Subsection 13(1) - Recaptured depreciation
Administrative Policy
21 October 2024 External T.I. 2024-1027501E5 - Stacking of investment tax credits and CCA
An elaborate CRA example illustrates how lush tax credits and CCA can result in recapture of depreciation, even where there is no disposition.
A...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2) - Element A | example of AIIP computation for solar panels | 81 |
| Tax Topics - Income Tax Act - Section 127 - Subsection 127(9) - Government Assistance | NS CITC was reasonably expected to be received at year end even though required government certificate not yet applied for | 170 |
| Tax Topics - Income Tax Act - Section 127.45 - Subsection 127.45(5) - Paragraph 127.45(5)(b.1) - Subparagraph 127.45(5)(b.1(i)) | combined effect of NS CITC and clean tech ITC | 119 |
S3-F4-C1 - General Discussion of Capital Cost Allowance
Pro-rating of capital cost on part disposition
In para. 1.73, CRA indicated that where the is a partial disposition of a depreciable property of a...
29 July 2015 Internal T.I. 2015-0575921I7 - Recapture arising in statute-barred years
A taxpayer added the cost of property acquired to a particular Schedule II class, and then claimed CCA on the property for numerous years...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - E | negative UCC balance arising in statute-barred year becomes recapture in 1st open year | 251 |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) | negative UCC balance arising in statute-barred year becomes recapture in 1st open year | 155 |
5 October 2012 Roundtable, 2012-0453201C6 F - Règles d'attribution- séparation & décès
Before finding that there was no attribution of recapture of depreciation by virtue of the exception from the application of s. 74.1(1) contained...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 74.5 - Subsection 74.5(3) | s. 74.5(3) busting of attribution occurs even if they were living separate and apart for under 90 days before the death of the transferee common-law spouse | 256 |
15 December 2011 Internal T.I. 2011-0413891I7 F - Récupération d'amortissement-Recapture CCA
A holding corporation earned deemed active business income under s. 129(6) from renting a building to an associated corporation for two years, and...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 129 - Subsection 129(4) - Income or Loss | reasonable to pro-rate recapture of depreciation between active business income and property income based on relative periods of use | 230 |
21 December 2006 External T.I. 2006-0170851E5 F - Option d'achat de biens immeubles
CRA indicated that recapture of depreciation realized on the sale of a farm should be reported as farming income.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(1) | capital gain when amount received for extending an option | 52 |
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(4) | refiling when option exercise in subsequent year | 83 |
6 June 2002 External T.I. 2002-0133895 F - entreprise de placement determinee
Realtyco, which carried on an active business of operating a rental residential real estate portfolio which was not a specified investment...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Specified Investment Business | recapture from sale of a rental business qualified as business income that was not from a specified investment business, notwithstanding no employees in that year after the sale | 201 |
Subsection 13(2)
Administrative Policy
16 November 2000 External T.I. 1999-0009895 F - Revenu protégé - voiture de tourisme
CCRA found that: on the disposition of a Class 10.1 passenger vehicle, the corporation's safe income on hand should be adjusted by reducing it by...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) | computing safe income on hand where ECE realized, scrapped depreciable property, borrowing cost incurred or disposition of passenger vehicle | 355 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Legal and other Professional Fees | reorganization expenses are eligible capital expenditures (now Class 14.1) | 101 |
Subsection 13(4) - Exchanges of property
Cases
Posno v. The Queen, 89 DTC 5423, [1989] 2 CTC 234 (FCTD)
An airplane was found to be a replacement property for a previous airplane of the plaintiff, notwithstanding "no evidence that the plaintiff ever...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Reasonable Expectation of Profit | personal use was principal motivation for aircraft operation | 130 |
| Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) - Business Source/Reasonable Expectation of Profit | 130 |
The Queen v. G.T.E. Sylvania Canada Ltd., 74 DTC 6673, [1974] CTC 751 (FCA)
A reduction in the taxpayer's Quebec income tax that was effected by an amendment to the provincial legislation did not result in the taxpayer...
See Also
Gestions Calce Ltée v. Agence du revenu du Québec, 2019 QCCQ 7377
One of the exceptions from the rule that a rental property cannot qualify as a “former business property” for purposes of the replacement...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Former Business Property | property was used more than 50% in active business of related lessee given actual use (in excess of written lease terms) | 337 |
Administrative Policy
4 November 2016 External T.I. 2016-0666901E5 - New Class 14.1 and replacement property rules
Is it correct that, following the repeal of the eligible capital property rules effective January 1, 2017, no replacement property provisions will...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Former Business Property | farm quota or other former ECP excluded | 46 |
17 February 2005 External T.I. 2004-0090411E5 F - Bien de remplacement-dispos. involontaire
Regarding the situation where a corporation’s building and equipment were destroyed by fire and it used the insurance proceeds to invest in a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 44 - Subsection 44(5) - Paragraph 44(5)(a.1) | replacement property potentially can be held through a partnership if the partnership property is physically similar | 220 |
84 C.R. - Q.85
The amendment, effective February 2, 1978, which specifically reduced the capital cost by investment tax credits, was enacted only for greater...
