I-3 - Taxation Act

Section 99 Disposition versions

2023-03-15

99. Subject to section 450.10, for the purposes of this division, Chapter III, sections 64 and 78.4 and any regulations made under paragraph a of section 130, the following rules apply:

(a)  where a taxpayer, having acquired property to gain income, begins at a later time to use it for some other purpose, the taxpayer is deemed to have disposed of it at that time for proceeds of disposition equal to its fair market value and to have reacquired it immediately thereafter at a cost equal to that fair market value;

(b)  subject to section 284, where a taxpayer, having acquired property for some other purpose, begins at a particular time to use it to gain income, the taxpayer is deemed to have acquired it at that time at a capital cost to the taxpayer equal to the lesser of

i.  its fair market value at that time;

ii.  the aggregate of its cost to the taxpayer at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d, and, subject to section 99.1, 1/2 of the amount by which the fair market value of the property at that time exceeds the aggregate of the cost to the taxpayer of the property at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d, and, subject to section 99.1, twice the amount deducted by the taxpayer under Title VI.5 of Book IV in respect of the amount by which the fair market value of the property at that time exceeds the cost to the taxpayer of the property at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d;

(c)  where property has, since it was acquired by a taxpayer, been regularly used in part to gain income and in part for some other purpose, the proportion of the property acquired by the taxpayer to gain such income, the proportion of its capital cost and the proportion of the proceeds of disposition of such property, as the case may be, are deemed to be the same as the proportion that its use to gain income is of its whole use;

(d)  where there has been a change in the relation between the proportion of the use made of the property to gain income and the proportion of the use made of it for some other purpose, the following rules apply:

i.  where the proportion of the use made of the property to gain income has increased at a particular time, the taxpayer is deemed to have acquired at that time depreciable property of that class at a capital cost equal to the aggregate of the proportion of the lesser of its fair market value at that time, and its cost to the taxpayer at that time determined without reference to this subparagraph, subparagraph ii and paragraph a that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property, and, subject to section 99.1, 1/2 of the amount by which the amount deemed under section 283 to be the taxpayer’s proceeds of disposition of the property in respect of the change in the use made of the property exceeds the aggregate of that proportion of the cost to the taxpayer of the property at that time determined without reference to this subparagraph, subparagraph ii and paragraph a, that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property, and, subject to section 99.1, twice the amount deducted by the taxpayer under Title VI.5 of Book IV in respect of the amount by which the amount deemed under section 283 to be the taxpayer’s proceeds of disposition of the property in respect of the change in the use made of the property exceeds that proportion of the cost to the taxpayer of the property at that time determined without reference to this subparagraph, subparagraph ii and paragraph a that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property;

i.1.  for greater certainty, where the property is a passenger vehicle in respect of which paragraph d.3 or d.4 applies or a zero-emission passenger vehicle in respect of which paragraph d.5 applies, the capital cost established under subparagraph i must in no case be greater than the proportion referred to in that subparagraph i of the capital cost of the property established under paragraph d.3, d.4 or d.5, as the case may be;

ii.  where the proportion of the use made of the property to gain income has decreased at a particular time, the taxpayer is deemed to have disposed at that time of depreciable property of that class and the proceeds of disposition are deemed to be an amount equal to the proportion of the fair market value of the property as of that time that the amount of the decrease in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of it;

(d.1)  notwithstanding any other provision of this Part except section 450.10, where at any time a particular person or partnership has, in any manner whatever, acquired, otherwise than as a consequence of the death of the transferor, a depreciable property of a prescribed class, other than a timber resource property or a passenger vehicle in respect of which paragraph d.3 or d.4 or section 525.1 applies, from a transferor being a person or partnership with whom the particular person or partnership did not deal at arm’s length and the property was, immediately before the transfer, a capital property of the transferor, the following rules apply:

i.  where the transferor was an individual resident in Canada or a partnership any member of which was either an individual resident in Canada or another partnership and the cost of the property to the particular person or partnership at that time determined without reference to this paragraph exceeds the cost or, where the property was depreciable property, the capital cost of the property to the transferor immediately before the transferor disposed of it, the capital cost of the property to the particular person or partnership at that time is deemed to be the amount, in this subparagraph referred to as “the particular amount”, that is equal to the aggregate of the cost or capital cost, as the case may be, of the property to the transferor immediately before that time and, subject to section 99.1, 1/2 of the amount by which the transferor’s proceeds of disposition of the property exceed the aggregate of the cost or capital cost, as the case may be, of the property to the transferor immediately before that time, the amount required by section 726.9.4 to be deducted in computing the capital cost to the particular person or partnership of the property at that time, and, subject to section 99.1, twice the amount deducted by any person under Title VI.5 of Book IV in respect of the amount by which the transferor’s proceeds of disposition of the property exceed the cost or capital cost, as the case may be, of the property to the transferor immediately before that time and, for the purposes of paragraph b and subparagraph i of paragraph d, the cost of the property to the particular person or partnership is deemed to be equal to the particular amount,

ii.  where the transferor was not a transferor described in subparagraph i, the rules provided in that subparagraph, which shall be read as if the reference therein to “exceed the aggregate of the cost or capital cost” were a reference to “exceed the cost or capital cost” and without reference to “, the amount required by section 726.9.4 to be deducted in computing the capital cost to the particular person or partnership of the property at that time, and, subject to section 99.1, twice the amount deducted by any person under Title VI.5 of Book IV in respect of the amount by which the transferor’s proceeds of disposition of the property exceed the cost or capital cost, as the case may be, of the property to the transferor immediately before that time”, apply in the same manner, and

iii.  where the cost or capital cost, as the case may be, of the property to the transferor immediately before the transferor disposed of it exceeds the capital cost of the property to the particular person or partnership at that time determined without reference to this paragraph, the capital cost of the property to the particular person or partnership at that time is deemed to be an amount equal to the cost or capital cost, as the case may be, of the property to the transferor immediately before the transferor disposed of it and the excess is deemed to have been allowed as depreciation to the particular person or partnership in respect of the property under regulations made under paragraph a of section 130 in computing the income of the particular person or partnership for taxation years ending before the acquisition of the property by the particular person or partnership;

(d.1.1)  where a taxpayer is deemed by subparagraph a of the first paragraph of section 726.9.2 to have disposed of and reacquired a property that immediately before the disposition was a depreciable property, the taxpayer is deemed to have acquired the property from himself, herself or itself and, in so having acquired the property, not to have been dealing with himself, herself or itself at arm’s length;

(d.2)  where a taxpayer is deemed under subparagraph c of the second paragraph of section 736 to have disposed of and reacquired depreciable property, other than a timber resource property, the capital cost to the taxpayer of the property at the time of the reacquisition is deemed to be equal to the aggregate of

i.  the capital cost to the taxpayer of the property at the time of the disposition, and

ii.  subject to section 99.1, 1/2 of the amount by which the taxpayer’s proceeds of disposition of the property exceed the capital cost to the taxpayer of the property at the time of the disposition;

(d.3)  where the cost to a taxpayer of a passenger vehicle exceeds $20,000 or such other amount as may be prescribed, the capital cost to the taxpayer of the passenger vehicle is deemed to be equal to $20,000 or to that other amount, as the case may be;

(d.4)  notwithstanding paragraph d.3, where a passenger vehicle is acquired at any time by a taxpayer from a person with whom the taxpayer does not deal at arm’s length and this paragraph, paragraph d.3 or section 525.1 applies to the person in respect of that passenger vehicle, the capital cost thereof to the taxpayer is deemed to be equal to the least of the following amounts:

i.  the fair market value of the passenger vehicle at that time,

ii.  the amount that immediately before that time was the cost amount to that person of the passenger vehicle minus, as the case may be, the amount deducted by that person under paragraph a of section 130 in respect of the passenger vehicle in computing income for that person’s taxation year in which that person disposed of the passenger vehicle, and

iii.  $20,000 or such other amount as may be prescribed for the purposes of paragraph d.3;

(d.5)  where the cost to a taxpayer of a zero-emission passenger vehicle exceeds the prescribed amount that is determined, in respect of the taxpayer, under section 99R1.1 of the Regulation respecting the Taxation Act (chapter I-3, r. 1), or where the cost to a taxpayer of a passenger vehicle that was, at any time, designated immediate expensing property, within the meaning of section 130R3 of that Regulation, exceeds the prescribed amount that is determined in its respect under section 99R1 of that Regulation, the following rules apply:

i.  the capital cost to the taxpayer of the vehicle is deemed to be equal to the prescribed amount that is determined, in respect of the taxpayer, under section 99R1 or 99R1.1 of that Regulation, as the case may be, and

ii.  for the purposes of subparagraph c of the second paragraph of section 93, the proceeds of disposition of the vehicle are deemed to be equal to the amount determined under section 99.2;

