interest in a family fishing partnership of the individual or the individual’s spouse, or

iv.  an incorporeal capital property used in the course of carrying on a fishing business in Canada by a person or a partnership referred to in any of subparagraphs 1 to 5 of subparagraph i or by a personal trust from which the individual acquired the capital property;

(a.1)  “child” means a child within the meaning of subparagraph d of the first paragraph of section 451;

(a.2)  “investment expense” of an individual for a taxation year means an amount equal to the amount by which the aggregate of the amount included in computing the individual’s income for the year under section 313.10 and the amount included in computing the individual’s taxable income for the year under section 737.0.1 is exceeded by the aggregate of

i.  the aggregate of all amounts each of which is an amount deducted in computing his income for the year from property, except to the extent that the amount was otherwise taken into account in computing his investment expense or his investment income for the year, other than any such amount deducted under

(1)  section 147, 160, 163, 176, 176.4 or 178, in respect of borrowed money that was used by the individual, or that was used to acquire property that was used by the individual, to make a payment as consideration for an income-averaging annuity contract, to pay a premium under a registered retirement savings plan or to make a contribution to a registered pension plan or a deferred profit sharing plan, or

(2)  section 177, the first paragraph of section 360 or section 371, 401, 413, 414, 418.1.10 or 418.7,

ii.  the aggregate of

(1)  all amounts each of which is an amount deducted under section 147, paragraph d of section 157 or section 160, 163, 176, 176.4, 178 or 179 in computing his income for the year from a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 147.2 or 176.3 in computing his income for the year in respect of an expense incurred by a partnership of which he was a specified member in the fiscal period thereof ending immediately before the partnership ceased to exist,

iii.  the aggregate of

(1)  all amounts, other than allowable capital losses, each of which is an amount deducted in computing his income for the year in respect of his share of any loss of a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 733.0.0.1 in computing his taxable income for the year,

iv.  50% of the aggregate of all amounts each of which is an amount deducted under section 371, 401, 413, 414, 418.1.10 or 418.7 in computing his income for the year in respect of expenses incurred and renounced under section 359.2, 359.2.1, 359.4 or 359.6 by a corporation or in respect of expenses incurred by a partnership of which he was a specified member in the fiscal period of the partnership in which the expense was incurred, other than any such expense that would be referred to in subparagraph i of paragraph a of section 726.4.10 if the reference therein to “30 June 1988” were a reference to “31 December 1988”,

v.  the aggregate of all amounts each of which is the amount of his loss for the year from property or from renting or leasing a rental property within the meaning of section 130R88 of the Regulation respecting the Taxation Act (chapter I-3, r. 1) or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member other than a partnership of which he was a specified member in the fiscal year thereof ending in the year, and

vi.  the amount by which the aggregate of his net capital losses for other taxation years deducted under section 729 in computing his taxable income for the year exceeds the amount determined in respect of the individual for the year under subparagraph 1 of subparagraph ii of subparagraph b;

vii.  the amount deducted in computing the individual’s income for the year under section 336.6;

(a.3)  “interest in a family farm partnership” of an individual, other than a trust that is not a personal trust, at any time means an interest owned by the individual at that time in a partnership where

i.  throughout any 24-month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to

(1)  property that has been used by the partnership or any of the persons referred to in the third paragraph, principally in the course of carrying on the business of farming in Canada in which the individual, a beneficiary referred to in subparagraph b of the third paragraph or a spouse, a child or the father or mother of the individual or of such a beneficiary was actively engaged on a regular and continuous basis,

(2)  shares of the capital stock or indebtedness of one or more corporations all or substantially all of the fair market value of the property of which was attributable to properties described in subparagraph 3,

(2.1)  a partnership interest in or indebtedness of one or more partnerships all or substantially all of the fair market value of the property of which was attributable to property described in subparagraph 3, or

(3)  properties described in any of subparagraphs 1 to 2.1, and

ii.  at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in subparagraph 3 of subparagraph i;

(a.4)  “interest in a family fishing partnership” of an individual, other than a trust that is not a personal trust, at any time means a partnership interest owned by the individual at that time if

i.  throughout any 24-month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to

(1)  property that was used by the partnership or any of the persons referred to in the third paragraph, principally in the course of carrying on a fishing business in Canada in which the individual, a beneficiary referred to in subparagraph b of the third paragraph or the spouse, a child or the father or mother of the individual or of such a beneficiary was actively engaged on a regular and continuous basis,

(2)  shares of the capital stock or indebtedness of one or more corporations all or substantially all of the fair market value of the property of which was attributable to property described in subparagraph 4,

(3)  a partnership interest in or indebtedness of one or more partnerships all or substantially all of the fair market value of the property of which was attributable to property described in subparagraph 4, or

(4)  property described in any of subparagraphs 1 to 3, and

ii.  at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in subparagraph 4 of subparagraph i;

(b)  “annual gains limit” of an individual for a taxation year means the amount, if any, by which

i.  the lesser of

(1)  the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses, and

(2)  the amount that would be determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses if the only properties referred to in that paragraph were qualified farm properties disposed of by the individual after 31 December 1984, qualified small business corporation shares disposed of by the individual after 17 June 1987 and qualified fishing properties disposed of by the individual after 10 December 2002, exceeds

ii.  the aggregate of

(1)  the amount by which the individual’s net capital losses for other taxation years deducted under section 729 in computing the individual’s taxable income for the year exceeds the amount by which the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses exceeds the amount determined under subparagraph i in respect of the individual for the year, and

(2)  the individual’s allowable business investment losses for the year;

(c)  “cumulative gains limit” of an individual at the end of a taxation year means the amount, if any, by which

i.  the aggregate of all amounts determined under subparagraph i of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984, exceeds

ii.  the aggregate of

(1)  all amounts determined under subparagraph ii of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984,

(2)  the amount deducted by the individual under subparagraph iii of subparagraph c of the first paragraph of section 28 in computing his income for the taxation year 1985,

