Budget Implementation Act, 2016, No. 2 (S.C. 2016, c. 12)

• Marginal note:Derivatives — lower of cost and market

  (x) any reduction in a taxation year in the value of a property if

  • (i) the method used by the taxpayer to value the property at the end of the year for purposes of computing the taxpayer’s profit from a business or property is the cost at which the taxpayer acquired it or its fair market value at the end of the year, whichever is lower,

  • (ii) the property is described in subsection 10(15), and

  • (iii) the property is not disposed of by the taxpayer in the year; and

• Marginal note:Payment for shares

  (y) an amount referred to in subsection 13(36).

• Marginal note:Incorporation expenses

  (b) the lesser of

  • (i) the portion of the amount (that is not otherwise deductible in computing the income of the taxpayer) that is an expense incurred in the year for the incorporation of a corporation, and

  • (ii) $3,000 less the total of all amounts each of which is an amount deducted by another taxpayer in respect of the incorporation of the corporation;

• Marginal note:Repayment of obligation

  (hh.1) 3/4 of any amount repaid by the taxpayer in the year (on or after the time the taxpayer ceases to carry on a business) under a legal obligation to repay all or part of an amount the taxpayer received or was entitled to receive that was assistance from a government, municipality or other public authority (whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance) in respect of, or for the acquisition of, property the cost of which was an eligible capital expenditure of the taxpayer in respect of the business if the amount of the eligible capital expenditure of the taxpayer in respect of the business was reduced by paragraph 14(10)(c) because of the amount of the assistance the taxpayer received or was entitled to receive;

• Marginal note:Former eligible capital property

  (4.2) If an amount is deductible under subsection (4) in respect of the disposition of a depreciable property and subsection 13(39) applied to the disposition of the depreciable property, the amount deductible under subsection (4) is equal to 3/4 of the amount that would be deductible without reference to this subsection.

• Marginal note:Sales of linked notes

  (14.2) For the purposes of subsection (14), the amount determined by the following formula is deemed to be interest that accrued on an assigned or otherwise transferred debt obligation — that is, at any time, described in paragraph 7000(1)(d) of the Income Tax Regulations — to which the transferee has become entitled to for a period commencing before the time of the transfer and ending at that particular time that is not payable until after that particular time:

  A − B

  where

  A

  is the price for which the debt obligation was assigned or otherwise transferred at the particular time; and

  B

  is the amount by which the price (converted to Canadian currency using the exchange rate prevailing at the particular time, if the debt obligation is denominated in a foreign currency) for which the debt obligation was issued exceeds the portion, if any, of the principal amount of the debt obligation (converted to Canadian currency using the exchange rate prevailing at the particular time, if the debt obligation is denominated in a foreign currency) that was repaid by the issuer on or before the particular time.

• (c) in respect of a taxation year in respect of property included in Class 14.1 of Schedule II to the Income Tax Regulations unless the taxpayer has ceased to carry on the business to which the class relates.

• Marginal note:Business carried on by spouse or common-law partner or controlled corporation

  (2) If, at any time, an individual ceases to carry on a business and the individual’s spouse or common-law partner, or a corporation controlled directly or indirectly in any manner whatever by the individual, carries on the business and acquires all of the property included in Class 14.1 of Schedule II to the Income Tax Regulations in respect of the business owned by the individual immediately before that time and that had value at that time, the following rules apply:

  • (a) the individual is deemed to have, immediately before that time, disposed of the property and received proceeds of disposition equal to the lesser of the capital cost and the cost amount to the individual of the property immediately before the disposition;

  • (b) the spouse, common-law partner or corporation, as the case may be, is deemed to have acquired the property at a cost equal to those proceeds; and

  • (c) if the amount that was the capital cost to the individual of the property exceeds the amount determined under paragraph 70(5)(b) to be the cost to the person that acquired the property, for the purposes of sections 13 and 20 and any regulations made for the purpose of paragraph 20(1)(a),

    • (i) the capital cost to the person of the property is deemed to be the amount that was the capital cost to the individual of the property, and

    • (ii) the excess is deemed to have been allowed to the person in respect of the property under regulations made for the purposes of paragraph 20(1)(a) in computing income for taxation years that ended before the person acquired the property.

