Technical Tax Amendments Act, 2012 (S.C. 2013, c. 34)
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Assented to 2013-06-26
PART 5OTHER AMENDMENTS TO THE INCOME TAX ACT AND RELATED LEGISLATION
R.S., c. 1 (5th Supp.)Income Tax Act
174. (1) Section 12.3 of the Act is repealed.
(2) Subsection (1) applies to taxation years that begin after October 31, 2011.
175. (1) Subsection 13(1) of the Act is replaced by the following:
Marginal note:Recaptured depreciation
13. (1) If, at the end of a taxation year, the total of the amounts determined for E to K in the definition “undepreciated capital cost” in subsection (21) in respect of a taxpayer’s depreciable property of a particular prescribed class exceeds the total of the amounts determined for A to D.1 in that definition in respect of that property, the excess shall be included in computing the taxpayer’s income of the year.
(2) Subparagraph 13(4)(c)(ii) of the Act is replaced by the following:
(ii) the amount that has been used by the taxpayer to acquire
(A) if the former property is described in paragraph (a), before the later of the end of the second taxation year following the initial year and 24 months after the end of the initial year, or
(B) in any other case, before the later of the end of the first taxation year following the initial year and 12 months after the end of the initial year,
a replacement property of a prescribed class that has not been disposed of by the taxpayer before the time at which the taxpayer disposed of the former property, and
(3) Section 13 of the Act is amended by adding the following after subsection (4.1):
Marginal note:Election — limited period franchise, concession or license
(4.2) Subsection (4.3) applies if
(a) a taxpayer (in this subsection and subsection (4.3) referred to as the “transferor”) has, pursuant to a written agreement with a person or partnership (in this subsection and subsection (4.3) referred to as the “transferee”), at any time disposed of or terminated a former property that is a franchise, concession or licence for a limited period that is wholly attributable to the carrying on of a business at a fixed place;
(b) the transferee acquired the former property from the transferor or, on the termination, acquired a similar property in respect of the same fixed place from another person or partnership; and
(c) the transferor and the transferee jointly elect in their returns of income for their taxation years that include that time to have subsection (4.3) apply in respect of the acquisition and the disposition or termination.
Marginal note:Effect of election
(4.3) If this subsection applies in respect of an acquisition and a disposition or termination,
(a) if the transferee acquired a similar property referred to in paragraph (4.2)(b), the transferee is deemed to have also acquired the former property at the time that the former property was terminated and to own the former property until the transferee no longer owns the similar property;
(b) if the transferee acquired the former property referred to in paragraph (4.2)(b), the transferee is deemed to own the former property until such time as the transferee owns neither the former property nor a similar property in respect of the same fixed place to which the former property related;
(c) for the purpose of calculating the amount deductible under paragraph 20(1)(a) in respect of the former property in computing the transferee’s income, the life of the former property remaining on its acquisition by the transferee is deemed to be equal to the period that was the life of the former property remaining on its acquisition by the transferor; and
(d) any amount that would, if this Act were read without reference to this subsection, be an eligible capital amount to the transferor or an eligible capital expenditure to the transferee in respect of the disposition or termination of the former property by the transferor is deemed to be
(i) neither an eligible capital amount nor an eligible capital expenditure,
(ii) an amount required to be included in computing the capital cost to the transferee of the former property, and
(iii) an amount required to be included in computing the proceeds of disposition to the transferor in respect of a disposition of the former property.
(4) The description of E in the definition “undepreciated capital cost” in subsection 13(21) of the Act is replaced by the following:
- E
- is the total depreciation allowed to the taxpayer for property of the class before that time, including, if the taxpayer is an insurer, depreciation deemed to have been allowed before that time under subsection (22) or (23) as they read in their application to the taxpayer’s last taxation year that began before November 2011,
(5) Subsections 13(22) to (23.1) of the Act are repealed.
(6) Subsection (1) applies to taxation years that end after February 23, 1998.
(7) Subsection (2) applies in respect of dispositions that occur in taxation years that end on or after December 20, 2000, except that for those dispositions that occur in taxation years that end before December 20, 2001, clause 13(4)(c)(ii)(B) of the Act, as enacted by subsection (2), is to be read as follows:
(B) in any other case, before the end of the first taxation year following the initial year,
(8) Subsection (3) applies in respect of dispositions and terminations that occur after December 20, 2002.
(9) Subsections (4) and (5) apply to taxation years that begin after October 31, 2011.