(3)  all amounts deducted by the individual under this Title in computing his taxable income for preceding taxation years, and

(4)  the individual’s cumulative net investment loss at the end of the year;

(d)  “cumulative net investment loss” of an individual at the end of a taxation year means the amount by which

i.  the aggregate of all amounts each of which is the investment expense of the individual for the year or a preceding taxation year ending after 31 December 1987, exceeds

ii.  the aggregate of all amounts each of which is the investment income of the individual for the year or a preceding taxation year ending after 31 December 1987;

(e)  “investment income” of an individual for a taxation year means the aggregate of the following amounts:

i.  the aggregate of all amounts each of which is an amount included in computing his income for the year from property, other than an amount included under section 113, paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for that year before being struck out, including any amount so included under section 94 in respect of a property the income from which would be income from property, except to the extent that the amount was otherwise taken into account in computing his investment income or investment expense for the year,

ii.  the aggregate of all amounts, other than taxable capital gains, each of which is an amount included in computing his income for the year in respect of his share of the income of a partnership of which he was a specified member in the fiscal period thereof ending in the year, including his share of all amounts included in computing the income of the partnership under section 94,

iii.  50% of all amounts included in computing his income for the year under paragraphs c to e.1 of section 330,

iv.  the aggregate of all amounts each of which is the amount of his income for the year from property or from renting or leasing a rental property within the meaning of section 130R88 of the Regulation respecting the Taxation Act or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member, other than a partnership of which he was a specified member in the fiscal year thereof ending in the year, including any amount included in computing his income for the year under section 94 in respect of a rental property of the individual or the partnership or in respect of a property any income from which would be income from property,

v.  the amount by which the aggregate of all amounts, other than amounts in respect of an income-averaging annuity contract, an income-averaging annuity contract respecting income from artistic activities or an annuity contract purchased pursuant to a deferred profit sharing plan or a revoked plan, referred to in section 879, included in computing the individual’s income for the year under paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for the year before being struck out, exceeds the aggregate of all amounts deducted under paragraph f of section 336 in computing the individual’s income for the year; and

vi.  the amount by which the aggregate of all amounts included under paragraph b of section 28 in respect of capital gains and capital losses in computing his income for the year exceeds the amount determined in respect of the individual for the year under subparagraph i of subparagraph b.

For the purposes of subparagraph iv of subparagraphs a and a.0.1 of the first paragraph, an incorporeal capital property is deemed to include a capital property in respect of which paragraph b of section 437 or subparagraph d of the first paragraph of section 462 applies.

The persons referred to in subparagraph 1 of subparagraph i of subparagraphs a.3 and a.4 of the first paragraph are

(a)  the individual;

(b)  where the individual is a personal trust, a beneficiary of the trust;

(c)  a spouse, a child or the father or mother of the individual or of a beneficiary referred to in subparagraph b;

(d)  a corporation, a share of the capital stock of which is a share of the capital stock of a family farm corporation or a share of the capital stock of a family fishing corporation of the individual, of a beneficiary referred to in subparagraph b or the spouse, a child or the father or mother of the individual or of such a beneficiary; or

(e)  a partnership, an interest in which is an interest in a family farm partnership or an interest in a family fishing partnership of the individual, of a beneficiary referred to in subparagraph b or the spouse, a child or the father or mother of the individual or of such a beneficiary.

1987, c. 67, s. 142; 1990, c. 59, s. 258; 1993, c. 16, s. 264; 1994, c. 22, s. 247; 1995, c. 49, s. 164; 1996, c. 39, s. 179; 1997, c. 3, s. 71; 1997, c. 14, s. 104; 1998, c. 16, s. 251; 2004, c. 8, s. 140; 2004, c. 21, s. 120; 2005, c. 1, s. 138; 2005, c. 23, s. 75; 2005, c. 38, s. 89; 2006, c. 13, s. 51; 2007, c. 12, s. 73; 2009, c. 15, s. 114.

2007-11-07

726.6. In this Title, the expression

(a)  “qualified farm property” of an individual, other than a trust that is not a personal trust, at any time means a property owned at that time by the individual or his spouse, or by a partnership, an interest in which is an interest in a family farm partnership of the individual or his spouse that is

i.  an immovable that has been used principally in the course of carrying on a business of farming in Canada, by

(1)  the individual,

(2)  if the individual is a personal trust, a beneficiary under the trust that is entitled to receive directly from the trust all or part of the income or capital of the trust,

(3)  the spouse, a child, the father or the mother of a person referred to in subparagraph 1 or 2,

(4)  a corporation, a share of the capital stock of which is a share of the capital stock of a family farm corporation of an individual referred to in any of subparagraphs 1 to 3, or

(5)  a partnership, an interest in which is an interest in a family farm partnership of an individual referred to in any of subparagraphs 1 to 3,

ii.  a share of the capital stock of a family farm corporation of the individual or his spouse,

iii.  an interest in a family farm partnership of the individual or his spouse, or

iv.  an incorporeal capital property used, in the course of carrying on the business of farming in Canada, by a person or partnership referred to in subparagraphs 1 to 5 of subparagraph i or by a personal trust from which the individual acquired capital property;

(a.0.1)  “qualified fishing property” of an individual, other than a trust that is not a personal trust, at any time means a property owned at that time by the individual, the spouse of the individual or a partnership, an interest in which is an interest in a family fishing partnership of the individual or the individual’s spouse that is

i.  an immovable or a fishing boat that was used principally in the course of carrying on a fishing business in Canada by

(1)  the individual,

(2)  if the individual is a personal trust, a beneficiary under the trust that is entitled to receive directly from the trust all or part of the income or capital of the trust,

(3)  the spouse, a child or the father or mother of a person referred to in subparagraph 1 or 2,

(4)  a corporation, a share of the capital stock of which is a share of the capital stock of a family fishing corporation of an individual referred to in any of subparagraphs 1 to 3, or

