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

Regulations are current to 2015-08-04 and last amended on 2015-07-01. Previous Versions

Exempt Mining Income

  •  (1) [Repealed, SOR/88-165, s. 6]

  • (2) Any election under subparagraph 13(21)(f)(vi) of the Act in respect of property of a prescribed class acquired by a corporation for the purpose of gaining or producing income from a mine shall be made by filing with the Minister, not later than the day on or before which the corporation is required to file a return of income pursuant to section 150 of the Act for its taxation year in which the exempt period in respect of the mine ended, one of the following documents in duplicate:

    • (a) where the directors of the corporation are legally entitled to administer the affairs of the corporation, a certified copy of their resolution authorizing the election to be made in respect of that class; and

    • (b) where the directors of the corporation are not legally entitled to administer the affairs of the corporation, a certified copy of the authorization of the making of the election in respect of that class by the person or persons legally entitled to administer the affairs of the corporation.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/78-377, s. 7;
  • SOR/78-493, s. 1(F);
  • SOR/79-426, s. 1;
  • SOR/88-165, s. 6;
  • SOR/94-686, s. 79(F).

Division IISeparate Classes

Businesses and Properties

  •  (1) Where more than one property of a taxpayer is described in the same class in Schedule II and where

    • (a) one of the properties was acquired for the purpose of gaining or producing income from a business, and

    • (b) one of the properties was acquired for the purpose of gaining or producing income from another business or from the property,

    a separate class is hereby prescribed for the properties that

    • (c) were acquired for the purpose of gaining or producing income from each business; and

    • (d) would otherwise be included in the class.

  • (1a) For the purposes of subsection (1),

    • (a) a life insurance business, and

    • (b) an insurance business other than a life insurance business,

    shall each be regarded as a separate business.

  • (1ab) Where, at the end of 1971, more than one property of a taxpayer who was a member of a partnership at that time is described in the same class in Schedule II and where

    • (a) one of the properties can reasonably be regarded to be the interest of the taxpayer in a depreciable property that is partnership property of the partnership, and

    • (b) one of the properties is property other than property referred to in paragraph (a),

    a separate class is hereby prescribed for all properties each of which

    • (c) is a property referred to in paragraph (a); and

    • (d) would otherwise be included in the class.

  • (1ac) Subject to subsection (5h), where more than one property of a taxpayer is described in the same class in Schedule II, and one or more of the properties is a rental property of the taxpayer the capital cost of which to the taxpayer was not less than $50,000, a separate class is hereby prescribed for each such rental property of the taxpayer that would otherwise be included in the same class, other than a rental property that was acquired by the taxpayer before 1972 or that is

    • (a) a building or an interest therein, or

    • (b) a leasehold interest acquired by the taxpayer by reason of the fact that the taxpayer erected a building on leased land,

    erection of which building was commenced by the taxpayer before 1972 or pursuant to an agreement in writing entered into by the taxpayer before 1972.

  • (1ad) Notwithstanding subsection (1ac), a rental property acquired by a taxpayer

    • (a) in the course of a reorganization in respect of which, if a dividend were received by a corporation in the course of the reorganization, subsection 55(2) of the Act would not be applicable to the dividend by reason of the application of paragraph 55(3)(b) of the Act, or

    • (a.1[Repealed, SOR/90-22, s. 2]

    • (b) from a person with whom the taxpayer was not dealing at arm’s length (otherwise than by virtue of a right referred to in paragraph 251(5)(b) of the Act) at the time the property was acquired,

    • (c[Repealed, SOR/90-22, s. 2]

    that would otherwise be rental property of the taxpayer of a separate class prescribed under subsection (1ac), shall be deemed not to be property of a separate class prescribed under that subsection if, immediately before it was so acquired by the taxpayer, it was a rental property of the person from whom the property was so acquired of a prescribed class other than a separate class prescribed under that subsection.

