The 2013 amendment to s. 42 prevents damages payments made after the filing due date for sales of small business corporation shares to qualify as a business investment loss
30 December 2014 - 11:01am
Where a taxpayer disposed of small business corporation shares and in a subsequent taxation year paid damages for breach of a covenant in the sale agreement, s. 42(b) formerly deemed the damages payment to be a capital loss from the disposition of the shares, so that it could qualify as a business investment loss. Effective for taxation years ending after 4 November 2010, s. 42 was amended in 2013 so that the payment (if made after the filing due date for the taxation year of the sale) was deemed to be a capital loss from the disposition of property in the abstract rather than from the specific shares, so that such amount could no longer qualify as a BIL.
Neal Armstrong. Summary of 2 October 2014 2013-0513281E5 F under s. 42.