(5)  a partnership, an interest in which is an interest in a family fishing partnership of an individual referred to in any of subparagraphs 1 to 3,

ii.  a share of the capital stock of a family fishing corporation of the individual or the individual’s spouse,

iii.  an interest in a family fishing partnership of the individual or the individual’s spouse, or

iv.  an incorporeal capital property used in the course of carrying on a fishing business in Canada by a person or a partnership referred to in any of subparagraphs 1 to 5 of subparagraph i or by a personal trust from which the individual acquired the capital property;

(a.1)  “child” means a child within the meaning of subparagraph d of the first paragraph of section 451;

(a.2)  “investment expense” of an individual for a taxation year means an amount equal to the amount by which the aggregate of the amount included in computing the individual’s income for the year under section 313.10 and the amount included in computing the individual’s taxable income for the year under section 737.0.1 is exceeded by the aggregate of

i.  the aggregate of all amounts each of which is an amount deducted in computing his income for the year from property, except to the extent that the amount was otherwise taken into account in computing his investment expense or his investment income for the year, other than any such amount deducted under

(1)  section 147, 160, 163, 176, 176.4 or 178, in respect of borrowed money that was used by the individual, or that was used to acquire property that was used by the individual, to make a payment as consideration for an income-averaging annuity contract, to pay a premium under a registered retirement savings plan or to make a contribution to a registered pension plan or a deferred profit sharing plan, or

(2)  section 177, the first paragraph of section 360 or section 371, 401, 413, 414, 418.1.10 or 418.7,

ii.  the aggregate of

(1)  all amounts each of which is an amount deducted under section 147, paragraph d of section 157 or section 160, 163, 176, 176.4, 178 or 179 in computing his income for the year from a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 147.2 or 176.3 in computing his income for the year in respect of an expense incurred by a partnership of which he was a specified member in the fiscal period thereof ending immediately before the partnership ceased to exist,

iii.  the aggregate of

(1)  all amounts, other than allowable capital losses, each of which is an amount deducted in computing his income for the year in respect of his share of any loss of a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 733.0.0.1 in computing his taxable income for the year,

iv.  50% of the aggregate of all amounts each of which is an amount deducted under section 371, 401, 413, 414, 418.1.10 or 418.7 in computing his income for the year in respect of expenses incurred and renounced under section 359.2, 359.2.1, 359.4 or 359.6 by a corporation or in respect of expenses incurred by a partnership of which he was a specified member in the fiscal period of the partnership in which the expense was incurred, other than any such expense that would be referred to in subparagraph i of paragraph a of section 726.4.10 if the reference therein to “30 June 1988” were a reference to “31 December 1988”,

v.  the aggregate of all amounts each of which is the amount of his loss for the year from property or from renting or leasing a rental property within the meaning of section 130R46 of the Regulation respecting the Taxation Act (R.R.Q., 1981, chapter I-3, r.1) or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member other than a partnership of which he was a specified member in the fiscal year thereof ending in the year, and

vi.  the amount by which the aggregate of his net capital losses for other taxation years deducted under section 729 in computing his taxable income for the year exceeds the amount determined in respect of the individual for the year under subparagraph 1 of subparagraph ii of subparagraph b;

vii.  the amount deducted in computing the individual’s income for the year under section 336.6;

(a.3)  “interest in a family farm partnership” of an individual, other than a trust that is not a personal trust, at any time means an interest owned by the individual at that time in a partnership where

i.  throughout any 24-month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to

(1)  property that has been used by the partnership or any of the persons referred to in the third paragraph, principally in the course of carrying on the business of farming in Canada in which the individual, a beneficiary referred to in subparagraph b of the third paragraph or a spouse, a child or the father or mother of the individual or of such a beneficiary was actively engaged on a regular and continuous basis,

(2)  shares of the capital stock or indebtedness of one or more corporations all or substantially all of the fair market value of the property of which was attributable to properties described in subparagraph 3,

(2.1)  a partnership interest in or indebtedness of one or more partnerships all or substantially all of the fair market value of the property of which was attributable to property described in subparagraph 3, or

(3)  properties described in any of subparagraphs 1 to 2.1, and

ii.  at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in subparagraph 3 of subparagraph i;

(a.4)  “interest in a family fishing partnership” of an individual, other than a trust that is not a personal trust, at any time means a partnership interest owned by the individual at that time if

i.  throughout any 24-month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to

(1)  property that was used by the partnership or any of the persons referred to in the third paragraph, principally in the course of carrying on a fishing business in Canada in which the individual, a beneficiary referred to in subparagraph b of the third paragraph or the spouse, a child or the father or mother of the individual or of such a beneficiary was actively engaged on a regular and continuous basis,

(2)  shares of the capital stock or indebtedness of one or more corporations all or substantially all of the fair market value of the property of which was attributable to property described in subparagraph 4,

(3)  a partnership interest in or indebtedness of one or more partnerships all or substantially all of the fair market value of the property of which was attributable to property described in subparagraph 4, or

(4)  property described in any of subparagraphs 1 to 3, and

ii.  at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in subparagraph 4 of subparagraph i;

(b)  “annual gains limit” of an individual for a taxation year means the amount, if any, by which

i.  the lesser of

(1)  the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses, and

(2)  the amount that would be determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses if the only properties referred to in that paragraph were qualified farm properties disposed of by the individual after 31 December 1984, qualified small business corporation shares disposed of by the individual after 17 June 1987 and qualified fishing properties disposed of by the individual after 10 December 2002, exceeds

ii.  the aggregate of

(1)  the amount by which the individual’s net capital losses for other taxation years deducted under section 729 in computing the individual’s taxable income for the year exceeds the amount by which the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses exceeds the amount determined under subparagraph i in respect of the individual for the year, and

(2)  the individual’s allowable business investment losses for the year;

(c)  “cumulative gains limit” of an individual at the end of a taxation year means the amount, if any, by which

i.  the aggregate of all amounts determined under subparagraph i of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984, exceeds

ii.  the aggregate of

(1)  all amounts determined under subparagraph ii of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984,

(2)  the amount deducted by the individual under subparagraph iii of subparagraph c of the first paragraph of section 28 in computing his income for the taxation year 1985,