  • (1ae) Except in the case of a corporation or partnership described in subsection 1100(12), where more than one property of a taxpayer is described in the same class in Schedule II and where

    • (a) one of the properties is a rental property other than a property of a separate class prescribed under subsection (1ac), and

    • (b) one of the properties is a property other than rental property,

    a separate class is hereby prescribed for properties that

    • (c) are described in paragraph (a); and

    • (d) would otherwise be included in the class.

  • (1af) A separate class is hereby prescribed for each property included in Class 10.1 in Schedule II.

  • (1ag) If more than one property of a taxpayer is described in the same class in Schedule II, and one or more of the properties is a property in respect of which the taxpayer is a transferee that has elected under subsection 13(4.2) of the Act (each of which is referred to in this subsection as an “elected property”), a separate class is prescribed for each elected property of the taxpayer that would otherwise be included in the same class.

  • (1b) and (1c) [Repealed, SOR/79-670, s. 1]

Fishing Vessels

  • (2) Where a property of a taxpayer that would otherwise be included in Class 7 in Schedule II is a property in respect of which a depreciation allowance could have been taken under Order in Council

    • (a) P.C. 2798 of April 10, 1942,

    • (b) P.C. 7580 of August 26, 1942, as amended by P.C. 3297 of April 22, 1943, or

    • (c) P.C. 3979 of June 1, 1944,

    if those Orders in Council were applicable to the taxation year, a separate class is hereby prescribed for each property, including the furniture, fittings and equipment attached thereto.

Canadian Vessels

  • (2a) A separate class is hereby prescribed for each vessel of a taxpayer, including the furniture, fittings, radiocommunication equipment and other equipment attached thereto, that

    • (a) was constructed in Canada;

    • (b) is registered in Canada; and

    • (c) had not been used for any purpose whatever before it was acquired by the taxpayer.

Offshore Drilling Vessels

  • (2b) A separate class is hereby prescribed for all vessels described in Class 7 in Schedule II, including the furniture, fittings, radiocommunication equipment and other equipment attached thereto, acquired by a taxpayer

    • (a) after May 25, 1976 and designed principally for the purpose of

      • (i) determining the existence, location, extent or quality of accumulations of petroleum or natural gas (other than mineral resources), or

      • (ii) drilling oil or gas wells; or

    • (b) after May 22, 1979 and designed principally for the purpose of determining the existence, location, extent or quality of mineral resources.

Vessels and a Structured Financing Facility

  • (2c) Subsections (2a) and (2b) do not apply to a vessel, nor to the furniture, fittings, radio communications equipment and other equipment attached to the vessel, if a structured financing facility relating to any such property has been agreed to by the Minister of Industry under the Department of Industry Act.

Timber Limits and Cutting Rights

  • (3) For the purposes of this Part and Schedules IV and VI, each property of a taxpayer that is

    • (a) a timber limit other than a timber resource property, or

    • (b) a right to cut timber from a limit other than a right that is a timber resource property,

    is hereby prescribed to be a separate class of property.

Industrial Mineral Mines

  • (4) For the purposes of this Part and Schedule V, where a taxpayer has

    • (a) more than one industrial mineral mine in respect of which he may claim an allowance under paragraph 1100(1)(g),

    • (b) more than one right to remove industrial minerals from an industrial mineral mine in respect of which he may claim an allowance under that paragraph, or

    • (c) both such a mine and a right,

    each such industrial mineral mine and each such right to remove industrial minerals from an industrial mineral mine is hereby prescribed to be a separate class of property.

Class 28 — Single Mine Properties

  • (4a) If one or more properties of a taxpayer are described in Class 28 of Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from one mine and not from any other mine (which properties are referred to as “single mine properties” in this subsection), a separate class is prescribed for the single mine properties that

    • (a) were acquired for the purpose of gaining or producing income from that mine;

    • (b) would otherwise be included in Class 28; and

    • (c) are not included in a separate class by reason of subsection (4b).

