I-3 - Taxation Act

Section 93.3.1 Disposition versions

2017-02-08

93.3.1. The rules in the second paragraph apply where

(a)  a person or partnership, in this section referred to as the “transferor”, disposes at a particular time, otherwise than in a disposition described in any of paragraphs a to e of section 238, of a particular depreciable property of a particular prescribed class of the transferor;

(b)  the lesser of the following amounts exceeds the amount that would otherwise be the transferor’s proceeds of disposition of the particular property at the particular time:

i.  the capital cost to the transferor of the particular property, and

ii.  the proportion of the undepreciated capital cost to the transferor of all property of the particular class immediately before the particular time that the fair market value of the particular property at the particular time is of the fair market value of all property of the particular class immediately before the particular time; and

(c)  on the thirtieth day after the particular time, a particular person or partnership, who is the transferor or a person affiliated with the transferor, owns or has a right to acquire the particular property, other than a right, as security only, derived from a hypothec, mortgage, agreement of sale or similar obligation.

The rules to which the first paragraph refers are as follows:

(a)  sections 518 to 533 and 614 to 617 do not apply in respect of the disposition of the particular property;

(b)  for the purpose of applying this division, sections 130 and 130.1 and any regulations made for the purposes of paragraph a of section 130 in respect of the transferor for taxation years that end after the particular time,

i.  the transferor is deemed to have disposed of the particular property for proceeds of disposition equal to the lesser of the amounts determined in subparagraphs i and ii of subparagraph b of the first paragraph with respect to the particular property,

ii.  if two or more properties of a prescribed class of the transferor are disposed of at the same time, subparagraph i applies in their respect as if each property so disposed of had been separately disposed of in the following order:

(1)  if an order is designated after 19 December 2006 in their respect under subparagraph ii of paragraph e of subsection 21.2 of section 13 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), the order so designated, and

(2)  if subparagraph 1 does not apply, the order designated by the transferor or, if the transferor does not designate an order, in the order designated by the Minister,

iii.  the transferor is deemed to own a property that was acquired before the beginning of the taxation year that includes the particular time at a capital cost equal to the amount of the excess described in subparagraph b of the first paragraph with respect to the particular property, and that is property of the particular class, until the time that is immediately before the first time, after the particular time,

(1)  at which a 30-day period begins throughout which neither the transferor nor a person affiliated with the transferor owns or has a right to acquire the particular property, other than a right, as security only, derived from a hypothec, mortgage, agreement of sale or similar obligation,

(2)  at which the particular property is not used by the transferor or a person affiliated with the transferor for the purpose of earning income and is used for another purpose,

(3)  at which the particular property would, if it were owned by the transferor, be deemed under Chapter I of Title I.1 of Book VI or section 999.1 to have been disposed of by the transferor,

(4)  that is immediately before the transferor is subject to a loss restriction event, or

(5)  at which the winding-up of the transferor begins, other than a winding-up referred to in section 556, where the transferor is a corporation, and

iv.  the property described in subparagraph iii is considered to have become available for use by the transferor at the time at which the particular property is considered to have become available for use by the particular person or partnership referred to in subparagraph c of the first paragraph;

(c)  for the purposes of subparagraphs iii and iv of subparagraph b, where a partnership otherwise ceases to exist at any time after the particular time,

i.  the partnership is deemed not to have ceased to exist until the time that is immediately after the first time described in subparagraphs 1 to 5 of subparagraph iii of subparagraph b, and

ii.  each person who was a member of the partnership immediately before the partnership would, but for this subparagraph c, have ceased to exist is deemed to remain a member of the partnership, until the time that is immediately after the first time described in subparagraphs 1 to 5 of subparagraph iii of subparagraph b; and

(d)  for the purpose of applying this division, sections 130 and 130.1 and any regulations made for the purposes of paragraph a of section 130 in respect of the particular person or partnership referred to in subparagraph c of the first paragraph,

i.  that person’s or partnership’s capital cost of the particular property is deemed to be equal to the amount that was the transferor’s capital cost of that property, and

ii.  the amount by which the transferor’s capital cost of the particular property exceeds the lesser of its fair market value at the particular time and the amount that would otherwise be the transferor’s proceeds of disposition of the property at the particular time is deemed to have been allowed as depreciation to the particular person or partnership in respect of property of the prescribed class that includes that property for taxation years ending before the particular time.

Chapter V.2 of Title II of Book I applies in relation to a designation made under subparagraph ii of paragraph e of subsection 21.2 of section 13 of the Income Tax Act or in relation to a designation made under subparagraph ii of subparagraph b of the second paragraph before 20 December 2006 and must, if the order referred to in subparagraph 1 of subparagraph ii of subparagraph b of the second paragraph was designated by the Minister of National Revenue, apply, with the necessary modifications, as if the designation had been made by the transferor.

