Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Does the reference to "at that time" in 43(1) refer to a time that is immediately before the disposition?
Position: Yes.
Reasons: Section 43 provides that for the purposes of computing the gain or loss where part of a property is disposed of, the adjusted cost base (ACB) of the property owned immediately prior to the disposition must be reasonably apportioned between the part disposed of and the part retained. The phrase “at that time” refers to the time immediately before the triggering event that resulted in the application of subsection 43(1) which was the partial disposition of a property.
XXXXXXXXXX
2012-044613
Charles Rafuse
613-247-9237
June 18, 2012
Dear Ms. XXXXXXXXXX:
Re: Subsection 43(1)
This is in response to your email of May 2, 2012, concerning the interpretation of the term “at that time” in subsection 43(1) of the Income Tax Act (the “Act”).
You have indicated that in respect of a partial disposition of a property subsection 43(1) of the Act states that “... the adjusted cost base to the taxpayer, immediately before the disposition, of that part is the portion of the adjusted cost base to the taxpayer at that time of the whole property that can reasonably be regarded as attributable to that part”. It is your understanding that “at that time” seems to indicate a time that is “immediately before the disposition” and have requested our views on this.
Our Comments
Subsection 43(1) of the Act provides that for the purposes of computing the gain or loss where part of a property is disposed of, the adjusted cost base (ACB) of the property owned immediately prior to that disposition must be reasonably apportioned between the part disposed of and the part retained. The definition of ACB is contained in section 54 of the Act and would include, where required, any necessary adjustments under section 53 of the Act immediately before the particular disposition. As such, the phrase “at that time” as used in subsection 43(1) of the Act, would, in our view, refer to the time immediately before the particular triggering event that resulted in the application of the subsection which was the partial disposition of the property.
We trust that these comments are of assistance.
Yours truly,
Michael Cooke
Manager
Business and Capital Transactions Section
Business and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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