(3)  all amounts deducted by the individual under this Title in computing his taxable income for preceding taxation years, and

(4)  the individual’s cumulative net investment loss at the end of the year;

(d)  “cumulative net investment loss” of an individual at the end of a taxation year means the amount by which

i.  the aggregate of all amounts each of which is the investment expense of the individual for the year or a preceding taxation year ending after 31 December 1987, exceeds

ii.  the aggregate of all amounts each of which is the investment income of the individual for the year or a preceding taxation year ending after 31 December 1987;

(e)  “investment income” of an individual for a taxation year means the aggregate of the following amounts:

i.  the aggregate of all amounts each of which is an amount included in computing his income for the year from property, other than an amount included under section 113, paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for that year before being struck out, including any amount so included under section 94 in respect of a property the income from which would be income from property, except to the extent that the amount was otherwise taken into account in computing his investment income or investment expense for the year,

ii.  the aggregate of all amounts, other than taxable capital gains, each of which is an amount included in computing his income for the year in respect of his share of the income of a partnership of which he was a specified member in the fiscal period thereof ending in the year, including his share of all amounts included in computing the income of the partnership under section 94,

iii.  50% of all amounts included in computing his income for the year under paragraphs c to e.1 of section 330,

iv.  the aggregate of all amounts each of which is the amount of his income for the year from property or from renting or leasing a rental property within the meaning of section 130R46 of the Regulation respecting the Taxation Act or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member, other than a partnership of which he was a specified member in the fiscal year thereof ending in the year, including any amount included in computing his income for the year under section 94 in respect of a rental property of the individual or the partnership or in respect of a property any income from which would be income from property,

v.  the amount by which the aggregate of all amounts, other than amounts in respect of an income-averaging annuity contract, an income-averaging annuity contract respecting income from artistic activities or an annuity contract purchased pursuant to a deferred profit sharing plan or a revoked plan, referred to in section 879, included in computing the individual’s income for the year under paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for the year before being struck out, exceeds the aggregate of all amounts deducted under paragraph f of section 336 in computing the individual’s income for the year; and

vi.  the amount by which the aggregate of all amounts included under paragraph b of section 28 in respect of capital gains and capital losses in computing his income for the year exceeds the amount determined in respect of the individual for the year under subparagraph i of subparagraph b.

For the purposes of subparagraph iv of subparagraphs a and a.0.1 of the first paragraph, an incorporeal capital property is deemed to include a capital property in respect of which paragraph b of section 437 or subparagraph d of the first paragraph of section 462 applies.

The persons referred to in subparagraph 1 of subparagraph i of subparagraphs a.3 and a.4 of the first paragraph are

(a)  the individual;

(b)  where the individual is a personal trust, a beneficiary of the trust;

(c)  a spouse, a child or the father or mother of the individual or of a beneficiary referred to in subparagraph b;

(d)  a corporation, a share of the capital stock of which is a share of the capital stock of a family farm corporation or a share of the capital stock of a family fishing corporation of the individual, of a beneficiary referred to in subparagraph b or the spouse, a child or the father or mother of the individual or of such a beneficiary; or

(e)  a partnership, an interest in which is an interest in a family farm partnership or an interest in a family fishing partnership of the individual, of a beneficiary referred to in subparagraph b or the spouse, a child or the father or mother of the individual or of such a beneficiary.

1987, c. 67, s. 142; 1990, c. 59, s. 258; 1993, c. 16, s. 264; 1994, c. 22, s. 247; 1995, c. 49, s. 164; 1996, c. 39, s. 179; 1997, c. 3, s. 71; 1997, c. 14, s. 104; 1998, c. 16, s. 251; 2004, c. 8, s. 140; 2004, c. 21, s. 120; 2005, c. 1, s. 138; 2005, c. 23, s. 75; 2005, c. 38, s. 89; 2006, c. 13, s. 51; 2007, c. 12, s. 73.

2006-06-13

726.6. In this Title, the expression

(a)  “qualified farm property” of an individual, other than a trust that is not a personal trust, at any time means a property owned at that time by the individual or his spouse, or by a partnership, an interest in which is an interest in a family farm partnership of the individual or his spouse that is

i.  an immovable that has been used in the course of carrying on a business of farming in Canada, by

(1)  the individual,

(2)  where the individual is a personal trust, a beneficiary referred to in paragraph b of section 668.1 of the trust,

(3)  the spouse, a child, the father or the mother of a person referred to in subparagraph 1 or 2,

(4)  a corporation, a share of the capital stock of which is a share of the capital stock of a family farm corporation of an individual referred to in any of subparagraphs 1 to 3, or

(5)  a partnership, an interest in which is an interest in a family farm partnership of an individual referred to in any of subparagraphs 1 to 3,

ii.  a share of the capital stock of a family farm corporation of the individual or his spouse,

iii.  an interest in a family farm partnership of the individual or his spouse, or

iv.  an incorporeal capital property used, in the course of carrying on the business of farming in Canada, by a person or partnership referred to in subparagraphs 1 to 5 of subparagraph i or by a personal trust from which the individual acquired capital property;

(a.0.1)  “qualified fishing property” of an individual, other than a trust, at any time means a fishing licence, an individual quota or a fishing boat owned or held by the individual at that time and that has been used by the individual in carrying on a fishing business, including the harvesting of marine plants, in Québec;

(a.1)  “child” means a child within the meaning of subparagraph d of the first paragraph of section 451;

(a.2)  “investment expense” of an individual for a taxation year means an amount equal to the amount by which the aggregate of the amount included in computing the individual’s income for the year under section 313.10 and the amount included in computing the individual’s taxable income for the year under section 737.0.1 is exceeded by the aggregate of

i.  the aggregate of all amounts each of which is an amount deducted in computing his income for the year from property, except to the extent that the amount was otherwise taken into account in computing his investment expense or his investment income for the year, other than any such amount deducted under