(e)  for the purposes of this Part, a taxpayer who has acquired prescribed property between 3 December 1970 and 1 April 1972 for use in a prescribed manufacturing or processing business carried on by the taxpayer, is deemed to have acquired that property at a capital cost equal to 115% of the amount that, but for this paragraph and section 180, would have been the capital cost of that property, if that property was not used for any purpose whatever before it was acquired by the taxpayer;

(f)  where any part of a self-contained domestic establishment (in this paragraph referred to as the “work space”) in which an individual resides is the principal place of business of the individual or a partnership of which the individual is a member, or is used exclusively for the purpose of earning income from a business and on a regular and continuous basis for meeting clients, customers or patients of the individual or partnership in the course of the business, as the case may be, except a work space that relates to the operation of a private residential home or a tourist accommodation establishment that is a principal residence establishment, bed and breakfast establishment or tourist home, within the meaning of the regulations made under the Tourist Accommodation Act (chapter H-1.01), where the tourist accommodation establishment is duly registered under that Act, the following rules apply:

i.  the capital cost at any time of the work space to the individual or partnership is deemed to be equal to the aggregate of

(1)  50% of the portion of the capital cost of the work space to the individual or partnership, determined without reference to this subparagraph i, that cannot reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made before that time, and

(2)  the portion of the capital cost of the work space to the individual or partnership, determined without reference to this subparagraph i, that may reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made before that time,

ii.  the proceeds of disposition of the work space to the individual or partnership, reduced by the total of all expenditures made or incurred by the individual or partnership for the purpose of making the disposition, are deemed to be equal to the aggregate of

(1)  50% of such proportion of the proceeds of disposition to the individual or partnership of the work space so reduced, determined without reference to this subparagraph ii, as the portion of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, that cannot reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made is of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, and

(2)  such proportion of the proceeds of disposition to the individual or partnership of the work space so reduced, determined without reference to this subparagraph ii, as the portion of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, that may reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made is of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, and

iii.  each of the amounts that increased or reduced the undepreciated capital cost to an individual or a partnership of the class that includes the work space, for a taxation year or a fiscal period, as the case may be, that begins before 10 May 1996, otherwise than because of subparagraph i of subparagraph e of the first paragraph of section 93 or subparagraph c of the second paragraph of that section, to the extent that it may reasonably be considered that the amount is attributable to an expenditure of a capital nature which does not relate solely to the work space that the individual or partnership made, is deemed, for a taxation year or a fiscal period, as the case may be, that begins after 9 May 1996, to be equal to 50% of that amount.

1972, c. 23, s. 89; 1975, c. 22, s. 13; 1977, c. 26, s. 14; 1978, c. 26, s. 20; 1987, c. 67, s. 24; 1989, c. 77, s. 17; 1990, c. 59, s. 55; 1993, c. 16, s. 58; 1994, c. 22, s. 73; 1995, c. 49, s. 37; 1996, c. 39, s. 30; 1997, c. 3, s. 71; 1998, c. 16, s. 86; 2000, c. 5, s. 34; 2000, c. 39, s. 10; 2001, c. 53, s. 33; 2003, c. 2, s. 34; 2006, c. 13, s. 28; 2017, c. 1, s. 89; 2017, c. 29, s. 30; 2021, c. 18, s. 23; 2023, c. 2, s. 5.

2021-06-04

99. Subject to section 450.10, for the purposes of this division, Chapter III, sections 64 and 78.4 and any regulations made under paragraph a of section 130, the following rules apply:

(a)  where a taxpayer, having acquired property to gain income, begins at a later time to use it for some other purpose, the taxpayer is deemed to have disposed of it at that time for proceeds of disposition equal to its fair market value and to have reacquired it immediately thereafter at a cost equal to that fair market value;

(b)  subject to section 284, where a taxpayer, having acquired property for some other purpose, begins at a particular time to use it to gain income, the taxpayer is deemed to have acquired it at that time at a capital cost to the taxpayer equal to the lesser of

i.  its fair market value at that time;

ii.  the aggregate of its cost to the taxpayer at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d, and, subject to section 99.1, 1/2 of the amount by which the fair market value of the property at that time exceeds the aggregate of the cost to the taxpayer of the property at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d, and, subject to section 99.1, twice the amount deducted by the taxpayer under Title VI.5 of Book IV in respect of the amount by which the fair market value of the property at that time exceeds the cost to the taxpayer of the property at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d;

(c)  where property has, since it was acquired by a taxpayer, been regularly used in part to gain income and in part for some other purpose, the proportion of the property acquired by the taxpayer to gain such income, the proportion of its capital cost and the proportion of the proceeds of disposition of such property, as the case may be, are deemed to be the same as the proportion that its use to gain income is of its whole use;

(d)  where there has been a change in the relation between the proportion of the use made of the property to gain income and the proportion of the use made of it for some other purpose, the following rules apply:

i.  where the proportion of the use made of the property to gain income has increased at a particular time, the taxpayer is deemed to have acquired at that time depreciable property of that class at a capital cost equal to the aggregate of the proportion of the lesser of its fair market value at that time, and its cost to the taxpayer at that time determined without reference to this subparagraph, subparagraph ii and paragraph a that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property, and, subject to section 99.1, 1/2 of the amount by which the amount deemed under section 283 to be the taxpayer’s proceeds of disposition of the property in respect of the change in the use made of the property exceeds the aggregate of that proportion of the cost to the taxpayer of the property at that time determined without reference to this subparagraph, subparagraph ii and paragraph a, that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property, and, subject to section 99.1, twice the amount deducted by the taxpayer under Title VI.5 of Book IV in respect of the amount by which the amount deemed under section 283 to be the taxpayer’s proceeds of disposition of the property in respect of the change in the use made of the property exceeds that proportion of the cost to the taxpayer of the property at that time determined without reference to this subparagraph, subparagraph ii and paragraph a that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property;

i.1.  for greater certainty, where the property is a passenger vehicle in respect of which paragraph d.3 or d.4 applies or a zero-emission passenger vehicle in respect of which paragraph d.5 applies, the capital cost established under subparagraph i must in no case be greater than the proportion referred to in that subparagraph i of the capital cost of the property established under paragraph d.3, d.4 or d.5, as the case may be;

ii.  where the proportion of the use made of the property to gain income has decreased at a particular time, the taxpayer is deemed to have disposed at that time of depreciable property of that class and the proceeds of disposition are deemed to be an amount equal to the proportion of the fair market value of the property as of that time that the amount of the decrease in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of it;

(d.1)  notwithstanding any other provision of this Part except section 450.10, where at any time a particular person or partnership has, in any manner whatever, acquired, otherwise than as a consequence of the death of the transferor, a depreciable property of a prescribed class, other than a timber resource property or a passenger vehicle in respect of which paragraph d.3 or d.4 or section 525.1 applies, from a transferor being a person or partnership with whom the particular person or partnership did not deal at arm’s length and the property was, immediately before the transfer, a capital property of the transferor, the following rules apply:

i.  where the transferor was an individual resident in Canada or a partnership any member of which was either an individual resident in Canada or another partnership and the cost of the property to the particular person or partnership at that time determined without reference to this paragraph exceeds the cost or, where the property was depreciable property, the capital cost of the property to the transferor immediately before the transferor disposed of it, the capital cost of the property to the particular person or partnership at that time is deemed to be the amount, in this subparagraph referred to as “the particular amount”, that is equal to the aggregate of the cost or capital cost, as the case may be, of the property to the transferor immediately before that time and, subject to section 99.1, 1/2 of the amount by which the transferor’s proceeds of disposition of the property exceed the aggregate of the cost or capital cost, as the case may be, of the property to the transferor immediately before that time, the amount required by section 726.9.4 to be deducted in computing the capital cost to the particular person or partnership of the property at that time, and, subject to section 99.1, twice the amount deducted by any person under Title VI.5 of Book IV in respect of the amount by which the transferor’s proceeds of disposition of the property exceed the cost or capital cost, as the case may be, of the property to the transferor immediately before that time and, for the purposes of paragraph b and subparagraph i of paragraph d, the cost of the property to the particular person or partnership is deemed to be equal to the particular amount,

ii.  where the transferor was not a transferor described in subparagraph i, the rules provided in that subparagraph, which shall be read as if the reference therein to “exceed the aggregate of the cost or capital cost” were a reference to “exceed the cost or capital cost” and without reference to “, the amount required by section 726.9.4 to be deducted in computing the capital cost to the particular person or partnership of the property at that time, and, subject to section 99.1, twice the amount deducted by any person under Title VI.5 of Book IV in respect of the amount by which the transferor’s proceeds of disposition of the property exceed the cost or capital cost, as the case may be, of the property to the transferor immediately before that time”, apply in the same manner, and

iii.  where the cost or capital cost, as the case may be, of the property to the transferor immediately before the transferor disposed of it exceeds the capital cost of the property to the particular person or partnership at that time determined without reference to this paragraph, the capital cost of the property to the particular person or partnership at that time is deemed to be an amount equal to the cost or capital cost, as the case may be, of the property to the transferor immediately before the transferor disposed of it and the excess is deemed to have been allowed as depreciation to the particular person or partnership in respect of the property under regulations made under paragraph a of section 130 in computing the income of the particular person or partnership for taxation years ending before the acquisition of the property by the particular person or partnership;

