I-3 - Taxation Act

Section 96 Disposition versions

2009-06-04

96. (1)  Subsection 2 applies where an amount in respect of the disposition in a taxation year of depreciable property of a prescribed class of a taxpayer, in this section and section 96.0.2 referred to as the “former property”, would, but for this section, be the amount determined under subparagraph c or d of the second paragraph of section 93 in respect of the disposition of the former property that is either

(a)  property the proceeds of disposition of which were compensation or an amount described in subparagraph ii, iii or iv of subparagraph f of the first paragraph of section 93; or

(b)  a property that was, immediately before the disposition, a former business property of the taxpayer.

(2)  If the taxpayer acquires, in a taxation year, a depreciable property of a prescribed class of the taxpayer that is a replacement property for a former property of the taxpayer and the taxpayer makes a valid election under subsection 4 of section 13 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) after 19 December 2006 in respect of the former property or, if section 96.0.1 applies, the taxpayer so elects in the taxpayer’s fiscal return filed in accordance with section 1000 for the taxation year, the following rules apply:

(a)  the amount determined under subparagraph c or d of the second paragraph of section 93, in respect of the disposition of the former property, must be reduced by the lesser of the amount by which the amount otherwise determined under that subparagraph c or d, in respect of that disposition, exceeds the undepreciated capital cost to the taxpayer of property of the prescribed class to which the former property belonged at the time immediately before the time that the former property was disposed of, and the amount that has been used by the taxpayer to acquire, in the case of a former property referred to in paragraph a of subsection 1, before the end of the second taxation year following the year referred to in subsection 1 or, if it is later, before the end of the 24-month period following the year referred to in subsection 1, or, in any other case, before the end of the first taxation year following the year referred to in subsection 1 or, if it is later, before the end of the 12-month period following the year referred to in subsection 1, a replacement property that has not been disposed of by the taxpayer before the time at which the taxpayer disposed of the former property; and

(b)  the amount of the reduction determined under paragraph a is deemed to be proceeds of disposition of a depreciable property of the taxpayer that had a capital cost equal to that amount and that was property of the same class as the replacement property, from a disposition made on the day on which the replacement property was acquired by the taxpayer or, if it is later, on the day on which the former property was disposed of by the taxpayer.

(3)  For the purposes of this section, a depreciable property of a prescribed class of a taxpayer is a replacement property for the taxpayer’s former property where

(a)  it is reasonable to conclude that the property was acquired by the taxpayer to replace the former property;

(a.1)  it was acquired by the taxpayer and used by the taxpayer or a person related to the taxpayer for a use that is the same as or similar to the use to which the taxpayer or a person related to the taxpayer put the former property;

(b)  where the former property was used by the taxpayer or a person related to the taxpayer for the purpose of gaining or producing income from a business, the property was acquired by the taxpayer either for the purpose of gaining or producing income from that or a similar business or for use by a person related to the taxpayer for such a purpose;

(c)  where the former property was a taxable Canadian property of the taxpayer, the property is a taxable Canadian property of the taxpayer; and

(d)  where the former property was a taxable Canadian property, other than tax-agreement-protected property, of the taxpayer, the property is a taxable Canadian property, other than tax-agreement-protected property, of the taxpayer.

(4)  Chapter V.2 of Title II of Book I applies in relation to an election made under subsection 4 of section 13 of the Income Tax Act or in relation to an election made under this section before 20 December 2006 but otherwise than as a consequence of the application of section 96.0.1.

1972, c. 23, s. 86; 1975, c. 22, s. 11; 1977, c. 26, s. 13; 1978, c. 26, s. 17; 1993, c. 16, s. 57; 1994, c. 22, s. 72; 2001, c. 7, s. 16; 2001, c. 53, s. 32; 2009, c. 5, s. 53; 2009, c. 15, s. 51.

2009-05-15

96. (1)  Subsection 2 applies where an amount in respect of the disposition in a taxation year of depreciable property of a prescribed class of a taxpayer, in this section referred to as the “former property”, would, but for this section, be the amount determined under subparagraph c or d of the second paragraph of section 93 in respect of the disposition of the former property that is either

(a)  property the proceeds of disposition of which were compensation or an amount described in subparagraph ii, iii or iv of subparagraph f of the first paragraph of section 93; or

(b)  a property that was, immediately before the disposition, a former business property of the taxpayer.

(2)  If the taxpayer acquires, in a taxation year, a depreciable property of a prescribed class of the taxpayer that is a replacement property for a former property of the taxpayer and the taxpayer makes a valid election under subsection 4 of section 13 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) after 19 December 2006 in respect of the former property or, if section 96.0.1 applies, the taxpayer so elects in the taxpayer’s fiscal return filed in accordance with section 1000 for the taxation year, the following rules apply:

(a)  the amount determined under subparagraph c or d of the second paragraph of section 93 in respect of the disposition of the former property shall be reduced by the lesser of the amount by which the amount otherwise determined under that subparagraph c or d, in respect of such disposition, exceeds the undepreciated capital cost to the taxpayer of property of the prescribed class to which the former property belonged at the time immediately before the time that the former property was disposed of, and the amount that has been used by the taxpayer, in the case of a former property referred to in paragraph a of subsection 1, before the end of the second taxation year following the year referred to in subsection 1, or, in any other case, before the end of the first taxation year following the end of the year referred to in subsection 1, to acquire a replacement property that has not been disposed of by the taxpayer before the time at which the taxpayer disposed of the former property; and

(b)  the amount of the reduction determined under paragraph a is deemed to be proceeds of disposition of a depreciable property of the taxpayer that had a capital cost equal to that amount and that was property of the same class as the replacement property, from a disposition made on the later of the time the replacement property was acquired by the taxpayer and the time the former property was disposed of by the taxpayer.