Class 28 — Multiple Mine Properties

  • (4b) If more than one property of a taxpayer is described in Class 28 in Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from particular mines and not from any other mine (which properties are referred to as “multiple mine properties” in this subsection), a separate class is prescribed for the multiple mine properties that

    • (a) were acquired for the purpose of gaining or producing income from the particular mines; and

    • (b) would otherwise be included in Class 28.

Class 41 — Single Mine Properties

  • (4c) If one or more properties of a taxpayer are described in paragraph (a), (a.1) or (a.2) of Class 41 of Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from one mine and not from any other mine (which properties are referred to as “single mine properties” in this subsection), a separate class is prescribed for the single mine properties that

    • (a) were acquired for the purpose of gaining or producing income from that mine;

    • (b) would otherwise be included in Class 41; and

    • (c) are not included in a separate class by reason of subsection (4d).

Class 41 — Multiple Mine Properties

  • (4d) If more than one property of a taxpayer is described in paragraph (a), (a.1) or (a.2) of Class 41 in Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from particular mines and not from any other mine (which properties are referred to as “multiple mine properties” in this subsection), a separate class is prescribed for the multiple mine properties that

    • (a) were acquired for the purpose of gaining or producing income from the particular mines; and

    • (b) would otherwise be included in Class 41.

Class 41.1 — Single Mine Properties

  • (4e) If one or more properties of a taxpayer are described in paragraph (a) of Class 41.1 of Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from one mine and not from any other mine (which properties are referred to as “single mine properties” in this subsection), a separate class is prescribed for the single mine properties that

    • (a) were acquired for the purpose of gaining or producing income from that mine;

    • (b) would otherwise be included in Class 41.1, because of paragraph (a) of that class; and

    • (c) are not included in a separate class by reason of subsection (4f).

Class 41.1 — Multiple Mine Properties

  • (4f) If more than one property of a taxpayer is described in paragraph (a) of Class 41.1 in Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from particular mines and not from any other mine (which properties are referred to as “multiple mine properties” in this subsection), a separate class is prescribed for the multiple mine properties that

    • (a) were acquired for the purpose of gaining or producing income from the particular mines; and

    • (b) would otherwise be included in Class 41.1 because of paragraph (a) of that class.

Class 41.2  —  Single Mine Properties

  • (4g) If one or more properties of a taxpayer are described in paragraph (a) of Class 41.2 of Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from one mine and not from any other mine (in this subsection referred to as “single mine properties”), a separate class is prescribed for the single mine properties that

    • (a) were acquired for the purpose of gaining or producing income from that mine;

    • (b) would otherwise be included in Class 41.2 because of paragraph (a) of that class; and

    • (c) are not included in a separate class because of subsection (4h).

Class 41.2  —  Multiple Mine Properties

  • (4h) If more than one property of a taxpayer is described in paragraph (a) of Class 41.2 in Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from particular mines and not from any other mine (in this subsection referred to as “multiple mine properties”), a separate class is prescribed for the multiple mine properties that

    • (a) were acquired for the purpose of gaining or producing income from the particular mines; and

    • (b) would otherwise be included in Class 41.2 because of paragraph (a) of that class.

Class 47 — Liquefaction Equipment

  • (4i) If a taxpayer acquires property that is eligible liquefaction equipment to be used as part of an eligible liquefaction facility of the taxpayer, a separate class is prescribed for those properties that were acquired for the purpose of gaining or producing income from that eligible liquefaction facility.

Lease Option Agreements

  • (5) Where, by virtue of an agreement, contract or arrangement entered into on or after May 31, 1954, a taxpayer is deemed by section 18 of the Income Tax Act, as enacted by the Statutes of Canada, 1958, Chapter 32, subsection 8(1), to have acquired a property, a separate class is hereby prescribed for each such property and if the taxpayer subsequently actually acquires the property it shall be included in the same class.