(1)  section 147, 160, 163, 176, 176.4 or 178, in respect of borrowed money that was used by the individual, or that was used to acquire property that was used by the individual, to make a payment as consideration for an income-averaging annuity contract, to pay a premium under a registered retirement savings plan or to make a contribution to a registered pension plan or a deferred profit sharing plan, or

(2)  section 177, the first paragraph of section 360 or section 371, 401, 413, 414, 418.1.10 or 418.7,

ii.  the aggregate of

(1)  all amounts each of which is an amount deducted under section 147, paragraph d of section 157 or section 160, 163, 176, 176.4, 178 or 179 in computing his income for the year from a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 147.2 or 176.3 in computing his income for the year in respect of an expense incurred by a partnership of which he was a specified member in the fiscal period thereof ending immediately before the partnership ceased to exist,

iii.  the aggregate of

(1)  all amounts, other than allowable capital losses, each of which is an amount deducted in computing his income for the year in respect of his share of any loss of a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 733.0.0.1 in computing his taxable income for the year,

iv.  50% of the aggregate of all amounts each of which is an amount deducted under section 371, 401, 413, 414, 418.1.10 or 418.7 in computing his income for the year in respect of expenses incurred and renounced under section 359.2, 359.2.1, 359.4 or 359.6 by a corporation or in respect of expenses incurred by a partnership of which he was a specified member in the fiscal period of the partnership in which the expense was incurred, other than any such expense that would be referred to in subparagraph i of paragraph a of section 726.4.10 if the reference therein to “30 June 1988” were a reference to “31 December 1988”,

v.  the aggregate of all amounts each of which is the amount of his loss for the year from property or from renting or leasing a rental property within the meaning of section 130R46 of the Regulation respecting the Taxation Act (R.R.Q., 1981, chapter I-3, r.1) or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member other than a partnership of which he was a specified member in the fiscal year thereof ending in the year, and

vi.  the amount by which the aggregate of his net capital losses for other taxation years deducted under section 729 in computing his taxable income for the year exceeds the amount determined in respect of the individual for the year under subparagraph 1 of subparagraph ii of subparagraph b;

vii.  the amount deducted in computing the individual’s income for the year under section 336.6;

(a.3)  “interest in a family farm partnership” of an individual, other than a trust that is not a personal trust, at any time means an interest owned by the individual at that time in a partnership where

i.  throughout any 24-month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to

(1)  property that has been used by the partnership or any of the persons referred to in the fifth paragraph, principally in the course of carrying on the business of farming in Canada in which the individual, a beneficiary referred to in subparagraph b of the fifth paragraph or a spouse, a child or the father or mother of the individual or of such a beneficiary was actively engaged on a regular and continuous basis,

(2)  shares of the capital stock or indebtedness of one or more corporations all or substantially all of the fair market value of the property of which was attributable to properties described in subparagraph 3, or

(3)  properties described in subparagraph 1 or 2, and

ii.  at that time, all or substantially all of the fair market value of the property of the partnership was attributable to

(1)  property that has been used principally in the course of carrying on the business of farming in Canada by the partnership or a person referred to in the fifth paragraph,

(2)  shares of the capital stock or indebtedness of one or more corporations described in subparagraph 2 of subparagraph i, or

(3)  properties described in subparagraph 1 or 2;

(b)  “annual gains limit” of an individual for a taxation year means the amount, if any, by which

i.  the lesser of

(1)  the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses, and

(2)  the amount that would be determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses if the only properties referred to in that paragraph were qualified farm properties disposed of by the individual after 31 December 1984, qualified small business corporation shares disposed of by the individual after 17 June 1987 and qualified fishing properties disposed of by the individual after 10 December 2002, exceeds

ii.  the aggregate of

(1)  the amount by which the individual’s net capital losses for other taxation years deducted under section 729 in computing the individual’s taxable income for the year exceeds the amount by which the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses exceeds the amount determined under subparagraph i in respect of the individual for the year, and

(2)  the individual’s allowable business investment losses for the year;

(c)  “cumulative gains limit” of an individual at the end of a taxation year means the amount, if any, by which

i.  the aggregate of all amounts determined under subparagraph i of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984, exceeds

ii.  the aggregate of

(1)  all amounts determined under subparagraph ii of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984,

(2)  the amount deducted by the individual under subparagraph iii of subparagraph c of the first paragraph of section 28 in computing his income for the taxation year 1985,

(3)  all amounts deducted by the individual under this Title in computing his taxable income for preceding taxation years, and

(4)  the individual’s cumulative net investment loss at the end of the year;

(d)  “cumulative net investment loss” of an individual at the end of a taxation year means the amount by which

i.  the aggregate of all amounts each of which is the investment expense of the individual for the year or a preceding taxation year ending after 31 December 1987, exceeds

ii.  the aggregate of all amounts each of which is the investment income of the individual for the year or a preceding taxation year ending after 31 December 1987;

(e)  “investment income” of an individual for a taxation year means the aggregate of the following amounts:

i.  the aggregate of all amounts each of which is an amount included in computing his income for the year from property, other than an amount included under section 113, paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for that year before being struck out, including any amount so included under section 94 in respect of a property the income from which would be income from property, except to the extent that the amount was otherwise taken into account in computing his investment income or investment expense for the year,

ii.  the aggregate of all amounts, other than taxable capital gains, each of which is an amount included in computing his income for the year in respect of his share of the income of a partnership of which he was a specified member in the fiscal period thereof ending in the year, including his share of all amounts included in computing the income of the partnership under section 94,

iii.  50% of all amounts included in computing his income for the year under paragraphs c to e.1 of section 330,

iv.  the aggregate of all amounts each of which is the amount of his income for the year from property or from renting or leasing a rental property within the meaning of section 130R46 of the Regulation respecting the Taxation Act or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member, other than a partnership of which he was a specified member in the fiscal year thereof ending in the year, including any amount included in computing his income for the year under section 94 in respect of a rental property of the individual or the partnership or in respect of a property any income from which would be income from property,

v.  the amount by which the aggregate of all amounts, other than amounts in respect of an income-averaging annuity contract, an income-averaging annuity contract respecting income from artistic activities or an annuity contract purchased pursuant to a deferred profit sharing plan or a revoked plan, referred to in section 879, included in computing the individual’s income for the year under paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for the year before being struck out, exceeds the aggregate of all amounts deducted under paragraph f of section 336 in computing the individual’s income for the year; and

vi.  the amount by which the aggregate of all amounts included under paragraph b of section 28 in respect of capital gains and capital losses in computing his income for the year exceeds the amount determined in respect of the individual for the year under subparagraph i of subparagraph b.

