I-3 - Taxation Act

Section 772.5.2 Disposition versions

2017-02-08

772.5.2. If at any particular time a taxpayer disposes of a property that is a share or debt obligation and the period that began at the time the taxpayer last acquired the property and ended at the particular time is one year or less, the amount included in business-income tax or non-business-income tax paid by the taxpayer for a particular taxation year on account of all taxes that meet the following conditions, shall, subject to section 772.5.3, not exceed the amount determined by the formula provided for in the second paragraph:

(a)  the taxes are paid by the taxpayer in respect of dividends or interest in respect of the period that are included in computing the taxpayer’s income from the property for any taxation year;

(b)  the taxes are otherwise included in business-income tax or non-business-income tax for any taxation year; and

(c)  the taxes are similar to the tax levied under Part XIII of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement).

The formula to which the first paragraph refers is the following:

A × (B − C) × D / E.

In the formula provided for in the second paragraph,

(a)  A is,

i.  if the foreign tax was otherwise included in business-income tax, the total of

(1)  that proportion of 26.5% that the number of days in the taxation year that are included in the calendar year 2011 is of the number of days in the taxation year, and

(2)  that proportion of 25% that the number of days in the taxation year that are after 31 December 2011 is of the number of days in the taxation year, or

ii.  if the foreign tax was otherwise included in non-business-income tax, the total of

(1)  if the taxpayer is a Canadian-controlled private corporation throughout the taxation year, that proportion of 28% that the number of days in the taxation year that are after 31 December 2010 is of the number of days in the taxation year, and

(2)  if the taxpayer is not a Canadian-controlled private corporation throughout the taxation year, the total of that proportion of 16.5% that the number of days in the taxation year that are included in the calendar year 2011 is of the number of days in the taxation year and that proportion of 15% that the number of days in the taxation year that are after 31 December 2011 is of the number of days in the taxation year;

(b)  B is the aggregate of

i.  the taxpayer’s proceeds from the disposition of the property at the particular time, and

ii.  the amount of all dividends or interest from the property in respect of the period included in computing the taxpayer’s income for any taxation year;

(c)  C is the aggregate of the cost at which the taxpayer last acquired the property and any outlays or expenses made or incurred by the taxpayer for the purpose of disposing of the property at the particular time;

(d)  D is the amount of the taxes referred to in the first paragraph that would otherwise be included in computing the taxpayer’s business-income tax or non-business-income tax for the particular year; and

(e)  E is the total amount of the taxes referred to in the first paragraph that would otherwise be included in computing the taxpayer’s business-income tax or non-business-income tax for all taxation years.

2001, c. 53, s. 133; 2003, c. 2, s. 231; 2017, c. 1, s. 218.

2006-03-01

772.5.2. If at any particular time a taxpayer disposes of a property that is a share or debt obligation and the period that began at the time the taxpayer last acquired the property and ended at the particular time is one year or less, the amount included in business-income tax or non-business-income tax paid by the taxpayer for a particular taxation year on account of all taxes that meet the following conditions, shall, subject to section 772.5.3, not exceed the amount determined by the formula provided for in the second paragraph:

(a)  the taxes are paid by the taxpayer in respect of dividends or interest in respect of the period that are included in computing the taxpayer’s income from the property for any taxation year;

(b)  the taxes are otherwise included in business-income tax or non-business-income tax for any taxation year; and

(c)  the taxes are similar to the tax levied under Part XIII of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement).

The formula to which the first paragraph refers is the following:

A × (B − C) × D / E.

In the formula provided for in the second paragraph,

(a)  A is a rate of 40%;

(b)  B is the aggregate of

i.  the taxpayer’s proceeds from the disposition of the property at the particular time, and

ii.  the amount of all dividends or interest from the property in respect of the period included in computing the taxpayer’s income for any taxation year;

(c)  C is the aggregate of the cost at which the taxpayer last acquired the property and any outlays or expenses made or incurred by the taxpayer for the purpose of disposing of the property at the particular time;

(d)  D is the amount of the taxes referred to in the first paragraph that would otherwise be included in computing the taxpayer’s business-income tax or non-business-income tax for the particular year; and

(e)  E is the total amount of the taxes referred to in the first paragraph that would otherwise be included in computing the taxpayer’s business-income tax or non-business-income tax for all taxation years.

2001, c. 53, s. 133; 2003, c. 2, s. 231.