I-3 - Taxation Act

Section 296 Disposition versions

2006-03-01

296. Where an option to purchase or sell is exercised, for the purposes of computing the income of the vendor and the purchaser the granting of the option and the exercise thereof are deemed not to be dispositions of property, and the following rules apply:

(a)  in the case of an option to purchase, the consideration received by the vendor for such option must be included in computing the proceeds of disposition to him of the property, and the purchaser must include, in computing the cost to him of the property, the adjusted cost base to him of the option or, where paragraph f or j.3 of section 255 applies in respect of the acquisition of the property by the purchaser because a person who did not deal at arm’s length with the purchaser was deemed by reason of the acquisition to have received a benefit under Division VI of Chapter II of Title II, the adjusted cost base to that person of the option immediately before that person last disposed of the option;

(b)  in the case of an option to sell, the adjusted cost base of the option to the vendor must be deducted in computing the proceeds of disposition to him of the property and the consideration received by the purchaser for such option must be deducted in computing the cost of the property to him.

1972, c. 23, s. 273; 1985, c. 25, s. 53; 1987, c. 67, s. 70; 1990, c. 59, s. 134; 1993, c. 16, s. 119; 2001, c. 53, s. 260; 2003, c. 2, s. 102.