Subsection 13(21.1) - Disposition of building
Administrative Policy
11 March 2013 External T.I. 2012-469231E5 F
A disposition by the taxpayer of a building and contiguous land (necessary for the building's use) would have given rise to a terminal loss in the...
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| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21.2) | 385 |
Paragraph 13(21.1)(a)
Administrative Policy
11 March 2013 External T.I. 2012-0469231E5 F - Deferred terminal loss
An individual, who disposed a building (with an accrued terminal loss) and its contiguous land (which was necessary for the use of the building...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21.2) | notional properties fall in same class so that losses suspended until triggering events for all properties/ordering of dispositions to affiliated and unaffiliated transferees generally not relevant | 435 |
2016 Ruling 2016-0635101R3 - 55(3)(a) Spin-Off to Use Parent Losses
Part of s. 55(3)(a) spin-off and immediate sale
It is proposed that the Property be spun-off by Subco to a newly-incorporated subsidiary of Parent...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) | 55(3)(a) spin-off of property already subject to sale agreement to parent before closing date | 592 |
| Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) | s. 86(1) applied where “dirty” s. 85 exchange mechanic used, but no s. 85 election made | 93 |
| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(a) | elected amount deterines proceeds before s. 13(21.1)(a) grind | 203 |
S3-F4-C1 - General Discussion of Capital Cost Allowance
Purpose of required allocation
1.87 Paragraph 13(21.1)(a) applies where both a building and land are disposed of in the same tax year… . [T]he...
Paragraph 13(21.1)(b)
See Also
Grondin v. Agence du revenu du Québec, 2019 QCCQ 1059
An uninsured barn of the taxpayer used in her pig-farming operation burned down. There would have been a resulting terminal loss, equalling the...
9136-6872 Québec Inc. v. The Queen, 2010 TCC 91, 2010 DTC 1263 [at 3833]
Paragraph 13(21.1)(b) applies as long as land is not disposed of in the same year as a building on the land.
The taxpayer purchased a building...
Administrative Policy
S3-F4-C1 - General Discussion of Capital Cost Allowance
Example of reduction of terminal loss
1.94 …
Example 9
In 2014, a taxpayer sells a building that is a rental property for $100,000. The taxpayer...
25 July 2007 External T.I. 2007-0222251E5 F - Perte finale sur un immeuble démoli
A Canadian-controlled private corporation demolished a building on its land, realized a terminal loss and, on the same land, erected a new rental...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | demolition of a building is its disposition | 42 |
Subsection 13(21.2) - Loss on certain transfers
Administrative Policy
2 April 2015 External T.I. 2015-0571501E5 F - Perte sur certains transferts
A partnership transferred a depreciable property to an affiliated person for proceeds less than its undepreciated capital cost, and then ceased to...
11 March 2013 External T.I. 2012-469231E5 F
A number of depreciable properties in the same class are transferred to an affiliated person, so that s. 13(21.2)(e)(iii) deems the transferor to...
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| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21.1) | 201 |
3 January 2013 External T.I. 2012-0460011E5 - Subsection 13(21.2)
A taxable Canadian corporation ("Canco") sells a depreciable property, with a fair market value lower than its undepreciated capital cost, for its...
11 March 2013 External T.I. 2012-0469231E5 F - Deferred terminal loss
First Situation
S. 13(21.2) applied to the transfer of all the depreciable properties in a prescribed class to an affiliated person. Could ss. 85...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21.1) - Paragraph 13(21.1)(a) | s. 13(21.1)(a) adjusts the proceeds as determined under s. 85 | 310 |
7 January 2013 External T.I. 2012-0452611E5 - Subsection 13(21.2)
CRA considered a scenario in which an individual transfers a depreciable property to his or her spouse and elects under s. 73(1) for the transfer...
2010 Ruling 2009-0347301R3 - Does s.s. 13(21.2) apply on s.s. 98(5) rollover
Debt owing by a limited partnership to its limited partner is converted into equity; and the limited partnership (which has a large number of...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) | 122 |
21 March 2007 External T.I. 2004-0091061E5 - stop loss rules for depreciable property
S. 13(21.2) would not apply to a transfer of depreciable property from a personal trust to a person affiliated with the trust, with the trust...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.3) | 114 |
25 July 2005 External T.I. 2005-0125501E5 - Subsection 13(21.2)
Aco and Bco (which are both owned by Holdco) carry on two distinct businesses with Class 13 properties. Aco transfers all its property to Newco,...
10 October 2003 Roundtable, 2003-0030095 F - Inter. Between Sub. 13(21.2) & 88(1) of ITA
Where a subsidiary corporation has had s. 13(21.2) apply to a transfer of depreciable property to its parent corporation, and the subsidiary is...
9 April 2003 External T.I. 2003-0011555 F - Application of 13(21.2) - Affil. Persons
Opco A held a building and subjacent land as nominee for Holdco 1 and Holdco 2, who had respective 33.33% and 66.67% co-ownership interests...
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|---|---|---|
| Tax Topics - General Concepts - Agency | CCRA tests for accepting the presence of an agency agreement, here, re property of a nominee | 177 |
1999 TEI Round Table, Q. XXII 992951
Where Aco transfers depreciable property to an affiliated corporation (Bco), the terminal loss of Aco will cease to be suspended when Bco ceases...
Subsection 13(26) - Restriction on deduction before available for use
Administrative Policy
1993 December Tax Executive Institute Roundtable, 5-932784
On the acquisition of control of a corporation, it is deemed to have claimed additional CCA under s. 111(5.1) on property which is not available...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(27) | 30 |
Subsection 13(27) - Interpretation — available for use
Administrative Policy
S3-F4-C1 - General Discussion of Capital Cost Allowance
Capable of producing salable product
1.34…
Example 2
Company B purchased specialized machinery for use in its manufacturing business. The...
18 October 2011 External T.I. 2011-0401381E5 - Capital Cost Allowance for a Partnership
In our opinion, paragraph 13(27)(f) of the Act would not apply where depreciable property is acquired by a partnership even if the only members...
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| Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2.21) | 30 | |
| Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2.2) | 29 |
1993 December Tax Executive Institute Roundtable, 5-932784
"With regard to equipment in the testing stage, it is our opinion that the testing activity would not qualify equipment to be considered...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(26) | 28 |
21 April 1993 T.I. (Tax Window, No. 31, p. 9, ¶2518)
A fishing vessel cannot be considered to be capable of performing the function for which it was acquired until all permits, certificates and...
15 April 1992 T.I. (Tax Window, No. 18, p. 13, ¶1846)
Even though a corporation is permitted a deduction under s. 20(1)(c) for interest on money borrowed to acquire equipment that is being tested, the...
November 1991 Memorandum (Tax Window, No. 12, p. 19, ¶1567)
A machine is "available for use" if it is capable of producing a commercially saleable product or extensive alterations are required to bring it...
24 June 1991 T.I. (Tax Window, No. 4, p. 14, ¶1314)
Equipment which has been acquired and is being tested is not considered for purposes of s. 13(27)(a) to be used for the purpose of earning income....
90 C.P.T.J. - Q.15
A well must be tied into a gas gathering system which in turn must be connected to a commercial gas plant in order to meet the requirements of...
Articles
Sinclair, "Depreciable Property: A Review of Recent Legislative Developments", 1991 Conference Report, c. 26.
Paragraph 13(27)(b)
Cases
Suncor Energy Inc. v. The King, 2024 TCC 31
Suncor acquired a Class 41 property in January 2005, then on January 1, 2006 transferred it on a s. 97(2) rollover basis to a limited partnership...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(31) - Paragraph 13(31)(a) | s. 13(31)(a) deemed property acquisition by an LP did not accord it a corresponding deemed taxation year under the 2-year rolling start rule | 350 |
Articles
John Tobin, "Infrastructure and P3 Projects", 2017 Conference Report (Canadian Tax Foundation), 10:1-31
Whether 2-year rolling-start rule in s. 13(27(b)) should be applied to Class 14 property acquired in a P3 construction project on an...
Shane Onufrechuk, Warren Pashkowick, "Tax Considerations of Major Construction Projects", 2014 Conference Report, Canadian Tax Foundation, 10:1-35.
Use of rolling-start rule in s. 13(27)(b) to accelerate CCA (p. 10:20)
[G]iven the long duration of major construction projects, the rolling-start...
Paragraph 13(27)(d)
See Also
Morley v. The Queen, 2004 DTC 2604, 2004 TCC 280, briefly aff'd 2006 DTC 6351, 2006 FCA 171
Software allegedly acquired by a partnership in 1993 was not available for use in that year given that no sales of the software were ever made...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 | 38 | |
| Tax Topics - General Concepts - Evidence | 32 | |
| Tax Topics - General Concepts - Fair Market Value - Other | 98 | |
| Tax Topics - General Concepts - Onus | 100 | |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A | 177 | |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | non-arm's length terms | 109 |
| Tax Topics - Income Tax Act - Section 96 | start-up activities sufficient to constitute carrying on business in common | 112 |
Brown v. The Queen, 2001 DTC 1094 (TCC), aff'd supra 2003 DTC 5298 (FCA)
A partnership acquired game "engines" (i.e., programs that would become functional games when graphic "shells" were added) at the end of 1993. The...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Fair Market Value - Other | 209 | |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A | 71 | |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | partnership purchase was NAL given that GP's shareholder acted in concert with vendor | 145 |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(2.2) - Paragraph 96(2.2)(d) | 69 | |
| Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(1) - Paragraph 1102(1)(c) | 56 |
Subsection 13(28) - Idem [Interpretation — available for use]
Administrative Policy
S3-F4-C1 - General Discussion of Capital Cost Allowance
Example of two-year rolling start rule
1.33 …
Example 1
Company A owns a Class 1 building that is used to earn business income. Near the end of...
19 December 2003 Internal T.I. 2003-0035347 - AVAILABLE FOR USE RULES
In connection with indicating that a building that was to be used as a sawmill which was substantially complete but was not yet operational (e.g.,...
16 October 1992 Memorandum 922845 (September 1993 Access Letter, p. 406, ¶C9-284)
A leasehold improvement referred to in Regulation 1102(5) is a building only for purposes of Schedule II and not for other purposes of the Act...
22 April 1992 Memorandum 920983 (May 1993 Access Letter, p. 191, ¶C20-069)
A building purchased by a taxpayer requiring extensive renovations will be eligible for capital cost allowance claims in the year of acquisition....
Subsection 13(29) - Idem [Interpretation — available for use]
Administrative Policy
1 October 2020 Internal T.I. 2019-0821651I7 - Filing of Long Term Project Election
Is the long-term project election under s. 13(29 required to be filed only once? The Directorate concluded:
The Long-Term Project Election is...
S3-F4-C1 - General Discussion of Capital Cost Allowance
Overview
1.37 Subsection 13(29) provides an election in respect of property acquired for use in a long-term project. The property can be a...
Articles
Shane Onufrechuk, Warren Pashkowick, "Tax Considerations of Major Construction Projects", 2014 Conference Report, Canadian Tax Foundation, 10:1-35.
Long-term project rule may permit faster CCA write-offs for long-term projects (p. 10:20)
When the creation of an asset in a major construction...
Subsection 13(31)
Paragraph 13(31)(a)
See Also
Suncor Energy Inc. v. The King, 2024 TCC 31
The taxpayer (Suncor) incurred $34 million in January 2005 to acquire Class 41 property, then on January 1, 2006 transferred the property on a s....
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|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(27) - Paragraph 13(27)(b) | transferee LP did not satisfy s. 13(27)(b) at the start of its 2nd tax year even though s. 13(31)(a) deemed it to acquire the property before its 1st tax year | 296 |
Subsection 13(34)
Paragraph 13(34)(a)
Administrative Policy
19 May 2020 Internal T.I. 2020-0841791I7 - Application of paragraph 111(4)(e)
In connection with an acquisition of its control, Canco used a s. 111(4)(c) and(d) write-down of debt owing by a controlled foreign affiliate to...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(4) - Paragraph 111(4)(e) | IP that were not on target’s tax books could be written up under s. 111(4)(e) | 248 |
Paragraph 13(34)(b)
See Also
Commissioner of Taxation v Sharpcan Pty Ltd, [2019] HCA 36
Due to a regulatory change, a hotel owner which had been sharing in the revenues generated from 18 gaming machines on its premises was required to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Contract Purchases or Prepayments | 10-year gaming licences required to maintain existing gaming revenues were purchased on capital account | 350 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Concessions and Licences | periodic payments under 30-year government concession were currently deductible | 206 |
| Tax Topics - General Concepts - Purpose/Intention | purpose distinguished from motive | 237 |
Subsection 13(35)
Administrative Policy
28 January 2021 Internal T.I. 2019-0817641I7 - Acquisition of rights to pension surplus
A portion of the purchase price paid for the acquisition of a business of the Seller by the Purchaser was allocated to the actuarial surplus in a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Actuarial Surplus | CRA finds that the purchase price of a business allocated to the actuarial surplus for a defined benefit plan was a non-deductible capital expenditure | 517 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(e) | purchased actuarial surplus was a reserve | 195 |
| Tax Topics - Income Tax Act - Section 78 - Subsection 78(4) | s. 78(4) exclusion would apply to the purchase of actuarial surplus | 191 |
Paragraph 13(35)(a)
Administrative Policy
27 November 2018 CTF Roundtable Q. 15, 2018-0780011C6 - Class 14.1
Class 14.1 depreciable property references “property” of the taxpayer. Does this have the effect of disqualifying, as Class 14.1 additions,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 14.1 | Class 14.1 “property” need not be property | 93 |
Subsection 13(38)
Finance
5 October 2018 Financial Strategies and Instruments Roundtable, Finance Response to Q.6
An individual transfers a directly-held pharmacy business to a wholly-owned Newco in 2017. On January 1, 2017, the cumulative eligible capital...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(h) | Finance is reviewing the interaction of the Class 14.1 transitional, and s. 85(1) rollover, rules | 189 |
Paragraph 13(38)(a)
Administrative Policy
7 June 2016 External T.I. 2016-0641851E5 - ECP Rules NAL Disposition
As a result of the taxpayer’s acquisition of eligible capital property from a non-arm’s length transferor prior to January 1, 2017, the amount...
