I-3 - Taxation Act

Section 96.0.2 Disposition versions

2019-06-19

96.0.2. The rules set out in the second paragraph apply if

(a)  a taxpayer (in this section referred to as the “transferor”) has, pursuant to a written agreement with a person or partnership (in this section referred to as the “transferee”), disposed of or terminated a former property that is a franchise, concession or licence for a limited period that is wholly attributable to the carrying on of a business at a fixed place;

(b)  the transferee acquired the former property from the transferor or, on the termination, acquired a similar property in respect of the same fixed place from another person or partnership; and

(c)  the transferor and the transferee make a valid election under paragraph c of subsection 4.2 of section 13 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) after 19 December 2006 in respect of the acquisition and the disposition or termination.

The rules to which the first paragraph refers in respect of an acquisition and a disposition or termination are as follows:

(a)  if the transferee acquires a similar property referred to in subparagraph b of the first paragraph, the transferee is deemed to have also acquired the former property at the time that the former property was terminated and to own the former property until the transferee no longer owns the similar property;

(b)  if the transferee acquires the former property referred to in subparagraph b of the first paragraph, the transferee is deemed to own the former property until such time as the transferee owns neither the former property nor a similar property in respect of the same fixed place to which the former property related;

(c)  for the purpose of calculating the amount deductible under paragraph a of section 130 in respect of the former property in computing the transferee’s income, the useful life of the former property remaining on its acquisition by the transferee is deemed to be equal to the period that was the useful life of the former property remaining on its acquisition by the transferor; and

(d)  any amount that would, but for this paragraph, be included in the cost of a property of the transferor included in Class 14.1 of Schedule B to the Regulation respecting the Taxation Act (chapter I-3, r. 1) (including a deemed acquisition under section 93.15) or included in the proceeds of disposition of a property of the transferee included in that class (including a deemed disposition under section 93.17) in respect of the disposition or termination of the former property by the transferor is deemed to be

i.  neither included in the cost nor in the proceeds of disposition of property included in that class,

ii.  an amount required to be included in computing the capital cost to the transferee of the former property, and

iii.  an amount required to be included in computing the proceeds of disposition to the transferor in respect of a disposition of the former property.

Chapter V.2 of Title II of Book I applies in relation to an election made under paragraph c of subsection 4.2 of section 13 of the Income Tax Act or in relation to an election made under this section before 20 December 2006.

2009, c. 15, s. 53; 2019, c. 14, s. 75.

2009-06-04

96.0.2. The rules set out in the second paragraph apply if

(a)  a taxpayer (in this section referred to as the “transferor”) has, pursuant to a written agreement with a person or partnership (in this section referred to as the “transferee”), disposed of or terminated a former property that is a franchise, concession or licence for a limited period that is wholly attributable to the carrying on of a business at a fixed place;

(b)  the transferee acquired the former property from the transferor or, on the termination, acquired a similar property in respect of the same fixed place from another person or partnership; and

(c)  the transferor and the transferee make a valid election under paragraph c of subsection 4.2 of section 13 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) after 19 December 2006 in respect of the acquisition and the disposition or termination.

The rules to which the first paragraph refers in respect of an acquisition and a disposition or termination are as follows:

(a)  if the transferee acquires a similar property referred to in subparagraph b of the first paragraph, the transferee is deemed to have also acquired the former property at the time that the former property was terminated and to own the former property until the transferee no longer owns the similar property;

(b)  if the transferee acquires the former property referred to in subparagraph b of the first paragraph, the transferee is deemed to own the former property until such time as the transferee owns neither the former property nor a similar property in respect of the same fixed place to which the former property related;

(c)  for the purpose of calculating the amount deductible under paragraph a of section 130 in respect of the former property in computing the transferee’s income, the useful life of the former property remaining on its acquisition by the transferee is deemed to be equal to the period that was the useful life of the former property remaining on its acquisition by the transferor; and

(d)  any amount that would, but for this paragraph, be an amount included in the aggregate determined under subparagraph b of the second paragraph of section 107 in respect of the transferor or an incorporeal capital amount to the transferee in respect of the disposition or termination of the former property by the transferor is deemed to be

i.  neither an amount included in the aggregate determined under subparagraph b of the second paragraph of section 107 nor an incorporeal capital amount,

ii.  an amount required to be included in computing the capital cost to the transferee of the former property, and

iii.  an amount required to be included in computing the proceeds of disposition to the transferor in respect of a disposition of the former property.

Chapter V.2 of Title II of Book I applies in relation to an election made under paragraph c of subsection 4.2 of section 13 of the Income Tax Act or in relation to an election made under this section before 20 December 2006.

2009, c. 15, s. 53.