For the purposes of subparagraph i of subparagraph a of the first paragraph, property of an individual will not be considered to have been used in the course of carrying on the business of farming in Canada unless

(a)  the property or property for which the property was substituted, in this subparagraph referred to as “the property”, was owned, throughout a period of at least 24 months immediately preceding the time specified in subparagraph a of the first paragraph, by a person who was the individual or a person referred to in subparagraph 2 or 3 of subparagraph i of subparagraph a of the first paragraph, by a personal trust from which the individual acquired the property or by a partnership referred to in subparagraph 5 of the said subparagraph i, and

i.  in at least two years during which the property was so owned, the gross revenue of such a person, or of a personal trust from which the individual acquired the property, from the farming business carried on in Canada in which the property was principally used and in which such a person or, where the individual is a personal trust, a beneficiary of the trust was actively engaged on a regular and continuous basis exceeded the income of the person from all other sources for the year, or

ii.  the property was used by a corporation referred to in subparagraph 4 of subparagraph i of paragraph a of the first paragraph or by a partnership referred to in subparagraph 5 of the said subparagraph i principally in the course of carrying on the business of farming in Canada throughout a period of at least 24 months during which an individual referred to in any of subparagraphs 1 to 3 of the said subparagraph i was actively engaged on a regular and continuous basis in the farming business in which the property was used; or

(b)  where the property was last acquired by the individual or a partnership before 18 June 1987, or after 17 June 1987 pursuant to an agreement in writing entered into before that date, the property or property for which the property was substituted, in this subparagraph referred to as “the property”, was used principally in the course of carrying on the business of farming in Canada by a person or a partnership referred to in any of subparagraphs 1 to 5 of subparagraph i of subparagraph a of the first paragraph or by a personal trust from which the individual acquired the property, in the year the property was disposed of by the individual or in at least five years during which the property was owned by an individual referred to in any of subparagraphs 1 to 3 of the said subparagraph i, by a personal trust from which the individual acquired the property, or by a partnership referred to in subparagraph 5 of that subparagraph i.

For the purposes of subparagraph iv of subparagraph a of the first paragraph, an incorporeal capital property is deemed to include capital property in respect of which paragraph b of section 437 or subparagraph c of the first paragraph of section 462 applies and will not be considered to have been used in the course of carrying on the business of farming in Canada unless the conditions set out in subparagraph a or b of the second paragraph, as the case may be, are met, except if the incorporeal capital property is a real servitude that encumbers an immovable referred to in subparagraph i of subparagraph a of the first paragraph.

For the purposes of subparagraph a.0.1 of the first paragraph, property of an individual is considered to be used in carrying on a fishing business, including the harvesting of marine plants, in Québec only if

(a)  the individual owned or held the property, or property for which the property was substituted, throughout a period of at least 24 months immediately preceding the time specified in subparagraph a.0.1 of the first paragraph; and

(b)  in at least two years during which the individual so owned or held the property or property for which the property was substituted, the individual’s gross revenue from the fishing business, including the harvesting of marine plants, carried on in Québec in which the property or property for which the property was substituted was principally used and in which the individual was actively engaged on a regular and continuous basis, exceeded the income of the individual from all other sources for the year.

The persons referred to in subparagraph a.3 of the first paragraph are

(a)  the individual;

(b)  where the individual is a personal trust, a beneficiary of the trust;

(c)  a spouse, a child or the father or mother of the individual or of a beneficiary referred to in subparagraph b; or

(d)  a corporation a share of the capital stock of which was a share of the capital stock of a family farm corporation of the individual, a beneficiary referred to in subparagraph b or a spouse, a child or the father or mother of the individual or of a beneficiary referred to in subparagraph b.

1987, c. 67, s. 142; 1990, c. 59, s. 258; 1993, c. 16, s. 264; 1994, c. 22, s. 247; 1995, c. 49, s. 164; 1996, c. 39, s. 179; 1997, c. 3, s. 71; 1997, c. 14, s. 104; 1998, c. 16, s. 251; 2004, c. 8, s. 140; 2004, c. 21, s. 120; 2005, c. 1, s. 138; 2005, c. 23, s. 75; 2005, c. 38, s. 89; 2006, c. 13, s. 51.

2006-03-01

726.6. In this Title, the expression

(a)  "qualified farm property" of an individual, other than a trust that is not a personal trust, at any time means a property owned at that time by the individual or his spouse, or by a partnership, an interest in which is an interest in a family farm partnership of the individual or his spouse that is

i.  an immovable that has been used in the course of carrying on a business of farming in Canada, by

(1)  the individual,

(2)  where the individual is a personal trust, a beneficiary referred to in paragraph b of section 668.1 of the trust,

(3)  the spouse, a child, the father or the mother of a person referred to in subparagraph 1 or 2,

(4)  a corporation, a share of the capital stock of which is a share of the capital stock of a family farm corporation of an individual referred to in any of subparagraphs 1 to 3, or

(5)  a partnership, an interest in which is an interest in a family farm partnership of an individual referred to in any of subparagraphs 1 to 3,

ii.  a share of the capital stock of a family farm corporation of the individual or his spouse,

iii.  an interest in a family farm partnership of the individual or his spouse, or

iv.  an incorporeal capital property used, in the course of carrying on the business of farming in Canada, by a person or partnership referred to in subparagraphs 1 to 5 of subparagraph i or by a personal trust from which the individual acquired capital property;

(a.0.1)  "qualified fishing property" of an individual, other than a trust, at any time means a fishing licence, an individual quota or a fishing boat owned or held by the individual at that time and that has been used by the individual in carrying on a fishing business, including the harvesting of marine plants, in Québec;

(a.1)  "child" means a child within the meaning of subparagraph d of the first paragraph of section 451;

(a.2)  "investment expense" of an individual for a taxation year means an amount equal to the amount by which the aggregate of the amount included in computing the individual’s income for the year under section 313.10 and the amount included in computing the individual’s taxable income for the year under section 737.0.1 is exceeded by the aggregate of

i.  the aggregate of all amounts each of which is an amount deducted in computing his income for the year from property, except to the extent that the amount was otherwise taken into account in computing his investment expense or his investment income for the year, other than any such amount deducted under

(1)  section 147, 160, 163, 176, 176.4 or 178, in respect of borrowed money that was used by the individual, or that was used to acquire property that was used by the individual, to make a payment as consideration for an income-averaging annuity contract, to pay a premium under a registered retirement savings plan or to make a contribution to a registered pension plan or a deferred profit sharing plan, or

(2)  section 177, the first paragraph of section 360 or section 371, 401, 413, 414, 418.1.10 or 418.7,

ii.  the aggregate of

(1)  all amounts each of which is an amount deducted under section 147, paragraph d of section 157 or section 160, 163, 176, 176.4, 178 or 179 in computing his income for the year from a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 147.2 or 176.3 in computing his income for the year in respect of an expense incurred by a partnership of which he was a specified member in the fiscal period thereof ending immediately before the partnership ceased to exist,

iii.  the aggregate of

(1)  all amounts, other than allowable capital losses, each of which is an amount deducted in computing his income for the year in respect of his share of any loss of a partnership of which he was a specified member in the fiscal period thereof ending in the year, and

(2)  all amounts each of which is an amount deducted under section 733.0.0.1 in computing his taxable income for the year,

iv.  50% of the aggregate of all amounts each of which is an amount deducted under section 371, 401, 413, 414, 418.1.10 or 418.7 in computing his income for the year in respect of expenses incurred and renounced under section 359.2, 359.2.1, 359.4 or 359.6 by a corporation or in respect of expenses incurred by a partnership of which he was a specified member in the fiscal period of the partnership in which the expense was incurred, other than any such expense that would be referred to in subparagraph i of paragraph a of section 726.4.10 if the reference therein to "30 June 1988" were a reference to "31 December 1988",

v.  the aggregate of all amounts each of which is the amount of his loss for the year from property or from renting or leasing a rental property within the meaning of section 130R46 of the Regulation respecting the Taxation Act (R.R.Q., 1981, chapter I-3, r.1) or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member other than a partnership of which he was a specified member in the fiscal year thereof ending in the year, and

vi.  the amount by which the aggregate of his net capital losses for other taxation years deducted under section 729 in computing his taxable income for the year exceeds the amount determined in respect of the individual for the year under subparagraph 1 of subparagraph ii of subparagraph b;

vii.  the amount deducted in computing the individual’s income for the year under section 336.6;

(a.3)  "interest in a family farm partnership" of an individual, other than a trust that is not a personal trust, at any time means an interest owned by the individual at that time in a partnership where

i.  throughout any 24-month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to

(1)  property that has been used by the partnership or any of the persons referred to in the fifth paragraph, principally in the course of carrying on the business of farming in Canada in which the individual, a beneficiary referred to in subparagraph b of the fifth paragraph or a spouse, a child or the father or mother of the individual or of such a beneficiary was actively engaged on a regular and continuous basis,

(2)  shares of the capital stock or indebtedness of one or more corporations all or substantially all of the fair market value of the property of which was attributable to properties described in subparagraph 3, or

(3)  properties described in subparagraph 1 or 2, and

ii.  at that time, all or substantially all of the fair market value of the property of the partnership was attributable to

(1)  property that has been used principally in the course of carrying on the business of farming in Canada by the partnership or a person referred to in the fifth paragraph,

(2)  shares of the capital stock or indebtedness of one or more corporations described in subparagraph 2 of subparagraph i, or

(3)  properties described in subparagraph 1 or 2;

(b)  "annual gains limit" of an individual for a taxation year means the amount, if any, by which

i.  the lesser of

(1)  the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses, and

(2)  the amount that would be determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses if the only properties referred to in that paragraph were qualified farm properties disposed of by the individual after 31 December 1984, qualified small business corporation shares disposed of by the individual after 17 June 1987 and qualified fishing properties disposed of by the individual after 10 December 2002, exceeds

ii.  the aggregate of

(1)  the amount by which the individual’s net capital losses for other taxation years deducted under section 729 in computing the individual’s taxable income for the year exceeds the amount by which the amount determined in respect of the individual for the year under paragraph b of section 28 in respect of capital gains and capital losses exceeds the amount determined under subparagraph i in respect of the individual for the year, and

(2)  the individual’s allowable business investment losses for the year;

(c)  "cumulative gains limit" of an individual at the end of a taxation year means the amount, if any, by which

i.  the aggregate of all amounts determined under subparagraph i of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984, exceeds

ii.  the aggregate of

(1)  all amounts determined under subparagraph ii of subparagraph b in respect of the individual for the year or preceding taxation years that end after 31 December 1984,

(2)  the amount deducted by the individual under subparagraph iii of subparagraph c of the first paragraph of section 28 in computing his income for the taxation year 1985,

(3)  all amounts deducted by the individual under this Title in computing his taxable income for preceding taxation years, and

(4)  the individual’s cumulative net investment loss at the end of the year;

(d)  "cumulative net investment loss" of an individual at the end of a taxation year means the amount by which

i.  the aggregate of all amounts each of which is the investment expense of the individual for the year or a preceding taxation year ending after 31 December 1987, exceeds

ii.  the aggregate of all amounts each of which is the investment income of the individual for the year or a preceding taxation year ending after 31 December 1987;