Telecommunication Spacecraft

  • (5a) For the purposes of this Part, each property of a taxpayer that is an unmanned telecommunication spacecraft described in paragraph (f.2) of Class 10 or in Class 30 in Schedule II is hereby prescribed to be a separate class of property.

Multiple-Unit Residential Buildings

  • (5b) For the purposes of this Part, when any property of a taxpayer is a property of Class 31 or 32 in Schedule II and the capital cost of that property to the taxpayer was not less than $50,000, a separate class is hereby prescribed for each such property of the taxpayer that would otherwise be included in the same class.

Eligible Non-Residential Building

  • (5b.1) For the purposes of this Part, a separate class is prescribed for each eligible non-residential building (other than an eligible liquefaction building) of a taxpayer in respect of which the taxpayer has (by letter attached to the return of income of the taxpayer filed with the Minister in accordance with section 150 of the Act for the taxation year in which the building is acquired) elected that this subsection apply.

Liquefaction Buildings

  • (5b.2) If a taxpayer acquires property that is an eligible liquefaction building to be used as part of an eligible liquefaction facility of the taxpayer, a separate class is prescribed for those properties that were acquired for the purpose of gaining or producing income from that eligible liquefaction facility.

Leasing Properties

  • (5c) For the purposes of this Part, except in the case of a corporation or partnership described in subsection 1100(16), where more than one property of a taxpayer is described in the same class in Schedule II and where

    • (a) one of the properties is a leasing property, and

    • (b) one of the properties is a property other than a leasing property,

    a separate class is hereby prescribed for properties that

    • (c) are described in paragraph (a); and

    • (d) would otherwise be included in the class.

Railway Cars

  • (5d) Where more than one property of a taxpayer is a railway car included in Class 35 in Schedule II that was rented, leased or used by the taxpayer in Canada in the taxation year, other than a railway car owned by a corporation, or a partnership any member of which is a corporation, that

    • (a) was at any time in that taxation year a common carrier that owned or operated a railway, or

    • (b) rented or leased the railway cars at any time in that taxation year, by one or more transactions between persons not dealing at arm’s length, to an associated corporation that was, at that time, a common carrier that owned or operated a railway,

    a separate class is prescribed

    • (c) for all such properties acquired by the taxpayer before February 3, 1990 (other than such properties acquired for rent or lease to another person),

    • (d) for all such properties acquired by the taxpayer after February 2, 1990 (other than such properties acquired for rent or lease to another person),

    • (e) for all such properties acquired by the taxpayer before April 27, 1989 for rent or lease to another person, and

    • (f) for all such properties acquired by the taxpayer after April 26, 1989 for rent or lease to another person.

  • (5d.1) A separate class is hereby prescribed for all property included in Class 35 in Schedule II acquired at a time after December 6, 1991 and before February 28, 2000 by a taxpayer that was at that time a common carrier that owned and operated a railway.

  • (5d.2) A separate class is hereby prescribed for all property included in Class 35 in Schedule II acquired at a time after February 27, 2000 by a taxpayer that was at that time a common carrier that owned and operated a railway.

Railway Track and Related Property

  • (5e) A separate class is hereby prescribed for all property included in Class 1 in Schedule II acquired by a taxpayer after March 31, 1977 and before 1988 that is

    • (a) railway track and grading, including components such as rails, ballast, ties and other track material;

    • (b) railway traffic control or signalling equipment, including switching, block signalling, interlocking, crossing protection, detection, speed control or retarding equipment, but not including property that is principally electronic equipment or systems software therefor; or

    • (c) a bridge, culvert, subway or tunnel that is ancillary to railway track and grading.

  • (5e.1) A separate class is hereby prescribed for all property included in Class 1 in Schedule II acquired at a time after December 6, 1991 by a taxpayer that was at that time a common carrier that owned and operated a railway, where the property is

    • (a) railway track and grading, including components such as rails, ballast, ties and other track material;

    • (b) railway traffic control or signalling equipment, including switching, block signalling, interlocking, crossing protection, detection, speed control or retarding equipment, but not including property that is principally electronic equipment or systems software therefor; or

    • (c) a bridge, culvert, subway or tunnel that is ancillary to railway track and grading.

