Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Marginal note:Synthetic disposition

• 80.6 (1) If a synthetic disposition arrangement is entered into in respect of a property owned by a taxpayer and the synthetic disposition period of the arrangement is one year or more, the taxpayer is deemed

  • (a) to have disposed of the property immediately before the beginning of the synthetic disposition period for proceeds equal to its fair market value at the beginning of the synthetic disposition period; and

  • (b) to have reacquired the property at the beginning of the synthetic disposition period at a cost equal to that fair market value.

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of a property owned by a taxpayer if

  • (a) the disposition referred to in subsection (1) would not result in the realization of a capital gain or income;

  • (b) the property is a mark-to-market property (as defined in subsection 142.2(1)) of the taxpayer;

  • (c) the synthetic disposition arrangement referred to in subsection (1) is a lease of tangible property or, for civil law, corporeal property;

  • (d) the arrangement is an exchange of property to which subsection 51(1) applies; or

  • (e) the property is disposed of as part of the arrangement, within one year after the day on which the synthetic disposition period of the arrangement begins.