Income Tax Regulations (C.R.C., c. 945)

Regulations are current to 2015-03-31 and last amended on 2015-03-13. Previous Versions

Residual Portion of Gain or Loss

Marginal note:Allocation of residual portion
  •  (1) Subject to section 9204, if subsection 142.4(4) of the Act applies to the disposition of a specified debt obligation by a taxpayer, the amount allocated to each taxation year in respect of the residual portion of the gain or loss from the disposition shall be determined, for the purpose of that subsection,

    • (a) by a method that complies with, or is substantially similar to a method that complies with, subsection (2); or

    • (b) if gains and losses from the disposition of debt obligations are amortized to profit for the purpose of the taxpayer’s financial statements, by the method used for the purpose of the taxpayer’s financial statements.

  • Marginal note:Proration method

    (2) For the purpose of subsection (1), a method for allocating to taxation years the residual portion of a taxpayer’s gain or loss from the disposition of a specified debt obligation complies with this subsection if the amount allocated to each taxation year is determined by the formula

    A × B/C

    where

    A 
    is the residual portion of the taxpayer’s gain or loss;
    B 
    is the number of days in the taxation year that are in the period referred to in the description of C; and
    C 
    is the number of days in the period that,
    • (a) where subsection (3) applies in respect of the obligation, is determined under that subsection, and

    • (b) in any other case,

      • (i) begins on the day on which the taxpayer disposed of the obligation, and

      • (ii) ends on the earlier of

        • (A) the amortization date for the obligation, and

        • (B) the day that is 20 years after the day on which the taxpayer disposed of the obligation.

  • Marginal note:Single proration period

    (3) This subsection applies in respect of specified debt obligations disposed of by a taxpayer in a transaction in a taxation year, and the period determined under this subsection in respect of the obligations is the period that begins on the day of disposition and ends on the weighted average amortization date for those obligations so disposed of to which subsection 142.4(4) of the Act applies, if

    • (a) the taxpayer has elected in its return of income for the taxation year to have this subsection apply in respect of the obligations so disposed of;

    • (b) all the obligations so disposed of were disposed of at the same time; and

    • (c) the number of the obligations so disposed of to which subsection 142.4(4) of the Act applies is at least 50.

  • Marginal note:Weighted average amortization date

    (4) For the purpose of subsection (3), the weighted average amortization date for a group of specified debt obligations disposed of on the same day by a taxpayer is,

    • (a) if paragraph (b) does not apply, the day that is the number of days after the day of disposition equal to the total of the number of days determined in respect of each obligation by the formula

      A × B/C

      where

      A 
      is the number of days from the day of disposition to the amortization date for the obligation,
      B 
      is the residual portion of the gain or loss from the disposition of the obligation, and
      C 
      is the total of all amounts each of which is the residual portion of the gain or loss from the disposition of an obligation in the group; and
    • (b) the day that the taxpayer determines using a reasonable method for estimating the day determined under paragraph (a).

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/2009-222, s. 7.