  • (5e.2) A separate class is hereby prescribed for all trestles included in Class 3 in Schedule II acquired at a time after December 6, 1991 by a taxpayer that was at that time a common carrier that owned and operated a railway, where the trestles are ancillary to railway track and grading.

  • (5f) A separate class is hereby prescribed for all trestles included in Class 3 in Schedule II acquired by a taxpayer after March 31, 1977 and before 1988 that are ancillary to railway track and grading.

Deemed Depreciable Property

  • (5g) A separate class is hereby prescribed for each property of a taxpayer described in Class 36 in Schedule II.

Leasehold Interest in Real Properties

  • (5h) For the purposes of this Part, where more than one property of a taxpayer is described in the same class in Schedule II and where

    • (a) one of the properties is a leasehold interest in real property described in subsection 1100(13), and

    • (b) one of the properties is a property other than a leasehold interest in real property described in subsection 1100(13),

    a separate class is hereby prescribed for properties that

    • (c) are described in paragraph (a); and

    • (d) would otherwise be included in the class.

Pipelines

  • (5i) A separate class is hereby prescribed for each property of a taxpayer described in Class 2 in Schedule II that is

    • (a) a pipeline the construction of which was commenced after 1984 and completed after September 1, 1985 and the capital cost of which to the taxpayer is not less than $10,000,000,

    • (b) a pipeline that has been extended or converted where the extension or conversion was completed after September 1, 1985 and the capital cost to the taxpayer of the extension or the cost to him of the conversion, as the case may be, is not less than $10,000,000, or

    • (c) a pipeline that has been extended and converted as part of a single program of extension and conversion of the pipeline where the program was completed after September 1, 1985 and the aggregate of the capital cost to the taxpayer of the extension and the cost to him of the conversion is not less than $10,000,000,

    and in respect of which the taxpayer has, by letter attached to the return of his income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the construction, extension, conversion or program, as the case may be, was completed, elected that this subsection apply.

  • (5j) An election under subsection (5i), (5l) or (5o) shall be effective from the first day of the taxation year in respect of which the election is made and shall continue to be effective for all subsequent taxation years.

Certified Productions

  • (5k) A separate class is hereby prescribed for all property of a taxpayer included in Class 10 of Schedule II by reason of paragraph (w) thereof.

Canadian Film or Video Production

  • (5k.1) A separate class is hereby prescribed for all property of a corporation included in Class 10 in Schedule II because of paragraph (x) of that Class that is property

    • (a) in respect of which the corporation is deemed under subsection 125.4(3) of the Act to have paid an amount on account of its tax payable under Part I of the Act for a taxation year; or

    • (b) acquired by the corporation from another corporation where

      • (i) the other corporation is deemed under subsection 125.4(3) of the Act to have paid an amount on account of its tax payable under Part I of the Act for a taxation year in respect of the property, and

      • (ii) the corporations were related to each other throughout the period that began when the other corporation first incurred a qualified labour expenditure (as defined in subsection 125.4(1) of the Act) in respect of the property and ended when the other corporation disposed of the property to the corporation.

Class 38 — Property and Outdoor Advertising Signs

  • (51) A separate class is hereby prescribed for each property of a taxpayer described in Class 38 in Schedule II or in paragraph (1) of Class 8 in Schedule II in respect of which the taxpayer has, by letter attached to the return of income of the taxpayer filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property was acquired, elected that this subsection apply.

Specified Energy Property

  • (5m) Where, for any taxation year, a property of a taxpayer or partnership is a specified energy property, a separate class is prescribed in respect of that property for that and subsequent taxation years.

  • (5n) Notwithstanding subsection (5c), where at the end of any taxation year a property of a taxpayer is specified leasing property, a separate class is prescribed in respect of that property (including any additions or alterations to that property included in the same class in Schedule II) for that year and all subsequent taxation years.

  • (5o) A separate class is prescribed for one or more properties of a class in Schedule II that are exempt properties, as defined in paragraph 1100(1.13)(a), of a taxpayer referred to in subsection 1100(16) in respect of which the taxpayer has, by letter attached to the return of income of the taxpayer filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property or properties were acquired, elected that this subsection apply.

Rapidly Depreciating Electronic Equipment

  • (5p) Subject to subsection (5q), a separate class is prescribed for one or more properties of a taxpayer acquired in a taxation year and included in the year in Class 8 in Schedule II, where each of the properties has a capital cost to the taxpayer of at least $1,000 and is

    • (a) computer software;

    • (b) a photocopier; or

    • (c) office equipment that is electronic communications equipment, such as a facsimile transmission device or telephone equipment.

  • (5q) Each of subsections (5p) and (5s) apply to a property or properties of a taxpayer only if the taxpayer has (by letter attached to the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property or properties were acquired) elected that the subsection apply to the property or properties, as the case may be.

Computer Tax Shelter Property

  • (5r) For the purpose of this Part, where

    • (a) more than one property of a taxpayer is described in the same class in Schedule II,

    • (b) one of the properties is a computer tax shelter property, and

    • (c) one of the properties is not a computer tax shelter property,

    for properties that are described in paragraph (b) and that would otherwise be included in the class, a separate class is prescribed.

Manufacturing or Processing Property

  • (5s) Subject to subsection (5q), a separate class is prescribed for one or more properties of a taxpayer

    • (a) that were acquired in a taxation year and included in the year in Class 43 in Schedule II because of paragraph (a) of that Class; and

    • (b) that had a capital cost to the taxpayer of at least $1,000.

  • (5t) [Repealed, SOR/2006-117, s. 2]

Equipment Related to Transmission Pipelines

  • (5u) A separate class is prescribed for one or more properties of a taxpayer that is property included in Class 7 in Schedule II because of paragraph (j) or (k) of that Class if the taxpayer has (by letter attached to the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property or properties were acquired) elected that this subsection apply to the property or properties.

Transmission Pipelines

  • (5v) A separate class is prescribed for one or more properties of a taxpayer that is property included in Class 49 in Schedule II if the taxpayer has (by letter attached to the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property or properties were acquired) elected that this subsection apply to the property or properties.

Reference

  • (6) A reference in this Part to a class in Schedule II includes a reference to the corresponding separate classes prescribed by this section.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-137, s. 2;
  • SOR/79-426, s. 2;
  • SOR/79-670, s. 1;
  • SOR/80-618, s. 1;
  • SOR/81-244, s. 1;
  • SOR/82-265, s. 2;
  • SOR/84-454, s. 2;
  • SOR/84-948, s. 6;
  • SOR/86-156, s. 1;
  • SOR/88-392, s. 2;
  • SOR/89-27, s. 2;
  • SOR/90-22, s. 2;
  • SOR/90-257, s. 2;
  • SOR/91-196, s. 2;
  • SOR/91-673, s. 2;
  • SOR/94-140, s. 3;
  • SOR/94-170, s. 2;
  • SOR/94-686, ss. 58(F), 78(F), 79(F);
  • SOR/98-97, s. 1;
  • SOR/2000-248, s. 3;
  • SOR/2005-126, s. 2;
  • SOR/2005-371, s. 2;
  • SOR/2005-414, s. 2;
  • SOR/2006-117, s. 2;
  • SOR/2009-115, ss. 2, 13;
  • SOR/2009-126, s. 2;
  • SOR/2010-93, s. 13(F);
  • SOR/2011-9, s. 2;
  • 2013, c. 34, s. 384, c. 40, 101;
  • SOR/2015-117, s. 2.