(d.1.1)  where a taxpayer is deemed by subparagraph a of the first paragraph of section 726.9.2 to have disposed of and reacquired a property that immediately before the disposition was a depreciable property, the taxpayer is deemed to have acquired the property from himself, herself or itself and, in so having acquired the property, not to have been dealing with himself, herself or itself at arm’s length;

(d.2)  where a taxpayer is deemed under subparagraph c of the second paragraph of section 736 to have disposed of and reacquired depreciable property, other than a timber resource property, the capital cost to the taxpayer of the property at the time of the reacquisition is deemed to be equal to the aggregate of

i.  the capital cost to the taxpayer of the property at the time of the disposition, and

ii.  subject to section 99.1, 1/2 of the amount by which the taxpayer’s proceeds of disposition of the property exceed the capital cost to the taxpayer of the property at the time of the disposition;

(d.3)  where the cost to a taxpayer of a passenger vehicle exceeds $20,000 or such other amount as may be prescribed, the capital cost to the taxpayer of the passenger vehicle is deemed to be equal to $20,000 or to that other amount, as the case may be;

(d.4)  notwithstanding paragraph d.3, where a passenger vehicle is acquired at any time by a taxpayer from a person with whom the taxpayer does not deal at arm’s length and this paragraph, paragraph d.3 or section 525.1 applies to the person in respect of that passenger vehicle, the capital cost thereof to the taxpayer is deemed to be equal to the least of the following amounts:

i.  the fair market value of the passenger vehicle at that time,

ii.  the amount that immediately before that time was the cost amount to that person of the passenger vehicle minus, as the case may be, the amount deducted by that person under paragraph a of section 130 in respect of the passenger vehicle in computing income for that person’s taxation year in which that person disposed of the passenger vehicle, and

iii.  $20,000 or such other amount as may be prescribed for the purposes of paragraph d.3;

(d.5)  where the cost to a taxpayer of a zero-emission passenger vehicle exceeds the prescribed amount, the following rules apply:

i.  the capital cost to the taxpayer of the vehicle is deemed to be equal to the prescribed amount, and

ii.  for the purposes of subparagraph c of the second paragraph of section 93, the proceeds of disposition of the vehicle are deemed to be equal to the amount determined under section 99.2;

(e)  for the purposes of this Part, a taxpayer who has acquired prescribed property between 3 December 1970 and 1 April 1972 for use in a prescribed manufacturing or processing business carried on by the taxpayer, is deemed to have acquired that property at a capital cost equal to 115% of the amount that, but for this paragraph and section 180, would have been the capital cost of that property, if that property was not used for any purpose whatever before it was acquired by the taxpayer;

(f)  where any part of a self-contained domestic establishment (in this paragraph referred to as the “work space”) in which an individual resides is the principal place of business of the individual or a partnership of which the individual is a member, or is used exclusively for the purpose of earning income from a business and on a regular and continuous basis for meeting clients, customers or patients of the individual or partnership in the course of the business, as the case may be, except a work space that relates to the operation of a private residential home or a tourist accommodation establishment that is a tourist home or bed and breakfast establishment, within the meaning of the regulations made under the Act respecting tourist accommodation establishments (chapter E-14.2), where the individual or partnership holds a classification certificate of the appropriate class to which the tourist accommodation establishment belongs, issued under that Act, the following rules apply:

i.  the capital cost at any time of the work space to the individual or partnership is deemed to be equal to the aggregate of

(1)  50% of the portion of the capital cost of the work space to the individual or partnership, determined without reference to this subparagraph i, that cannot reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made before that time, and

(2)  the portion of the capital cost of the work space to the individual or partnership, determined without reference to this subparagraph i, that may reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made before that time,

ii.  the proceeds of disposition of the work space to the individual or partnership, reduced by the total of all expenditures made or incurred by the individual or partnership for the purpose of making the disposition, are deemed to be equal to the aggregate of

(1)  50% of such proportion of the proceeds of disposition to the individual or partnership of the work space so reduced, determined without reference to this subparagraph ii, as the portion of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, that cannot reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made is of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, and

(2)  such proportion of the proceeds of disposition to the individual or partnership of the work space so reduced, determined without reference to this subparagraph ii, as the portion of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, that may reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made is of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, and

iii.  each of the amounts that increased or reduced the undepreciated capital cost to an individual or a partnership of the class that includes the work space, for a taxation year or a fiscal period, as the case may be, that begins before 10 May 1996, otherwise than because of subparagraph i of subparagraph e of the first paragraph of section 93 or subparagraph c of the second paragraph of that section, to the extent that it may reasonably be considered that the amount is attributable to an expenditure of a capital nature which does not relate solely to the work space that the individual or partnership made, is deemed, for a taxation year or a fiscal period, as the case may be, that begins after 9 May 1996, to be equal to 50% of that amount.

1972, c. 23, s. 89; 1975, c. 22, s. 13; 1977, c. 26, s. 14; 1978, c. 26, s. 20; 1987, c. 67, s. 24; 1989, c. 77, s. 17; 1990, c. 59, s. 55; 1993, c. 16, s. 58; 1994, c. 22, s. 73; 1995, c. 49, s. 37; 1996, c. 39, s. 30; 1997, c. 3, s. 71; 1998, c. 16, s. 86; 2000, c. 5, s. 34; 2000, c. 39, s. 10; 2001, c. 53, s. 33; 2003, c. 2, s. 34; 2006, c. 13, s. 28; 2017, c. 1, s. 89; 2017, c. 29, s. 30; 2021, c. 18, s. 23.

2017-12-07

99. Subject to section 450.10, for the purposes of this division, Chapter III, sections 64 and 78.4 and any regulations made under paragraph a of section 130, the following rules apply:

(a)  where a taxpayer, having acquired property to gain income, begins at a later time to use it for some other purpose, the taxpayer is deemed to have disposed of it at that time for proceeds of disposition equal to its fair market value and to have reacquired it immediately thereafter at a cost equal to that fair market value;

(b)  subject to section 284, where a taxpayer, having acquired property for some other purpose, begins at a particular time to use it to gain income, the taxpayer is deemed to have acquired it at that time at a capital cost to the taxpayer equal to the lesser of

i.  its fair market value at that time;

ii.  the aggregate of its cost to the taxpayer at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d, and, subject to section 99.1, 1/2 of the amount by which the fair market value of the property at that time exceeds the aggregate of the cost to the taxpayer of the property at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d, and, subject to section 99.1, twice the amount deducted by the taxpayer under Title VI.5 of Book IV in respect of the amount by which the fair market value of the property at that time exceeds the cost to the taxpayer of the property at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d;

(c)  where property has, since it was acquired by a taxpayer, been regularly used in part to gain income and in part for some other purpose, the proportion of the property acquired by the taxpayer to gain such income, the proportion of its capital cost and the proportion of the proceeds of disposition of such property, as the case may be, are deemed to be the same as the proportion that its use to gain income is of its whole use;