2000, c. 5, s. 32; 2004, c. 8, s. 18; 2004, c. 21, s. 53; 2005, c. 1, s. 33; 2009, c. 5, s. 52; 2017, c. 1, s. 87.

2009-05-15

93.3.1. The rules in the second paragraph apply where

(a)  a person or partnership, in this section referred to as the “transferor”, disposes at a particular time, otherwise than in a disposition described in any of paragraphs a to e of section 238, of a particular depreciable property of a particular prescribed class of the transferor;

(b)  the lesser of the following amounts exceeds the amount that would otherwise be the transferor’s proceeds of disposition of the particular property at the particular time:

i.  the capital cost to the transferor of the particular property, and

ii.  the proportion of the undepreciated capital cost to the transferor of all property of the particular class immediately before the particular time that the fair market value of the particular property at the particular time is of the fair market value of all property of the particular class immediately before the particular time; and

(c)  on the thirtieth day after the particular time, a particular person or partnership, who is the transferor or a person affiliated with the transferor, owns or has a right to acquire the particular property, other than a right, as security only, derived from a hypothec, mortgage, agreement of sale or similar obligation.

The rules to which the first paragraph refers are as follows:

(a)  sections 518 to 533 and 614 to 617 do not apply in respect of the disposition of the particular property;

(b)  for the purpose of applying this division, sections 130 and 130.1 and any regulations made for the purposes of paragraph a of section 130 in respect of the transferor for taxation years that end after the particular time,

i.  the transferor is deemed to have disposed of the particular property for proceeds of disposition equal to the lesser of the amounts determined in subparagraphs i and ii of subparagraph b of the first paragraph with respect to the particular property,

ii.  if two or more properties of a prescribed class of the transferor are disposed of at the same time, subparagraph i applies in their respect as if each property so disposed of had been separately disposed of in the following order:

(1)  if an order is designated after 19 December 2006 in their respect under subparagraph ii of paragraph e of subsection 21.2 of section 13 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), the order so designated, and

(2)  if subparagraph 1 does not apply, the order designated by the transferor or, if the transferor does not designate an order, in the order designated by the Minister,

iii.  the transferor is deemed to own a property that was acquired before the beginning of the taxation year that includes the particular time at a capital cost equal to the amount of the excess described in subparagraph b of the first paragraph with respect to the particular property, and that is property of the particular class, until the time that is immediately before the first time, after the particular time,

(1)  at which a 30-day period begins throughout which neither the transferor nor a person affiliated with the transferor owns or has a right to acquire the particular property, other than a right, as security only, derived from a hypothec, mortgage, agreement of sale or similar obligation,

(2)  at which the particular property is not used by the transferor or a person affiliated with the transferor for the purpose of earning income and is used for another purpose,

(3)  at which the particular property would, if it were owned by the transferor, be deemed under Chapter I of Title I.1 of Book VI or section 999.1 to have been disposed of by the transferor,

(4)  that is immediately before control of the transferor is acquired by a person or group of persons, where the transferor is a corporation, or

(5)  at which the winding-up of the transferor begins, other than a winding-up referred to in section 556, where the transferor is a corporation, and

iv.  the property described in subparagraph iii is considered to have become available for use by the transferor at the time at which the particular property is considered to have become available for use by the particular person or partnership referred to in subparagraph c of the first paragraph;

(c)  for the purposes of subparagraphs iii and iv of subparagraph b, where a partnership otherwise ceases to exist at any time after the particular time,

i.  the partnership is deemed not to have ceased to exist until the time that is immediately after the first time described in subparagraphs 1 to 5 of subparagraph iii of subparagraph b, and

ii.  each person who was a member of the partnership immediately before the partnership would, but for this subparagraph c, have ceased to exist is deemed to remain a member of the partnership, until the time that is immediately after the first time described in subparagraphs 1 to 5 of subparagraph iii of subparagraph b; and

(d)  for the purpose of applying this division, sections 130 and 130.1 and any regulations made for the purposes of paragraph a of section 130 in respect of the particular person or partnership referred to in subparagraph c of the first paragraph,

i.  that person’s or partnership’s capital cost of the particular property is deemed to be equal to the amount that was the transferor’s capital cost of that property, and

ii.  the amount by which the transferor’s capital cost of the particular property exceeds the lesser of its fair market value at the particular time and the amount that would otherwise be the transferor’s proceeds of disposition of the property at the particular time is deemed to have been allowed as depreciation to the particular person or partnership in respect of property of the prescribed class that includes that property for taxation years ending before the particular time.