176. (1) Paragraph 14(3)(a) of the Act is replaced by the following:
(a) the amount determined for E in the definition “cumulative eligible capital” in subsection (5) in respect of the disposition of the property by the transferor or, if the property is the subject of an election under subsection (1.01) or (1.02) by the transferor, 3/4 of the actual proceeds referred to in that subsection,
(2) The definition “adjustment time” in subsection 14(5) of the Act is replaced by the following:
“adjustment time”
« moment du rajustement »
“adjustment time”, of a taxpayer in respect of a business, means
(a) for a corporation, the time immediately after the commencement of its first taxation year commencing after June 1988, and
(b) for any other taxpayer, the time immediately after the commencement of the taxpayer’s first fiscal period commencing after 1987 in respect of the business;
(3) The description of A in the definition “cumulative eligible capital” in subsection 14(5) of the Act is replaced by the following:
- A
- is the amount, if any, by which 3/4 of the total of all eligible capital expenditures in respect of the business made or incurred by the taxpayer after the taxpayer’s adjustment time and before that time exceeds the total of all amounts each of which is determined by the formula
1/2 × (A.1 – A.2) × (A.3/A.4)
where
- A.1
- is the amount required, because of paragraph (1)(b) or 38(a), to be included in the income of a person or partnership (in this definition referred to as the “transferor”) not dealing at arm’s length with the taxpayer in respect of the disposition after December 20, 2002 of a property that was an eligible capital property acquired by the taxpayer directly or indirectly, in any manner whatever, from the transferor and not disposed of by the taxpayer before that time,
- A.2
- is the total of all amounts that can reasonably be considered to have been claimed as deductions under section 110.6 by the transferor in respect of that disposition,
- A.3
- is the transferor’s proceeds from that disposition, and
- A.4
- is the transferor’s total proceeds of disposition of eligible capital property in the taxation year of the transferor in which the property described in A.1 was disposed of,
(4) The description of R in the definition “cumulative eligible capital” in subsection 14(5) of the Act is replaced by the following:
- R
- is the total of all amounts each of which is an amount included, in computing the taxpayer’s income from the business for a taxation year that ended before that time and after the taxpayer’s adjustment time
(a) in the case of a taxation year that ends after February 27, 2000, under paragraph (1)(a), or
(b) in the case of a taxation year that ended before February 28, 2000,
(i) under subparagraph (1)(a)(iv), as that subparagraph applied in respect of that taxation year, or
(ii) under paragraph (1)(b), as that paragraph applied in respect of that taxation year, to the extent that the amount so included is in respect of an amount included in the amount determined for P;
(5) Section 14 of the Act is amended by adding the following after subsection (5):
Marginal note:Restrictive covenant amount
(5.1) The description of E in the definition “cumulative eligible capital” in subsection (5) does not apply to an amount that is received or receivable by a taxpayer in a taxation year if that amount is required to be included in the taxpayer’s income because of subsection 56.4(2).
(6) The portion of subsection 14(6) of the Act before paragraph (a) is replaced by the following:
Marginal note:Exchange of property
(6) If in a taxation year (in this subsection referred to as the “initial year”) a taxpayer disposes of an eligible capital property (in this section referred to as the taxpayer’s “former property”) and the taxpayer so elects under this subsection in the taxpayer’s return of income for the year in which the taxpayer acquires an eligible capital property that is a replacement property for the taxpayer’s former property, the amount, not exceeding the amount that would otherwise be included in the amount determined for E in the definition “cumulative eligible capital” in subsection (5) (if the description of E in that definition were read without reference to “3/4 of”) in respect of a business, that has been used by the taxpayer to acquire the replacement property before the later of the end of the first taxation year after the initial year and 12 months after the end of the initial year
(7) Subsections (1), (3) and (4) apply to taxation years that end after February 27, 2000, except that
(a) the reference to “subsection (1.01) or (1.02)” in paragraph 14(3)(a) of the Act, as enacted by subsection (1), is to be read as a reference to “subsection (1.01)” for taxation years that end after February 27, 2000 and before December 20, 2002; and
(b) the reference to “disposition after December 20, 2002 of a property that was an eligible capital property” in the description of A.1 in the definition “cumulative eligible capital” in subsection 14(5) of the Act, as enacted by subsection (3), is to be read as a reference to “disposition after 2003 of a property that was an eligible capital property” if
(i) the taxpayer referred to in that description of A.1 acquired the property referred to in that description from the transferor referred to in that description,
(ii) the property was so acquired under an agreement in writing made before December 21, 2002 between the transferor, or a particular person that controlled the transferor, and another person who dealt at arm’s length with the transferor and the particular person, and
(iii) no clause in the agreement or any other arrangement allows an obligation of any party to the agreement to be changed, reduced or waived in the event of a change to, or an adverse assessment under, the Act.
(8) Subsection (2) is deemed to have come into force on November 1, 2011.
(9) Subsection (5) is deemed to have come into force on October 8, 2003.
(10) Subsection (6) applies in respect of dispositions that occur in taxation years that end on or after December 20, 2001.
- Date modified: