Election for restrictive covenants

Since we have not published a prescribed form for the elections contained in section 56.4 of the Income Tax Act, the seller (grantor) and buyer (payor) have to file a jointly-signed letter to make the election.

This letter must include the following information concerning the grantor:

• Full name
• Social insurance number or business number
• Address, and mailing address if applicable
• The taxation year of the grantor in which they sold the restrictive covenant

This letter must include the following information concerning the payor:

• Full name
• Social insurance number or business number
• Address, and mailing address if applicable
• The taxation year of the payor in which they bought the restrictive covenant

This letter must include the following information concerning the covenant:

• A description of the covenant
• The full name of the taxpayer granting the covenant
• The full name of the taxpayer receiving the consideration for the covenant
• An indication that these parties deal at arm's length
• Under which provision of section 56.4 is the election being made by the parties

Date modified:

2016-01-05