Paragraph 13(38)(b)
Subparagraph 13(38)(b)(ii)
Administrative Policy
27 September 2016 External T.I. 2016-0660861E5 - partial disposition of farm quota
A taxpayer, who owns farm quota purchased at various times and prices before January 1, 2017, thereafter sells a fraction of the farm quota. What...
Paragraph 13(38)(c)
Administrative Policy
27 October 2017 External T.I. 2017-0688971E5 F - New Class 14.1
The CEC balance on December 31, 2016 in respect of Mr. X’s business was $75,000, equaling 75% of previously purchased goodwill and with no s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(39) | non-application on s. 85 roll can result in recapture -but disposition bump available to NAL transferee | 117 |
| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(e) | permitted agreed amount for Class 14.1 property rollover must be UCC even where amortized cost (equalling boot) is higher | 192 |
Paragraph 13(38)(d)
Administrative Policy
9 March 2017 External T.I. 2016-0680071E5 F - Règles transitoires - immobilisations admissibles
At the 2016 CTF Annual Conference, Q13, CRA indicated that the s. 13(38)(d)(iii) election to maintain the effect of the s. 14(1)(b) inclusion is...
27 March 2017 External T.I. 2016-0680141E5 - Subsection 13(38)
In December 2016, a corporation with an April 30, 2017 year end and which had previously incurred eligible capital expenditures, such as...
29 November 2016 CTF Roundtable Q. 13, 2016-0669721C6 - ECE/Class 14.1
Proposed s. 13(38)(d)(iii) provides in the case of a taxation year straddling January 1, 2017, a taxpayer would have had a particular amount...
Articles
Lorne Richter, "ECP Transitional Rules and 2016 Asset Sales", Canadian Tax Highlights, Vol. 24, No. 7, July 2016, p. 12
Potential application of transitional rule for years straddling 1 January 2017 (p. 12)
[A] transitional rule (proposed paragraph 13(37)(d))...
Subparagraph 13(38)(d)(iii)
Administrative Policy
6 October 2017 APFF Roundtable Q. 11, 2017-0709091C6 F - Transitional rules - Class 14.1
Where a partnership (the "Partnership") with a calendar year end, but whose corporate partners (the "Partners") have March 31 taxation year ends,...
Subsection 13(39)
Administrative Policy
27 October 2017 External T.I. 2017-0688971E5 F - New Class 14.1
Goodwill of a business was purchased in 2016 for $100,000, resulting in a cumulative eligible capital balance on December 31, 2016 of $75,000...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(38) - Paragraph 13(38)(c) | a s. 85 roll of purchased goodwill at an agreed amount of unamortized cost can trigger recapture | 250 |
| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(e) | permitted agreed amount for Class 14.1 property rollover must be UCC even where amortized cost (equalling boot) is higher | 192 |
Subsection 13(42)
Paragraph 13(42)(a)
Administrative Policy
9 November 2016 External T.I. 2016-0664451E5 - ECP Rules
S. 14(3) reduced a corporation’s eligible capital expenditure for its $1,000,000 purchase before 2017 of an eligible capital property (ECP) to...
Commentary
Loss suspension
S. 13(21.2) applies to suspend a terminal loss on a disposition of depreciable property by a person or partnership (referred to as...