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

Regulations are current to 2017-09-27 and last amended on 2017-07-01. Previous Versions

DIVISION IIIProperty not Included

  •  (1) Nothing in this Part shall be construed as allowing a deduction in respect of a property

    • (a) the cost of which is deductible in computing the taxpayer’s income;

    • (b) that is described in the taxpayer’s inventory;

    • (c) that was acquired by an expenditure in respect of which the taxpayer is allowed a deduction from income under section 37 of the Act;

    • (d) that has been constituted a prescribed class by subsection 24(2) of chapter 91, S.C. 1966-67;

    • (e) that is included in a separate prescribed class established under subsection 13(14) of the Act;

    • (f) that was not used in the business during the year;

    • (g) that is

      • (i) an animal, or

      • (ii) a tree, shrub, herb or similar growing thing;

    • (h) that was not acquired by the taxpayer for the purpose of gaining or producing income from farming or fishing;

    • (i) that has been included at any time by the taxpayer in a class prescribed under Part XI;

    • (j) that is a passenger automobile acquired after June 13, 1963, and before January 1, 1966, the cost to the taxpayer of which, minus the initial transportation charges and retail sales tax in respect thereof, exceeded $5,000, unless the automobile was acquired by a person before June 14, 1963 and has, by one or more transactions between persons not dealing at arm’s length, become vested in the taxpayer; or

    • (k) that was acquired by the taxpayer after 1971.

  • (2) Where a taxpayer is a member of a partnership, the properties referred to in this Part shall be deemed not to include any property that is an interest of the taxpayer in depreciable property that is partnership property of the partnership.

  • (3) The properties referred to in section 1700 shall be deemed not to include the land upon which a property described therein was constructed or is situated.

  • (4) Where the taxpayer is a non-resident person, the properties referred to in section 1700 shall be deemed not to include property that is situated outside Canada.

  • (5) The provisions of subsections 1102(11), (12) and (13) are applicable mutatis mutandis to paragraph (1)(j).

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/94-686, ss. 15(F), 50(F), 58(F), 70(F), 78(F);
  • SOR/2010-93, s. 15(F).

DIVISION IVInterpretation

Taxation Years for Individuals in Business

  •  (1) Where a taxpayer is an individual and his income for the taxation year includes income from a business the fiscal period of which does not coincide with the calendar year, in respect of depreciable properties acquired for the purpose of gaining or producing income from the business, a reference in this Part to

    • (a) “the taxation year” shall be deemed to be a reference to the fiscal period of the business; and

    • (b) “the end of the taxation year” shall be deemed to be a reference to the end of the fiscal period of the business.

Depreciable Cost

  • (2) In this Part, depreciable cost to a taxpayer of property means, except as otherwise provided, the actual cost of the property to the taxpayer or the amount at which he is deemed under subsection 13(7) of the Act to have acquired the property, as the case may be.

  • (3) Notwithstanding the other provisions of this section, in the case of property the cost of which to a partnership has been determined under paragraph 20(5)(a) of the Income Tax Application Rules, the depreciable cost to the taxpayer of the property for the purposes of this Part shall be deemed to be an amount equal to the cost to the partnership of the particular property as determined under that paragraph.

Personal Use of Property

  • (4) Where a taxpayer has, in a taxation year, regularly used a property in part for the purpose of gaining or producing income from farming or fishing and in part for a purpose other than gaining or producing income, the depreciable cost to the taxpayer of the property for the purposes of this Part is the proportion of the amount that would otherwise be the depreciable cost that the use regularly made of the property for the purpose of gaining or producing income from farming or fishing is of the whole use regularly made of the property.

Grants, Subsidies or Other Government Assistance

  • (5) Where a taxpayer has received or is entitled to receive a grant, subsidy or other assistance from a government, municipality or other public authority in respect of or for the acquisition of property, the depreciable cost to the taxpayer of the property for the purposes of this Part is the amount that would otherwise be the depreciable cost minus the amount of the grant, subsidy or other assistance.

Transactions Not at Arm’s Length

  • (6) Where property did belong to a person (in this subsection referred to as the “original owner”) and has, by one or more transactions between persons not dealing at arm’s length, become vested in a taxpayer, the depreciable cost to the taxpayer of the property for the purposes of this part is the lesser of

    • (a) the actual capital cost of the property to the taxpayer; and

    • (b) the amount by which the actual capital cost of the property to the original owner exceeds the aggregate of

      • (i) the total amount of depreciation for the property that, since the commencement of 1917, has been or should have been taken into account in accordance with the practice of the Department of National Revenue in ascertaining the income of the original owner and all intervening owners for the purposes of the Income War Tax Act or in ascertaining a loss for a year when there was no income under that Act,

      • (ii) any accumulated depreciation reserves that the original owner or an intervening owner had for the property at the commencement of 1917 and that were recognized by the Minister for the purposes of the Income War Tax Act, and

      • (iii) the aggregate of the deductions, if any, allowed under this Part in respect of the property to the original owner and all intervening owners.