(d)  where there has been a change in the relation between the proportion of the use made of the property to gain income and the proportion of the use made of it for some other purpose, the following rules apply:

i.  where the proportion of the use made of the property to gain income has increased at a particular time, the taxpayer is deemed to have acquired at that time depreciable property of that class at a capital cost equal to the aggregate of the proportion of the lesser of its fair market value at that time, and its cost to the taxpayer at that time determined without reference to this subparagraph, subparagraph ii and paragraph a that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property, and, subject to section 99.1, 1/2 of the amount by which the amount deemed under section 283 to be the taxpayer’s proceeds of disposition of the property in respect of the change in the use made of the property exceeds the aggregate of that proportion of the cost to the taxpayer of the property at that time determined without reference to this subparagraph, subparagraph ii and paragraph a, that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property, and, subject to section 99.1, twice the amount deducted by the taxpayer under Title VI.5 of Book IV in respect of the amount by which the amount deemed under section 283 to be the taxpayer’s proceeds of disposition of the property in respect of the change in the use made of the property exceeds that proportion of the cost to the taxpayer of the property at that time determined without reference to this subparagraph, subparagraph ii and paragraph a that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property;

i.1.  for greater certainty, where the property is a passenger vehicle in respect of which paragraph d.3 or d.4 applies, the capital cost established under subparagraph i shall in no case be greater than the proportion referred to in the said subparagraph of the capital cost of the property established under paragraph d.3 or d.4, as the case may be;

ii.  where the proportion of the use made of the property to gain income has decreased at a particular time, the taxpayer is deemed to have disposed at that time of depreciable property of that class and the proceeds of disposition are deemed to be an amount equal to the proportion of the fair market value of the property as of that time that the amount of the decrease in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of it;

(d.1)  notwithstanding any other provision of this Part except section 450.10, where at any time a particular person or partnership has, in any manner whatever, acquired, otherwise than as a consequence of the death of the transferor, a depreciable property of a prescribed class, other than a timber resource property or a passenger vehicle in respect of which paragraph d.3 or d.4 or section 525.1 applies, from a transferor being a person or partnership with whom the particular person or partnership did not deal at arm’s length and the property was, immediately before the transfer, a capital property of the transferor, the following rules apply:

i.  where the transferor was an individual resident in Canada or a partnership any member of which was either an individual resident in Canada or another partnership and the cost of the property to the particular person or partnership at that time determined without reference to this paragraph exceeds the cost or, where the property was depreciable property, the capital cost of the property to the transferor immediately before the transferor disposed of it, the capital cost of the property to the particular person or partnership at that time is deemed to be the amount, in this subparagraph referred to as “the particular amount”, that is equal to the aggregate of the cost or capital cost, as the case may be, of the property to the transferor immediately before that time and, subject to section 99.1, 1/2 of the amount by which the transferor’s proceeds of disposition of the property exceed the aggregate of the cost or capital cost, as the case may be, of the property to the transferor immediately before that time, the amount required by section 726.9.4 to be deducted in computing the capital cost to the particular person or partnership of the property at that time, and, subject to section 99.1, twice the amount deducted by any person under Title VI.5 of Book IV in respect of the amount by which the transferor’s proceeds of disposition of the property exceed the cost or capital cost, as the case may be, of the property to the transferor immediately before that time and, for the purposes of paragraph b and subparagraph i of paragraph d, the cost of the property to the particular person or partnership is deemed to be equal to the particular amount,

ii.  where the transferor was not a transferor described in subparagraph i, the rules provided in that subparagraph, which shall be read as if the reference therein to “exceed the aggregate of the cost or capital cost” were a reference to “exceed the cost or capital cost” and without reference to “, the amount required by section 726.9.4 to be deducted in computing the capital cost to the particular person or partnership of the property at that time, and, subject to section 99.1, twice the amount deducted by any person under Title VI.5 of Book IV in respect of the amount by which the transferor’s proceeds of disposition of the property exceed the cost or capital cost, as the case may be, of the property to the transferor immediately before that time”, apply in the same manner, and

iii.  where the cost or capital cost, as the case may be, of the property to the transferor immediately before the transferor disposed of it exceeds the capital cost of the property to the particular person or partnership at that time determined without reference to this paragraph, the capital cost of the property to the particular person or partnership at that time is deemed to be an amount equal to the cost or capital cost, as the case may be, of the property to the transferor immediately before the transferor disposed of it and the excess is deemed to have been allowed as depreciation to the particular person or partnership in respect of the property under regulations made under paragraph a of section 130 in computing the income of the particular person or partnership for taxation years ending before the acquisition of the property by the particular person or partnership;

(d.1.1)  where a taxpayer is deemed by subparagraph a of the first paragraph of section 726.9.2 to have disposed of and reacquired a property that immediately before the disposition was a depreciable property, the taxpayer is deemed to have acquired the property from himself, herself or itself and, in so having acquired the property, not to have been dealing with himself, herself or itself at arm’s length;

(d.2)  where a taxpayer is deemed under subparagraph c of the second paragraph of section 736 to have disposed of and reacquired depreciable property, other than a timber resource property, the capital cost to the taxpayer of the property at the time of the reacquisition is deemed to be equal to the aggregate of

i.  the capital cost to the taxpayer of the property at the time of the disposition, and

ii.  subject to section 99.1, 1/2 of the amount by which the taxpayer’s proceeds of disposition of the property exceed the capital cost to the taxpayer of the property at the time of the disposition;

(d.3)  where the cost to a taxpayer of a passenger vehicle exceeds $20,000 or such other amount as may be prescribed, the capital cost to the taxpayer of the passenger vehicle is deemed to be equal to $20,000 or to that other amount, as the case may be;

(d.4)  notwithstanding paragraph d.3, where a passenger vehicle is acquired at any time by a taxpayer from a person with whom the taxpayer does not deal at arm’s length and this paragraph, paragraph d.3 or section 525.1 applies to the person in respect of that passenger vehicle, the capital cost thereof to the taxpayer is deemed to be equal to the least of the following amounts:

i.  the fair market value of the passenger vehicle at that time,

ii.  the amount that immediately before that time was the cost amount to that person of the passenger vehicle minus, as the case may be, the amount deducted by that person under paragraph a of section 130 in respect of the passenger vehicle in computing income for that person’s taxation year in which that person disposed of the passenger vehicle, and

iii.  $20,000 or such other amount as may be prescribed for the purposes of paragraph d.3;

(e)  for the purposes of this Part, a taxpayer who has acquired prescribed property between 3 December 1970 and 1 April 1972 for use in a prescribed manufacturing or processing business carried on by the taxpayer, is deemed to have acquired that property at a capital cost equal to 115% of the amount that, but for this paragraph and section 180, would have been the capital cost of that property, if that property was not used for any purpose whatever before it was acquired by the taxpayer;

(f)  where any part of a self-contained domestic establishment (in this paragraph referred to as the “work space”) in which an individual resides is the principal place of business of the individual or a partnership of which the individual is a member, or is used exclusively for the purpose of earning income from a business and on a regular and continuous basis for meeting clients, customers or patients of the individual or partnership in the course of the business, as the case may be, except a work space that relates to the operation of a private residential home or a tourist accommodation establishment that is a tourist home or bed and breakfast establishment, within the meaning of the regulations made under the Act respecting tourist accommodation establishments (chapter E-14.2), where the individual or partnership holds a classification certificate of the appropriate class to which the tourist accommodation establishment belongs, issued under that Act, the following rules apply:

i.  the capital cost at any time of the work space to the individual or partnership is deemed to be equal to the aggregate of

(1)  50% of the portion of the capital cost of the work space to the individual or partnership, determined without reference to this subparagraph i, that cannot reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made before that time, and

(2)  the portion of the capital cost of the work space to the individual or partnership, determined without reference to this subparagraph i, that may reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made before that time,

ii.  the proceeds of disposition of the work space to the individual or partnership, reduced by the total of all expenditures made or incurred by the individual or partnership for the purpose of making the disposition, are deemed to be equal to the aggregate of

(1)  50% of such proportion of the proceeds of disposition to the individual or partnership of the work space so reduced, determined without reference to this subparagraph ii, as the portion of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, that cannot reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made is of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, and

(2)  such proportion of the proceeds of disposition to the individual or partnership of the work space so reduced, determined without reference to this subparagraph ii, as the portion of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, that may reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made is of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, and

iii.  each of the amounts that increased or reduced the undepreciated capital cost to an individual or a partnership of the class that includes the work space, for a taxation year or a fiscal period, as the case may be, that begins before 10 May 1996, otherwise than because of subparagraph i of subparagraph e of the first paragraph of section 93 or subparagraph c of the second paragraph of that section, to the extent that it may reasonably be considered that the amount is attributable to an expenditure of a capital nature which does not relate solely to the work space that the individual or partnership made, is deemed, for a taxation year or a fiscal period, as the case may be, that begins after 9 May 1996, to be equal to 50% of that amount.