(e)  "investment income" of an individual for a taxation year means the aggregate of the following amounts:

i.  the aggregate of all amounts each of which is an amount included in computing his income for the year from property, other than an amount included under section 113, paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for that year before being struck out, including any amount so included under section 94 in respect of a property the income from which would be income from property, except to the extent that the amount was otherwise taken into account in computing his investment income or investment expense for the year,

ii.  the aggregate of all amounts, other than taxable capital gains, each of which is an amount included in computing his income for the year in respect of his share of the income of a partnership of which he was a specified member in the fiscal period thereof ending in the year, including his share of all amounts included in computing the income of the partnership under section 94,

iii.  50% of all amounts included in computing his income for the year under paragraphs c to e.1 of section 330,

iv.  the aggregate of all amounts each of which is the amount of his income for the year from property or from renting or leasing a rental property within the meaning of section 130R46 of the Regulation respecting the Taxation Act or a property described in Class 31 or 32 of Schedule B to the said regulation, if the property was owned by the individual or by a partnership of which he was a member, other than a partnership of which he was a specified member in the fiscal year thereof ending in the year, including any amount included in computing his income for the year under section 94 in respect of a rental property of the individual or the partnership or in respect of a property any income from which would be income from property,

v.  the amount by which the aggregate of all amounts, other than amounts in respect of an income-averaging annuity contract, an income-averaging annuity contract respecting income from artistic activities or an annuity contract purchased pursuant to a deferred profit sharing plan or a revoked plan, referred to in section 879, included in computing the individual’s income for the year under paragraph c of section 312 or paragraph c.1 of section 312, as that paragraph read for the year before being struck out, exceeds the aggregate of all amounts deducted under paragraph f of section 336 in computing the individual’s income for the year; and

vi.  the amount by which the aggregate of all amounts included under paragraph b of section 28 in respect of capital gains and capital losses in computing his income for the year exceeds the amount determined in respect of the individual for the year under subparagraph i of subparagraph b.

For the purposes of subparagraph i of subparagraph a of the first paragraph, property of an individual will not be considered to have been used in the course of carrying on the business of farming in Canada unless

(a)  the property or property for which the property was substituted, in this subparagraph referred to as "the property", was owned, throughout a period of at least 24 months immediately preceding the time specified in subparagraph a of the first paragraph, by a person who was the individual or a person referred to in subparagraph 2 or 3 of subparagraph i of subparagraph a of the first paragraph, by a personal trust from which the individual acquired the property or by a partnership referred to in subparagraph 5 of the said subparagraph i, and

i.  in at least two years during which the property was so owned, the gross revenue of such a person, or of a personal trust from which the individual acquired the property, from the farming business carried on in Canada in which the property was principally used and in which such a person or, where the individual is a personal trust, a beneficiary of the trust was actively engaged on a regular and continuous basis exceeded the income of the person from all other sources for the year, or

ii.  the property was used by a corporation referred to in subparagraph 4 of subparagraph i of paragraph a of the first paragraph or by a partnership referred to in subparagraph 5 of the said subparagraph i principally in the course of carrying on the business of farming in Canada throughout a period of at least 24 months during which an individual referred to in any of subparagraphs 1 to 3 of the said subparagraph i was actively engaged on a regular and continuous basis in the farming business in which the property was used; or

(b)  where the property was last acquired by the individual or a partnership before 18 June 1987, or after 17 June 1987 pursuant to an agreement in writing entered into before that date, the property or property for which the property was substituted, in this subparagraph referred to as "the property", was used principally in the course of carrying on the business of farming in Canada by a person or a partnership referred to in any of subparagraphs 1 to 5 of subparagraph i of subparagraph a of the first paragraph or by a personal trust from which the individual acquired the property, in the year the property was disposed of by the individual or in at least five years during which the property was owned by an individual referred to in any of subparagraphs 1 to 3 of the said subparagraph i, by a personal trust from which the individual acquired the property, or by a partnership referred to in subparagraph 5 of that subparagraph i.

For the purposes of subparagraph iv of subparagraph a of the first paragraph, an incorporeal capital property is deemed to include capital property in respect of which paragraph b of section 437 or subparagraph c of the first paragraph of section 462 applies and will not be considered to have been used in the course of carrying on the business of farming in Canada unless the conditions set out in subparagraph a or b of the second paragraph, as the case may be, are met.

For the purposes of subparagraph a.0.1 of the first paragraph, property of an individual is considered to be used in carrying on a fishing business, including the harvesting of marine plants, in Québec only if

(a)  the individual owned or held the property, or property for which the property was substituted, throughout a period of at least 24 months immediately preceding the time specified in subparagraph a.0.1 of the first paragraph; and

(b)  in at least two years during which the individual so owned or held the property or property for which the property was substituted, the individual’s gross revenue from the fishing business, including the harvesting of marine plants, carried on in Québec in which the property or property for which the property was substituted was principally used and in which the individual was actively engaged on a regular and continuous basis, exceeded the income of the individual from all other sources for the year.

The persons referred to in subparagraph a.3 of the first paragraph are

(a)  the individual;

(b)  where the individual is a personal trust, a beneficiary of the trust;

(c)  a spouse, a child or the father or mother of the individual or of a beneficiary referred to in subparagraph b; or

(d)  a corporation a share of the capital stock of which was a share of the capital stock of a family farm corporation of the individual, a beneficiary referred to in subparagraph b or a spouse, a child or the father or mother of the individual or of a beneficiary referred to in subparagraph b.

1987, c. 67, s. 142; 1990, c. 59, s. 258; 1993, c. 16, s. 264; 1994, c. 22, s. 247; 1995, c. 49, s. 164; 1996, c. 39, s. 179; 1997, c. 3, s. 71; 1997, c. 14, s. 104; 1998, c. 16, s. 251; 2004, c. 8, s. 140; 2004, c. 21, s. 120; 2005, c. 1, s. 138; 2005, c. 23, s. 75; 2005, c. 38, s. 89.