Chapter V.2 of Title II of Book I applies in relation to a designation made under subparagraph ii of paragraph e of subsection 21.2 of section 13 of the Income Tax Act or in relation to a designation made under subparagraph ii of subparagraph b of the second paragraph before 20 December 2006 and must, if the order referred to in subparagraph 1 of subparagraph ii of subparagraph b of the second paragraph was designated by the Minister of National Revenue, apply, with the necessary modifications, as if the designation had been made by the transferor.

2000, c. 5, s. 32; 2004, c. 8, s. 18; 2004, c. 21, s. 53; 2005, c. 1, s. 33; 2009, c. 5, s. 52.

2006-03-01

93.3.1. The rules in the second paragraph apply where

(a)  a person or partnership, in this section referred to as the “transferor”, disposes at a particular time, otherwise than in a disposition described in any of paragraphs a to e of section 238, of a particular depreciable property of a particular prescribed class of the transferor;

(b)  the lesser of the following amounts exceeds the amount that would otherwise be the transferor’s proceeds of disposition of the particular property at the particular time:

i.  the capital cost to the transferor of the particular property, and

ii.  the proportion of the undepreciated capital cost to the transferor of all property of the particular class immediately before the particular time that the fair market value of the particular property at the particular time is of the fair market value of all property of the particular class immediately before the particular time; and

(c)  on the thirtieth day after the particular time, a particular person or partnership, who is the transferor or a person affiliated with the transferor, owns or has a right to acquire the particular property, other than a right, as security only, derived from a hypothec, mortgage, agreement of sale or similar obligation.

The rules to which the first paragraph refers are as follows:

(a)  sections 518 to 533 and 614 to 617 do not apply in respect of the disposition of the particular property;

(b)  for the purpose of applying this division, sections 130 and 130.1 and any regulations made for the purposes of paragraph a of section 130 in respect of the transferor for taxation years that end after the particular time,

i.  the transferor is deemed to have disposed of the particular property for proceeds of disposition equal to the lesser of the amounts determined in subparagraphs i and ii of subparagraph b of the first paragraph with respect to the particular property,

ii.  where two or more properties of a prescribed class of the transferor are disposed of at the same time, subparagraph i applies in their respect as if each property so disposed of had been separately disposed of in the order designated by the transferor or, if the transferor does not designate an order, in the order designated by the Minister,

iii.  the transferor is deemed to own a property that was acquired before the beginning of the taxation year that includes the particular time at a capital cost equal to the amount of the excess described in subparagraph b of the first paragraph with respect to the particular property, and that is property of the particular class, until the time that is immediately before the first time, after the particular time,

(1)  at which a 30-day period begins throughout which neither the transferor nor a person affiliated with the transferor owns or has a right to acquire the particular property, other than a right, as security only, derived from a hypothec, mortgage, agreement of sale or similar obligation,

(2)  at which the particular property is not used by the transferor or a person affiliated with the transferor for the purpose of earning income and is used for another purpose,

(3)  at which the particular property would, if it were owned by the transferor, be deemed under Chapter I of Title I.1 of Book VI or section 999.1 to have been disposed of by the transferor,

(4)  that is immediately before control of the transferor is acquired by a person or group of persons, where the transferor is a corporation, or

(5)  at which the winding-up of the transferor begins, other than a winding-up referred to in section 556, where the transferor is a corporation, and

iv.  the property described in subparagraph iii is considered to have become available for use by the transferor at the time at which the particular property is considered to have become available for use by the particular person or partnership referred to in subparagraph c of the first paragraph;

(c)  for the purposes of subparagraphs iii and iv of subparagraph b, where a partnership otherwise ceases to exist at any time after the particular time,

i.  the partnership is deemed not to have ceased to exist until the time that is immediately after the first time described in subparagraphs 1 to 5 of subparagraph iii of subparagraph b, and

ii.  each person who was a member of the partnership immediately before the partnership would, but for this subparagraph c, have ceased to exist is deemed to remain a member of the partnership, until the time that is immediately after the first time described in subparagraphs 1 to 5 of subparagraph iii of subparagraph b; and

(d)  for the purpose of applying this division, sections 130 and 130.1 and any regulations made for the purposes of paragraph a of section 130 in respect of the particular person or partnership referred to in subparagraph c of the first paragraph,

i.  that person’s or partnership’s capital cost of the particular property is deemed to be equal to the amount that was the transferor’s capital cost of that property, and

ii.  the amount by which the transferor’s capital cost of the particular property exceeds the lesser of its fair market value at the particular time and the amount that would otherwise be the transferor’s proceeds of disposition of the property at the particular time is deemed to have been allowed as depreciation to the particular person or partnership in respect of property of the prescribed class that includes that property for taxation years ending before the particular time.

2000, c. 5, s. 32; 2004, c. 8, s. 18; 2004, c. 21, s. 53; 2005, c. 1, s. 33.