1972, c. 23, s. 89; 1975, c. 22, s. 13; 1977, c. 26, s. 14; 1978, c. 26, s. 20; 1987, c. 67, s. 24; 1989, c. 77, s. 17; 1990, c. 59, s. 55; 1993, c. 16, s. 58; 1994, c. 22, s. 73; 1995, c. 49, s. 37; 1996, c. 39, s. 30; 1997, c. 3, s. 71; 1998, c. 16, s. 86; 2000, c. 5, s. 34; 2000, c. 39, s. 10; 2001, c. 53, s. 33; 2003, c. 2, s. 34; 2006, c. 13, s. 28; 2017, c. 1, s. 89; 2017, c. 29, s. 30.

2017-02-08

99. Subject to section 450.10, for the purposes of this division, Chapter III, sections 64 and 78.4 and any regulations made under paragraph a of section 130, the following rules apply:

(a)  where a taxpayer, having acquired property to gain income, begins at a later time to use it for some other purpose, the taxpayer is deemed to have disposed of it at that time for proceeds of disposition equal to its fair market value and to have reacquired it immediately thereafter at a cost equal to that fair market value;

(b)  subject to section 284, where a taxpayer, having acquired property for some other purpose, begins at a particular time to use it to gain income, the taxpayer is deemed to have acquired it at that time at a capital cost to the taxpayer equal to the lesser of

i.  its fair market value at that time;

ii.  the aggregate of its cost to the taxpayer at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d, and, subject to section 99.1, 1/2 of the amount by which the fair market value of the property at that time exceeds the aggregate of the cost to the taxpayer of the property at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d, and, subject to section 99.1, twice the amount deducted by the taxpayer under Title VI.5 of Book IV in respect of the amount by which the fair market value of the property at that time exceeds the cost to the taxpayer of the property at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d;

(c)  where property has, since it was acquired by a taxpayer, been regularly used in part to gain income and in part for some other purpose, the proportion of the property acquired by the taxpayer to gain such income, the proportion of its capital cost and the proportion of the proceeds of disposition of such property, as the case may be, are deemed to be the same as the proportion that its use to gain income is of its whole use;

(d)  where there has been a change in the relation between the proportion of the use made of the property to gain income and the proportion of the use made of it for some other purpose, the following rules apply:

i.  where the proportion of the use made of the property to gain income has increased at a particular time, the taxpayer is deemed to have acquired at that time depreciable property of that class at a capital cost equal to the aggregate of the proportion of the lesser of its fair market value at that time, and its cost to the taxpayer at that time determined without reference to this subparagraph, subparagraph ii and paragraph a that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property, and, subject to section 99.1, 1/2 of the amount by which the amount deemed under section 283 to be the taxpayer’s proceeds of disposition of the property in respect of the change in the use made of the property exceeds the aggregate of that proportion of the cost to the taxpayer of the property at that time determined without reference to this subparagraph, subparagraph ii and paragraph a, that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property, and, subject to section 99.1, twice the amount deducted by the taxpayer under Title VI.5 of Book IV in respect of the amount by which the amount deemed under section 283 to be the taxpayer’s proceeds of disposition of the property in respect of the change in the use made of the property exceeds that proportion of the cost to the taxpayer of the property at that time determined without reference to this subparagraph, subparagraph ii and paragraph a that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property;

i.1.  for greater certainty, where the property is a passenger vehicle in respect of which paragraph d.3 or d.4 applies, the capital cost established under subparagraph i shall in no case be greater than the proportion referred to in the said subparagraph of the capital cost of the property established under paragraph d.3 or d.4, as the case may be;

ii.  where the proportion of the use made of the property to gain income has decreased at a particular time, the taxpayer is deemed to have disposed at that time of depreciable property of that class and the proceeds of disposition are deemed to be an amount equal to the proportion of the fair market value of the property as of that time that the amount of the decrease in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of it;

(d.1)  notwithstanding any other provision of this Part except section 450.10, where at any time a particular person or partnership has, in any manner whatever, acquired, otherwise than as a consequence of the death of the transferor, a depreciable property of a prescribed class, other than a timber resource property or a passenger vehicle in respect of which paragraph d.3 or d.4 or section 525.1 applies, from a transferor being a person or partnership with whom the particular person or partnership did not deal at arm’s length and the property was, immediately before the transfer, a capital property of the transferor, the following rules apply:

i.  where the transferor was an individual resident in Canada or a partnership any member of which was either an individual resident in Canada or another partnership and the cost of the property to the particular person or partnership at that time determined without reference to this paragraph exceeds the cost or, where the property was depreciable property, the capital cost of the property to the transferor immediately before the transferor disposed of it, the capital cost of the property to the particular person or partnership at that time is deemed to be the amount, in this subparagraph referred to as “the particular amount”, that is equal to the aggregate of the cost or capital cost, as the case may be, of the property to the transferor immediately before that time and, subject to section 99.1, 1/2 of the amount by which the transferor’s proceeds of disposition of the property exceed the aggregate of the cost or capital cost, as the case may be, of the property to the transferor immediately before that time, the amount required by section 726.9.4 to be deducted in computing the capital cost to the particular person or partnership of the property at that time, and, subject to section 99.1, twice the amount deducted by any person under Title VI.5 of Book IV in respect of the amount by which the transferor’s proceeds of disposition of the property exceed the cost or capital cost, as the case may be, of the property to the transferor immediately before that time and, for the purposes of paragraph b and subparagraph i of paragraph d, the cost of the property to the particular person or partnership is deemed to be equal to the particular amount,

ii.  where the transferor was not a transferor described in subparagraph i, the rules provided in that subparagraph, which shall be read as if the reference therein to “exceed the aggregate of the cost or capital cost” were a reference to “exceed the cost or capital cost” and without reference to “, the amount required by section 726.9.4 to be deducted in computing the capital cost to the particular person or partnership of the property at that time, and, subject to section 99.1, twice the amount deducted by any person under Title VI.5 of Book IV in respect of the amount by which the transferor’s proceeds of disposition of the property exceed the cost or capital cost, as the case may be, of the property to the transferor immediately before that time”, apply in the same manner, and

iii.  where the cost or capital cost, as the case may be, of the property to the transferor immediately before the transferor disposed of it exceeds the capital cost of the property to the particular person or partnership at that time determined without reference to this paragraph, the capital cost of the property to the particular person or partnership at that time is deemed to be an amount equal to the cost or capital cost, as the case may be, of the property to the transferor immediately before the transferor disposed of it and the excess is deemed to have been allowed as depreciation to the particular person or partnership in respect of the property under regulations made under paragraph a of section 130 in computing the income of the particular person or partnership for taxation years ending before the acquisition of the property by the particular person or partnership;

(d.1.1)  where a taxpayer is deemed by subparagraph a of the first paragraph of section 726.9.2 to have disposed of and reacquired a property that immediately before the disposition was a depreciable property, the taxpayer is deemed to have acquired the property from himself, herself or itself and, in so having acquired the property, not to have been dealing with himself, herself or itself at arm’s length;

(d.2)  where a taxpayer is deemed under subparagraph c of the second paragraph of section 736 to have disposed of and reacquired depreciable property, other than a timber resource property, the capital cost to the taxpayer of the property at the time of the reacquisition is deemed to be equal to the aggregate of

i.  the capital cost to the taxpayer of the property at the time of the disposition, and

ii.  subject to section 99.1, 1/2 of the amount by which the taxpayer’s proceeds of disposition of the property exceed the capital cost to the taxpayer of the property at the time of the disposition;

(d.3)  where the cost to a taxpayer of a passenger vehicle exceeds $20,000 or such other amount as may be prescribed, the capital cost to the taxpayer of the passenger vehicle is deemed to be equal to $20,000 or to that other amount, as the case may be;

(d.4)  notwithstanding paragraph d.3, where a passenger vehicle is acquired at any time by a taxpayer from a person with whom the taxpayer does not deal at arm’s length and this paragraph, paragraph d.3 or section 525.1 applies to the person in respect of that passenger vehicle, the capital cost thereof to the taxpayer is deemed to be equal to the least of the following amounts:

i.  the fair market value of the passenger vehicle at that time,

ii.  the amount that immediately before that time was the cost amount to that person of the passenger vehicle minus, as the case may be, the amount deducted by that person under paragraph a of section 130 in respect of the passenger vehicle in computing income for that person’s taxation year in which that person disposed of the passenger vehicle, and

iii.  $20,000 or such other amount as may be prescribed for the purposes of paragraph d.3;