Property Acquired From a Parent

  • (7) Notwithstanding subsection (6), where depreciable property has been acquired by a taxpayer under such circumstances that the provisions of section 85H of the Act as it read in its application to the 1971 and prior taxation years are applicable for the determination of the capital cost of the property, the depreciable cost to the taxpayer of the property for the purposes of this Part is the capital cost as determined under that section.

Property Acquired by Gift

  • (8) Subsection (6) does not apply in respect of property which a taxpayer has acquired by gift.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/94-686, ss. 48, 78(F), 81(F);
  • SOR/2010-93, s. 16(F).

DIVISION VApplication of this Part

 This Part shall apply only to a taxpayer who, in computing his income, has never claimed an allowance under Part XI in respect of a property at a time when an allowance could have been claimed under this Part in respect of that property, other than an allowance claimed by the taxpayer under Part XI that may be claimed in respect of a property described in

  • (a) paragraph 1100(1)(r) as enacted by Order in Council P.C. 1965-1118 of June 18, 1965 and as amended by Order in Council P.C. 1965-2320 of December 29, 1965;

  • (b) paragraph 1100(1)(sa) as enacted by Order in Council P.C. 1968-2261 of December 10, 1968;

  • (c) paragraph 1100(1)(v); or

  • (d) Class 20 in Schedule II.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/78-377, s. 11;
  • SOR/86-1092, s. 9(F);
  • SOR/2010-93, s. 17(F).

PART XVIIIInventories

Manner of Keeping Inventories

 For the purposes of section 230 of the Act, an inventory shall show quantities and nature of the properties that should be included therein in such a manner and in sufficient detail that the property may be valued in accordance with this Part or section 10 of the Act.

Valuation

 Except as provided in section 1802, for the purpose of computing the income of a taxpayer from a business, all the property described in all the inventories of the business may be valued at its fair market value.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/89-419, s. 1;
  • SOR/94-686, s. 16(F).

Valuation of Animals

  •  (1) Except as provided in subsection (2), a taxpayer who is carrying on a business that includes the breeding and raising of animals may elect in prescribed form for a taxation year and subsequent taxation years to value each animal of a particular species (except a registered animal, an animal purchased for feedlot or similar operations, or an animal purchased by a drover or like person for resale) included in his inventory in respect of the business at a unit price determined in accordance with this section.

  • (2) An election made in accordance with subsection (1) may be revoked in writing by the taxpayer, but where a taxpayer has made a revocation in accordance with this subsection a further election may not be made under subsection (1) except with the concurrence of the Minister.

  • (3) The unit price with respect to an animal of a particular class of animal shall be determined in accordance with the following rules:

    • (a) where animals of a particular class of animal were included in the inventory of a taxpayer at the end of the taxation year immediately preceding the first year in respect of which the taxpayer elected under subsection (1), the unit price of an animal of that class shall be computed by dividing the total value of all animals of the class in the inventory of the preceding year by the number of animals of the class described in that inventory; and

    • (b) in any other case, the unit price of an animal of a class shall be determined by the Minister, having regard, among other things, to the unit prices of animals of a comparable class of animal used in valuing the inventories of other taxpayers in the district.

  • (4) Notwithstanding subsection (1), where the aggregate value of the animals of a particular class determined in accordance with that subsection exceeds the market value of those animals, the animals of that class may be valued at fair market value.

  • (5) In this section,

    class of animal

    class of animal means a group of animals of a particular species segregated on the basis of age, breed or other recognized division, as determined by the taxpayer at the time of election under this section; (catégorie d’animaux)

    district

    district means the territory served by a Tax Centre of the Canada Revenue Agency; (district)

    registered animal

    registered animal means an animal for which a certificate of registration has been issued by the registrar of the breed to which the animal belongs or by the registrar of the Canadian National Livestock Records; (animal enregistré)

    a reference to “taxation year” shall be deemed to include a reference to the fiscal period of a business.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/94-686, ss. 17(F), 81(F);
  • SOR/2007-116, s. 6.
 
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