(3)  For the purposes of this section, a depreciable property of a prescribed class of a taxpayer is a replacement property for the taxpayer’s former property where

(a)  it is reasonable to conclude that the property was acquired by the taxpayer to replace the former property;

(a.1)  it was acquired by the taxpayer and used by the taxpayer or a person related to the taxpayer for a use that is the same as or similar to the use to which the taxpayer or a person related to the taxpayer put the former property;

(b)  where the former property was used by the taxpayer or a person related to the taxpayer for the purpose of gaining or producing income from a business, the property was acquired by the taxpayer either for the purpose of gaining or producing income from that or a similar business or for use by a person related to the taxpayer for such a purpose; and

(c)  where the former property was a taxable Canadian property of the taxpayer, the property is a taxable Canadian property of the taxpayer; and

(d)  where the former property was a taxable Canadian property, other than tax-agreement-protected property, of the taxpayer, the property is a taxable Canadian property, other than tax-agreement-protected property, of the taxpayer.

(4)  Chapter V.2 of Title II of Book I applies in relation to an election made under subsection 4 of section 13 of the Income Tax Act or in relation to an election made under this section before 20 December 2006 but otherwise than as a consequence of the application of section 96.0.1.

1972, c. 23, s. 86; 1975, c. 22, s. 11; 1977, c. 26, s. 13; 1978, c. 26, s. 17; 1993, c. 16, s. 57; 1994, c. 22, s. 72; 2001, c. 7, s. 16; 2001, c. 53, s. 32; 2009, c. 5, s. 53.

2006-03-01

96. (1)  Subsection 2 applies where an amount in respect of the disposition in a taxation year of depreciable property of a prescribed class of a taxpayer, in this section referred to as the “former property”, would, but for this section, be the amount determined under subparagraph c or d of the second paragraph of section 93 in respect of the disposition of the former property that is either

(a)  property the proceeds of disposition of which were compensation or an amount described in subparagraph ii, iii or iv of subparagraph f of the first paragraph of section 93; or

(b)  a property that was, immediately before the disposition, a former business property of the taxpayer.

(2)  The taxpayer, in the taxpayer’s fiscal return filed in accordance with section 1000 for the taxation year in which the taxpayer acquires a depreciable property of a prescribed class of the taxpayer that is a replacement property for the former property of the taxpayer, may elect that the following rules apply:

(a)  the amount determined under subparagraph c or d of the second paragraph of section 93 in respect of the disposition of the former property shall be reduced by the lesser of the amount by which the amount otherwise determined under that subparagraph c or d, in respect of such disposition, exceeds the undepreciated capital cost to the taxpayer of property of the prescribed class to which the former property belonged at the time immediately before the time that the former property was disposed of, and the amount that has been used by the taxpayer, in the case of a former property referred to in paragraph a of subsection 1, before the end of the second taxation year following the year referred to in subsection 1, or, in any other case, before the end of the first taxation year following the end of the year referred to in subsection 1, to acquire a replacement property that has not been disposed of by the taxpayer before the time at which the taxpayer disposed of the former property; and

(b)  the amount of the reduction determined under paragraph a is deemed to be proceeds of disposition of a depreciable property of the taxpayer that had a capital cost equal to that amount and that was property of the same class as the replacement property, from a disposition made on the later of the time the replacement property was acquired by the taxpayer and the time the former property was disposed of by the taxpayer.

(3)  For the purposes of this section, a depreciable property of a prescribed class of a taxpayer is a replacement property for the taxpayer’s former property where

(a)  it is reasonable to conclude that the property was acquired by the taxpayer to replace the former property;

(a.1)  it was acquired by the taxpayer and used by the taxpayer or a person related to the taxpayer for a use that is the same as or similar to the use to which the taxpayer or a person related to the taxpayer put the former property;

(b)  where the former property was used by the taxpayer or a person related to the taxpayer for the purpose of gaining or producing income from a business, the property was acquired by the taxpayer either for the purpose of gaining or producing income from that or a similar business or for use by a person related to the taxpayer for such a purpose; and

(c)  where the former property was a taxable Canadian property of the taxpayer, the property is a taxable Canadian property of the taxpayer; and

(d)  where the former property was a taxable Canadian property, other than tax-agreement-protected property, of the taxpayer, the property is a taxable Canadian property, other than tax-agreement-protected property, of the taxpayer.

1972, c. 23, s. 86; 1975, c. 22, s. 11; 1977, c. 26, s. 13; 1978, c. 26, s. 17; 1993, c. 16, s. 57; 1994, c. 22, s. 72; 2001, c. 7, s. 16; 2001, c. 53, s. 32.