(e)  for the purposes of this Part, a taxpayer who has acquired prescribed property between 3 December 1970 and 1 April 1972 for use in a prescribed manufacturing or processing business carried on by the taxpayer, is deemed to have acquired that property at a capital cost equal to 115% of the amount that, but for this paragraph and section 180, would have been the capital cost of that property, if that property was not used for any purpose whatever before it was acquired by the taxpayer;

(f)  where any part of a self-contained domestic establishment, in this paragraph referred to as the “work space”, in which an individual resides is the principal place of business of the individual or a partnership of which the individual is a member, or is used exclusively for the purpose of earning income from a business and on a regular and continuous basis for meeting clients, customers or patients of the individual or partnership in the course of the business, as the case may be, except a work space that relates to the operation of a private residential home or a tourist accommodation establishment that is a tourist home, bed and breakfast establishment or participating establishment in a hospitality village, within the meaning of the regulations made under the Act respecting tourist accommodation establishments (chapter E-14.2), where the individual or partnership holds a classification certificate of the appropriate class to which the tourist accommodation establishment belongs, issued under that Act, or is a participant in a hospitality village covered by such a classification certificate, the following rules apply:

i.  the capital cost at any time of the work space to the individual or partnership is deemed to be equal to the aggregate of

(1)  50% of the portion of the capital cost of the work space to the individual or partnership, determined without reference to this subparagraph i, that cannot reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made before that time, and

(2)  the portion of the capital cost of the work space to the individual or partnership, determined without reference to this subparagraph i, that may reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made before that time,

ii.  the proceeds of disposition of the work space to the individual or partnership, reduced by the total of all expenditures made or incurred by the individual or partnership for the purpose of making the disposition, are deemed to be equal to the aggregate of

(1)  50% of such proportion of the proceeds of disposition to the individual or partnership of the work space so reduced, determined without reference to this subparagraph ii, as the portion of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, that cannot reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made is of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, and

(2)  such proportion of the proceeds of disposition to the individual or partnership of the work space so reduced, determined without reference to this subparagraph ii, as the portion of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, that may reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made is of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, and

iii.  each of the amounts that increased or reduced the undepreciated capital cost to an individual or a partnership of the class that includes the work space, for a taxation year or a fiscal period, as the case may be, that begins before 10 May 1996, otherwise than because of subparagraph i of subparagraph e of the first paragraph of section 93 or subparagraph c of the second paragraph of that section, to the extent that it may reasonably be considered that the amount is attributable to an expenditure of a capital nature which does not relate solely to the work space that the individual or partnership made, is deemed, for a taxation year or a fiscal period, as the case may be, that begins after 9 May 1996, to be equal to 50% of that amount.

1972, c. 23, s. 89; 1975, c. 22, s. 13; 1977, c. 26, s. 14; 1978, c. 26, s. 20; 1987, c. 67, s. 24; 1989, c. 77, s. 17; 1990, c. 59, s. 55; 1993, c. 16, s. 58; 1994, c. 22, s. 73; 1995, c. 49, s. 37; 1996, c. 39, s. 30; 1997, c. 3, s. 71; 1998, c. 16, s. 86; 2000, c. 5, s. 34; 2000, c. 39, s. 10; 2001, c. 53, s. 33; 2003, c. 2, s. 34; 2006, c. 13, s. 28; 2017, c. 1, s. 89.

2006-06-13

99. Subject to section 450.10, for the purposes of this division, Chapter III, sections 64 and 78.4 and any regulations made under paragraph a of section 130, the following rules apply:

(a)  where a taxpayer, having acquired property to gain income, begins at a later time to use it for some other purpose, the taxpayer is deemed to have disposed of it at that time for proceeds of disposition equal to its fair market value and to have reacquired it immediately thereafter at a cost equal to that fair market value;

(b)  subject to section 284, where a taxpayer, having acquired property for some other purpose, begins at a particular time to use it to gain income, the taxpayer is deemed to have acquired it at that time at a capital cost to the taxpayer equal to the lesser of

i.  its fair market value at that time;

ii.  the aggregate of its cost to the taxpayer at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d, and, subject to section 99.1, 1/2 of the amount by which the fair market value of the property at that time exceeds the aggregate of the cost to the taxpayer of the property at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d, and, subject to section 99.1, twice the amount deducted by the taxpayer under Title VI.5 of Book IV in respect of the amount by which the fair market value of the property at that time exceeds the cost to the taxpayer of the property at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d;

(c)  where property has, since it was acquired by a taxpayer, been regularly used in part to gain income and in part for some other purpose, the proportion of the property acquired by the taxpayer to gain such income, the proportion of its capital cost and the proportion of the proceeds of disposition of such property, as the case may be, are deemed to be the same as the proportion that its use to gain income is of its whole use;

(d)  where there has been a change in the relation between the proportion of the use made of the property to gain income and the proportion of the use made of it for some other purpose, the following rules apply:

i.  where the proportion of the use made of the property to gain income has increased at a particular time, the taxpayer is deemed to have acquired at that time depreciable property of that class at a capital cost equal to the aggregate of the proportion of the lesser of its fair market value at that time, and its cost to the taxpayer at that time determined without reference to this subparagraph, subparagraph ii and paragraph a that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property, and, subject to section 99.1, 1/2 of the amount by which the amount deemed under section 283 to be the taxpayer’s proceeds of disposition of the property in respect of the change in the use made of the property exceeds the aggregate of that proportion of the cost to the taxpayer of the property at that time determined without reference to this subparagraph, subparagraph ii and paragraph a, that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property, and, subject to section 99.1, twice the amount deducted by the taxpayer under Title VI.5 of Book IV in respect of the amount by which the amount deemed under section 283 to be the taxpayer’s proceeds of disposition of the property in respect of the change in the use made of the property exceeds that proportion of the cost to the taxpayer of the property at that time determined without reference to this subparagraph, subparagraph ii and paragraph a that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property;

i.1.  for greater certainty, where the property is a passenger vehicle in respect of which paragraph d.3 or d.4 applies, the capital cost established under subparagraph i shall in no case be greater than the proportion referred to in the said subparagraph of the capital cost of the property established under paragraph d.3 or d.4, as the case may be;

ii.  where the proportion of the use made of the property to gain income has decreased at a particular time, the taxpayer is deemed to have disposed at that time of depreciable property of that class and the proceeds of disposition are deemed to be an amount equal to the proportion of the fair market value of the property as of that time that the amount of the decrease in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of it;

(d.1)  notwithstanding any other provision of this Part except section 450.10, where at any time a particular person or partnership has, in any manner whatever, acquired, otherwise than as a consequence of the death of the transferor, a depreciable property of a prescribed class, other than a timber resource property or a passenger vehicle in respect of which paragraph d.3 or d.4 or section 525.1 applies, from a transferor being a person or partnership with whom the particular person or partnership did not deal at arm’s length and the property was, immediately before the transfer, a capital property of the transferor, the following rules apply:

i.  where the transferor was an individual resident in Canada or a partnership any member of which was either an individual resident in Canada or another partnership and the cost of the property to the particular person or partnership at that time determined without reference to this paragraph exceeds the cost or, where the property was depreciable property, the capital cost of the property to the transferor immediately before the transferor disposed of it, the capital cost of the property to the particular person or partnership at that time is deemed to be the amount, in this subparagraph referred to as “the particular amount”, that is equal to the aggregate of the cost or capital cost, as the case may be, of the property to the transferor immediately before that time and, subject to section 99.1, 1/2 of the amount by which the transferor’s proceeds of disposition of the property exceed the aggregate of the cost or capital cost, as the case may be, of the property to the transferor immediately before that time, the amount required by section 726.9.4 to be deducted in computing the capital cost to the particular person or partnership of the property at that time, and, subject to section 99.1, twice the amount deducted by any person under Title VI.5 of Book IV in respect of the amount by which the transferor’s proceeds of disposition of the property exceed the cost or capital cost, as the case may be, of the property to the transferor immediately before that time and, for the purposes of paragraph b and subparagraph i of paragraph d, the cost of the property to the particular person or partnership is deemed to be equal to the particular amount,

ii.  where the transferor was not a transferor described in subparagraph i, the rules provided in that subparagraph, which shall be read as if the reference therein to “exceed the aggregate of the cost or capital cost” were a reference to “exceed the cost or capital cost” and without reference to “, the amount required by section 726.9.4 to be deducted in computing the capital cost to the particular person or partnership of the property at that time, and, subject to section 99.1, twice the amount deducted by any person under Title VI.5 of Book IV in respect of the amount by which the transferor’s proceeds of disposition of the property exceed the cost or capital cost, as the case may be, of the property to the transferor immediately before that time”, apply in the same manner, and

iii.  where the cost or capital cost, as the case may be, of the property to the transferor immediately before the transferor disposed of it exceeds the capital cost of the property to the particular person or partnership at that time determined without reference to this paragraph, the capital cost of the property to the particular person or partnership at that time is deemed to be an amount equal to the cost or capital cost, as the case may be, of the property to the transferor immediately before the transferor disposed of it and the excess is deemed to have been allowed as depreciation to the particular person or partnership in respect of the property under regulations made under paragraph a of section 130 in computing the income of the particular person or partnership for taxation years ending before the acquisition of the property by the particular person or partnership;

(d.1.1)  where a taxpayer is deemed by subparagraph a of the first paragraph of section 726.9.2 to have disposed of and reacquired a property that immediately before the disposition was a depreciable property, the taxpayer is deemed to have acquired the property from himself, herself or itself and, in so having acquired the property, not to have been dealing with himself, herself or itself at arm’s length;

(d.2)  where a corporation is deemed under subparagraph c of the second paragraph of section 736 to have disposed of and reacquired depreciable property, other than a timber resource property, the capital cost to the corporation of the property at the time of the reacquisition is deemed to be the amount that is equal to the aggregate of

i.  the capital cost to the corporation of the property at the time of the disposition, and

ii.  subject to section 99.1, 1/2 of the amount by which the corporation’s proceeds of disposition of the property exceed the capital cost to the corporation of the property at the time of the disposition;

(d.3)  where the cost to a taxpayer of a passenger vehicle exceeds $20,000 or such other amount as may be prescribed, the capital cost to the taxpayer of the passenger vehicle is deemed to be equal to $20,000 or to that other amount, as the case may be;

(d.4)  notwithstanding paragraph d.3, where a passenger vehicle is acquired at any time by a taxpayer from a person with whom the taxpayer does not deal at arm’s length and this paragraph, paragraph d.3 or section 525.1 applies to the person in respect of that passenger vehicle, the capital cost thereof to the taxpayer is deemed to be equal to the least of the following amounts:

i.  the fair market value of the passenger vehicle at that time,

ii.  the amount that immediately before that time was the cost amount to that person of the passenger vehicle minus, as the case may be, the amount deducted by that person under paragraph a of section 130 in respect of the passenger vehicle in computing income for that person’s taxation year in which that person disposed of the passenger vehicle, and

iii.  $20,000 or such other amount as may be prescribed for the purposes of paragraph d.3;

(e)  for the purposes of this Part, a taxpayer who has acquired prescribed property between 3 December 1970 and 1 April 1972 for use in a prescribed manufacturing or processing business carried on by the taxpayer, is deemed to have acquired that property at a capital cost equal to 115% of the amount that, but for this paragraph and section 180, would have been the capital cost of that property, if that property was not used for any purpose whatever before it was acquired by the taxpayer;

(f)  where any part of a self-contained domestic establishment, in this paragraph referred to as the “work space”, in which an individual resides is the principal place of business of the individual or a partnership of which the individual is a member, or is used exclusively for the purpose of earning income from a business and on a regular and continuous basis for meeting clients, customers or patients of the individual or partnership in the course of the business, as the case may be, except a work space that relates to the operation of a private residential home or a tourist accommodation establishment that is a tourist home, bed and breakfast establishment or participating establishment in a hospitality village, within the meaning of the regulations made under the Act respecting tourist accommodation establishments (chapter E-14.2), where the individual or partnership holds a classification certificate of the appropriate class to which the tourist accommodation establishment belongs, issued under that Act, or is a participant in a hospitality village covered by such a classification certificate, the following rules apply:

i.  the capital cost at any time of the work space to the individual or partnership is deemed to be equal to the aggregate of

(1)  50% of the portion of the capital cost of the work space to the individual or partnership, determined without reference to this subparagraph i, that cannot reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made before that time, and

(2)  the portion of the capital cost of the work space to the individual or partnership, determined without reference to this subparagraph i, that may reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made before that time,

ii.  the proceeds of disposition of the work space to the individual or partnership, reduced by the total of all expenditures made or incurred by the individual or partnership for the purpose of making the disposition, are deemed to be equal to the aggregate of

(1)  50% of such proportion of the proceeds of disposition to the individual or partnership of the work space so reduced, determined without reference to this subparagraph ii, as the portion of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, that cannot reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made is of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, and

(2)  such proportion of the proceeds of disposition to the individual or partnership of the work space so reduced, determined without reference to this subparagraph ii, as the portion of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, that may reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made is of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, and

iii.  each of the amounts that increased or reduced the undepreciated capital cost to an individual or a partnership of the class that includes the work space, for a taxation year or a fiscal period, as the case may be, that begins before 10 May 1996, otherwise than because of subparagraph i of subparagraph e of the first paragraph of section 93 or subparagraph c of the second paragraph of that section, to the extent that it may reasonably be considered that the amount is attributable to an expenditure of a capital nature which does not relate solely to the work space that the individual or partnership made, is deemed, for a taxation year or a fiscal period, as the case may be, that begins after 9 May 1996, to be equal to 50% of that amount.

1972, c. 23, s. 89; 1975, c. 22, s. 13; 1977, c. 26, s. 14; 1978, c. 26, s. 20; 1987, c. 67, s. 24; 1989, c. 77, s. 17; 1990, c. 59, s. 55; 1993, c. 16, s. 58; 1994, c. 22, s. 73; 1995, c. 49, s. 37; 1996, c. 39, s. 30; 1997, c. 3, s. 71; 1998, c. 16, s. 86; 2000, c. 5, s. 34; 2000, c. 39, s. 10; 2001, c. 53, s. 33; 2003, c. 2, s. 34; 2006, c. 13, s. 28.

2006-03-01

99. Subject to section 450.10, for the purposes of this division, Chapter III, sections 64 and 78.4 and any regulations made under paragraph a of section 130, the following rules apply:

(a)  where a taxpayer, having acquired property to gain income, begins at a later time to use it for some other purpose, the taxpayer is deemed to have disposed of it at that time for proceeds of disposition equal to its fair market value and to have reacquired it immediately thereafter at a cost equal to that fair market value;

(b)  subject to section 284, where a taxpayer, having acquired property for some other purpose, begins at a particular time to use it to gain income, the taxpayer is deemed to have acquired it at that time at a capital cost to the taxpayer equal to the lesser of

i.  its fair market value at that time;

ii.  the aggregate of its cost to the taxpayer at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d, and, subject to section 99.1, 1/2 of the amount by which the fair market value of the property at that time exceeds the aggregate of the cost to the taxpayer of the property at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d, and, subject to section 99.1, twice the amount deducted by the taxpayer under Title VI.5 of Book IV in respect of the amount by which the fair market value of the property at that time exceeds the cost to the taxpayer of the property at that time determined without reference to this paragraph, paragraph a and subparagraph ii of paragraph d;

(c)  where property has, since it was acquired by a taxpayer, been regularly used in part to gain income and in part for some other purpose, the proportion of the property acquired by the taxpayer to gain such income, the proportion of its capital cost and the proportion of the proceeds of disposition of such property, as the case may be, are deemed to be the same as the proportion that its use to gain income is of its whole use;

(d)  where there has been a change in the relation between the proportion of the use made of the property to gain income and the proportion of the use made of it for some other purpose, the following rules apply:

i.  where the proportion of the use made of the property to gain income has increased at a particular time, the taxpayer is deemed to have acquired at that time depreciable property of that class at a capital cost equal to the aggregate of the proportion of the lesser of its fair market value at that time, and its cost to the taxpayer at that time determined without reference to this subparagraph, subparagraph ii and paragraph a that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property, and, subject to section 99.1, 1/2 of the amount by which the amount deemed under section 283 to be the taxpayer’s proceeds of disposition of the property in respect of the change in the use made of the property exceeds the aggregate of that proportion of the cost to the taxpayer of the property at that time determined without reference to this subparagraph, subparagraph ii and paragraph a, that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property, and, subject to section 99.1, twice the amount deducted by the taxpayer under Title VI.5 of Book IV in respect of the amount by which the amount deemed under section 283 to be the taxpayer’s proceeds of disposition of the property in respect of the change in the use made of the property exceeds that proportion of the cost to the taxpayer of the property at that time determined without reference to this subparagraph, subparagraph ii and paragraph a that the amount of the increase in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of the property;

i.1.  for greater certainty, where the property is a passenger vehicle in respect of which paragraph d.3 or d.4 applies, the capital cost established under subparagraph i shall in no case be greater than the proportion referred to in the said subparagraph of the capital cost of the property established under paragraph d.3 or d.4, as the case may be;

ii.  where the proportion of the use made of the property to gain income has decreased at a particular time, the taxpayer is deemed to have disposed at that time of depreciable property of that class and the proceeds of disposition are deemed to be an amount equal to the proportion of the fair market value of the property as of that time that the amount of the decrease in the use regularly made by the taxpayer of the property to gain income is of the whole of the use regularly made of it;

(d.1)  notwithstanding any other provision of this Part except section 450.10, where at any time a particular person or partnership has, in any manner whatever, acquired, otherwise than as a consequence of the death of the transferor, a depreciable property of a prescribed class, other than a timber resource property or a passenger vehicle in respect of which paragraph d.3 or d.4 or section 525.1 applies, from a transferor being a person or partnership with whom the particular person or partnership did not deal at arm’s length and the property was, immediately before the transfer, a capital property of the transferor, the following rules apply:

i.  where the transferor was an individual resident in Canada or a partnership any member of which was either an individual resident in Canada or another partnership and the cost of the property to the particular person or partnership at that time determined without reference to this paragraph exceeds the cost or, where the property was depreciable property, the capital cost of the property to the transferor immediately before the transferor disposed of it, the capital cost of the property to the particular person or partnership at that time is deemed to be the amount, in this subparagraph referred to as "the particular amount", that is equal to the aggregate of the cost or capital cost, as the case may be, of the property to the transferor immediately before that time and, subject to section 99.1, 1/2 of the amount by which the transferor’s proceeds of disposition of the property exceed the aggregate of the cost or capital cost, as the case may be, of the property to the transferor immediately before that time, the amount required by section 726.9.4 to be deducted in computing the capital cost to the particular person or partnership of the property at that time, and, subject to section 99.1, twice the amount deducted by any person under Title VI.5 of Book IV in respect of the amount by which the transferor’s proceeds of disposition of the property exceed the cost or capital cost, as the case may be, of the property to the transferor immediately before that time and, for the purposes of paragraph b and subparagraph i of paragraph d, the cost of the property to the particular person or partnership is deemed to be equal to the particular amount,

ii.  where the transferor was not a transferor described in subparagraph i, the rules provided in that subparagraph, which shall be read as if the reference therein to "exceed the aggregate of the cost or capital cost" were a reference to "exceed the cost or capital cost" and without reference to ", the amount required by section 726.9.4 to be deducted in computing the capital cost to the particular person or partnership of the property at that time, and, subject to section 99.1, twice the amount deducted by any person under Title VI.5 of Book IV in respect of the amount by which the transferor’s proceeds of disposition of the property exceed the cost or capital cost, as the case may be, of the property to the transferor immediately before that time", apply in the same manner, and

iii.  where the cost or capital cost, as the case may be, of the property to the transferor immediately before the transferor disposed of it exceeds the capital cost of the property to the particular person or partnership at that time determined without reference to this paragraph, the capital cost of the property to the particular person or partnership at that time is deemed to be an amount equal to the cost or capital cost, as the case may be, of the property to the transferor immediately before the transferor disposed of it and the excess is deemed to have been allowed as depreciation to the particular person or partnership in respect of the property under regulations made under paragraph a of section 130 in computing the income of the particular person or partnership for taxation years ending before the acquisition of the property by the particular person or partnership;

(d.1.1)  where a taxpayer is deemed by subparagraph a of the first paragraph of section 726.9.2 to have disposed of and reacquired a property that immediately before the disposition was a depreciable property, the taxpayer is deemed to have acquired the property from himself, herself or itself and, in so having acquired the property, not to have been dealing with himself, herself or itself at arm’s length;

(d.2)  where a corporation is deemed under subparagraph c of the second paragraph of section 736 to have disposed of and reacquired depreciable property, other than a timber resource property, the capital cost to the corporation of the property at the time of the reacquisition is deemed to be the amount that is equal to the aggregate of

i.  the capital cost to the corporation of the property at the time of the disposition, and

ii.  subject to section 99.1, 1/2 of the amount by which the corporation’s proceeds of disposition of the property exceed the capital cost to the corporation of the property at the time of the disposition;

(d.3)  where the cost to a taxpayer of a passenger vehicle exceeds $20,000 or such other amount as may be prescribed, the capital cost to the taxpayer of the passenger vehicle is deemed to be equal to $20,000 or to that other amount, as the case may be;

(d.4)  notwithstanding paragraph d.3, where a passenger vehicle is acquired at any time by a taxpayer from a person with whom the taxpayer does not deal at arm’s length and this paragraph, paragraph d.3 or section 525.1 applies to the person in respect of that passenger vehicle, the capital cost thereof to the taxpayer is deemed to be equal to the least of the following amounts:

i.  the fair market value of the passenger vehicle at that time,

ii.  the amount that immediately before that time was the cost amount to that person of the passenger vehicle minus, as the case may be, the amount deducted by that person under paragraph a of section 130 in respect of the passenger vehicle in computing income for that person’s taxation year in which that person disposed of the passenger vehicle, and

iii.  $20,000 or such other amount as may be prescribed for the purposes of paragraph d.3;

(e)  for the purposes of this Part, a taxpayer who has acquired prescribed property between 3 December 1970 and 1 April 1972 for use in a prescribed manufacturing or processing business carried on by the taxpayer, is deemed to have acquired that property at a capital cost equal to 115% of the amount that, but for this paragraph and section 180, would have been the capital cost of that property, if that property was not used for any purpose whatever before it was acquired by the taxpayer;

(f)  where any part of a self-contained domestic establishment, in this paragraph referred to as the "work space", in which an individual resides is the principal place of business of the individual or a partnership of which the individual is a member, or is used exclusively for the purpose of earning income from a business and on a regular and continuous basis for meeting clients, customers or patients of the individual or partnership in the course of the business, as the case may be, except a work space that relates to the operation of a lodging establishment that is a tourist home, bed and breakfast establishment or participating establishment in a hospitality village within the meaning of the regulations made under the Act respecting Tourist Accommodation Establishments (chapter E-14.2), where the individual or partnership holds a permit of the appropriate subclass to which the lodging establishment belongs, issued under that Act, or is a participant in a hospitality village covered by such a permit, the following rules apply:

i.  the capital cost at any time of the work space to the individual or partnership is deemed to be equal to the aggregate of

(1)  50% of the portion of the capital cost of the work space to the individual or partnership, determined without reference to this subparagraph i, that cannot reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made before that time, and

(2)  the portion of the capital cost of the work space to the individual or partnership, determined without reference to this subparagraph i, that may reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made before that time,

ii.  the proceeds of disposition of the work space to the individual or partnership, reduced by the total of all expenditures made or incurred by the individual or partnership for the purpose of making the disposition, are deemed to be equal to the aggregate of

(1)  50% of such proportion of the proceeds of disposition to the individual or partnership of the work space so reduced, determined without reference to this subparagraph ii, as the portion of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, that cannot reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made is of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, and

(2)  such proportion of the proceeds of disposition to the individual or partnership of the work space so reduced, determined without reference to this subparagraph ii, as the portion of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, that may reasonably be considered to be attributable to the amount of an expenditure of a capital nature relating solely to the work space that the individual or partnership made is of the capital cost of the work space to the individual or partnership immediately before the disposition, determined without reference to this paragraph, and

iii.  each of the amounts that increased or reduced the undepreciated capital cost to an individual or a partnership of the class that includes the work space, for a taxation year or a fiscal period, as the case may be, that begins before 10 May 1996, otherwise than because of subparagraph i of subparagraph e of the first paragraph of section 93 or subparagraph c of the second paragraph of that section, to the extent that it may reasonably be considered that the amount is attributable to an expenditure of a capital nature which does not relate solely to the work space that the individual or partnership made, is deemed, for a taxation year or a fiscal period, as the case may be, that begins after 9 May 1996, to be equal to 50% of that amount.

1972, c. 23, s. 89; 1975, c. 22, s. 13; 1977, c. 26, s. 14; 1978, c. 26, s. 20; 1987, c. 67, s. 24; 1989, c. 77, s. 17; 1990, c. 59, s. 55; 1993, c. 16, s. 58; 1994, c. 22, s. 73; 1995, c. 49, s. 37; 1996, c. 39, s. 30; 1997, c. 3, s. 71; 1998, c. 16, s. 86; 2000, c. 5, s. 34; 2000, c. 39, s. 10; 2001, c. 53, s. 33; 2003, c. 2, s. 34.