• Marginal note:Dispositions in extended fiscal period

  (3) If subsection (1) applies in respect of a fiscal period of a business of an individual, for the purpose of computing the individual’s income for the fiscal period, section 13 is to be read without reference to its subsection (8).

Marginal note:Emissions allowances

• 27.1 (1) Notwithstanding section 10, for the purpose of computing a taxpayer’s income from a business, an emissions allowance shall be valued at the cost at which the taxpayer acquired it.

• Marginal note:Determination of cost of emissions allowances

  (2) If at any particular time a taxpayer that owns one emissions allowance, or two or more identical emissions allowances (for the purposes of this subsection two or more emissions allowances will be considered identical if they could be used to settle the same emissions obligations), acquires one or more other emissions allowances (in this subsection referred to as newly acquired emissions allowances), each of which is identical to each of the previously-acquired emissions allowances, for the purposes of computing, at any subsequent time, the cost of the taxpayer of each of the identical emissions allowances,

  • (a) the taxpayer is deemed to have disposed of each of the previously-acquired emissions allowances immediately before the particular time for proceeds equal to its cost to the taxpayer immediately before the particular time; and

  • (b) the taxpayer is deemed to have acquired each of the identical emissions allowances at the particular time at a cost equal to the amount determined by the formula

    (A + B)/C

    where

    A

    is the total cost to the taxpayer immediately before the particular time of the previously-acquired emissions allowances,

    B

    is the total cost to the taxpayer (determined without reference to this section) of the newly-acquired emissions allowances, and

    C

    is the number of the identical emissions allowances owned by the taxpayer immediately after the particular time.

• Marginal note:Expense restriction

  (3) Notwithstanding any other provision of this Act, in computing a taxpayer’s income from a business for a taxation year, the total amount deductible in respect of a particular emissions obligation for a taxation year shall not exceed the amount determined by the formula

  A + B x C

  where

  A

  is the total cost of emissions allowances either

  • (a) used by the taxpayer to settle the particular emissions obligation in the year, or

  • (b) held by the taxpayer at the end of the taxation year that can be used to satisfy the particular emissions obligation in respect of the year;

  B

  is the amount determined by the formula

  D − (E + F)

  where

  D

  is the number of emissions allowances required to satisfy the particular emissions obligation in respect of the taxation year,

  E

  is the number of emissions allowances used by the taxpayer to settle the particular emissions obligation in the year, and

  F

  is the number of emissions allowances held by the taxpayer at the end of the taxation year that can be used to satisfy the particular emissions obligation in respect of the year; and

  C

  is the fair market value of an emissions allowance at the end of the taxation year that could be used to satisfy the particular emissions obligation in respect of the year.

• Marginal note:Income inclusion in following year

  (4) There shall be included in computing the income of a taxpayer for a taxation year as income from a business the amount deducted in respect of an emissions obligation referred to in subsection (3) for the immediately preceding taxation year to the extent that the emissions obligation was not settled in the immediately preceding taxation year.

• Marginal note:Proceeds of disposition

  (5) If a taxpayer surrenders an emissions allowance to settle an emissions obligation, the taxpayer’s proceeds from the disposition of the emissions allowance are deemed to be equal to the taxpayer’s cost of the emissions allowance.

• Marginal note:Loss restriction event

  (6) Notwithstanding subsection (1), each emissions allowance held at the end of the taxpayer’s taxation year that ends immediately before the time at which the taxpayer is subject to a loss restriction event is to be valued at the cost at which the taxpayer acquired the property, or its fair market value at the end of the year, whichever is lower, and after that time the cost at which the taxpayer acquired the property is, subject to a subsequent application of this subsection and subsection (2), deemed to be that lower amount.