80 C.R. - Q.44
Where a grant in respect of depreciable property to be acquired over a number of years is greater than the first costs incurred, the excess grant...
Paragraph 13(4)(d)
Administrative Policy
10 May 2001 Internal T.I. 2001-0065737 F - ÉCHANGE DE BIEN - 13(4)
In rejecting the suggestion that, where a car (Class 10) is replaced by a passenger vehicle (Class 10.1), the application of ITA s. 13(4)(d)...
Subsection 13(4.1) - Replacement for a former property
Administrative Policy
3 December 2019 CTF Roundtable Q. 14, 2019-0824481C6 - Replacement Property Rules
In order to expand its operations, a manufacturer acquires vacant land, takes three years to build a new plant, moves its operations there and,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 44 - Subsection 44(5) | a replacement property can be acquired before disposing of the former property | 133 |
1996 Tax Executives Institute Round Table, Q. XIV (No. 5 - 963910)
Where a taxpayer had already decided to expand its packaging operation by acquiring a second packaging machine when the existing machine was...
1 February 1990 T.I. (July 1990 Access Letter, ¶1321)
Where a taxpayer in the business of operating rest homes sold the rest homes and bought a hotel, the operation of the hotel generally would not be...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 44 - Subsection 44(5) | 35 |
Paragraph 13(4.1)(b)
Administrative Policy
S3-F3-C1 - Replacement Property
Similar business categories
1.41 …[T]wo businesses will be considered to be similar if they both fall within the same one of the following...
Subsection 13(4.3)
Administrative Policy
S3-F3-C1 - Replacement Property
Overview of ss. 13(4.2) and (4.3)
1.47 The term former business property includes a property that is the subject of an election under subsection...
Subsection 13(5) - Reclassification of property
Administrative Policy
S3-F4-C1 - General Discussion of Capital Cost Allowance
Reasons for transfer
1.123 Subsection 13(5) contains the rules for computing the UCC of property of a prescribed class that has been transferred...
19 March 2003 External T.I. 2002-0151015 F - ALLOCATION DU COUT EN CAPITAL
A corporation that had operated a short-term car rental business will now lease the cars on a long-term basis to a partnership that will handle...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 16 - Paragraph 16(e) | the short-term use requirement in 16(e) must continue to be met following the acquisition | 218 |
30 June 2000 External T.I. 1999-0013945 - Rental property
Where a taxpayer owns buildings that are used in an active business, subsequently leases one of those buildings and it has a cost greater than...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 1101 - Subsection 1101(1ac) | 40 |
10 April 1997 External T.I. 9704225 - RENTAL PROPERTY
On the facts in 15 August 1990 T.I. 900372, would Reg. 1102(14)(d) apply to Company B so that upon the commencement of the rental of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 1101 - Subsection 1101(1ac) | non-arm's length transfer followed by rental | 112 |
7 June 1993 External T.I. 9308775 - Bien locatif
Corporation ABC use various buildings in the same business and which are part of the same CCA class. A building which no longer is needed in the...
15 August 1990 T.I. 900372
Company A uses several buildings in an operating business, then later incorporates a subsidiary, transfers its real estate to the subsidiary on a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 1101 - Subsection 1101(1ac) | 13(5) applies to move to separate class upon becoming a ental property | 117 |
Paragraph 13(5)(a)
Administrative Policy
19 January 2004 Internal T.I. 2003-0045911I7 F - Camionnette et définition de automobile
An extended-cab pick-up truck was included in Class 10.1 when it was acquired in 2002 but fell into Class 10 for years commencing after 2002...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Automobile | application of s. 13(5) where extended-cab pick-up truck ceased to be an automobile | 90 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(7) - Paragraph 13(7)(g) | s. 13(7)(g) limitation was preserved when pick-up truck transferred from Class 10.1 to 10 | 69 |
Subsection 13(5.1) - Rules applicable
Administrative Policy
S4-F7-C1 - Amalgamations of Canadian Corporations
1.35 Where one predecessor corporation has a leasehold interest in a property owned by a second predecessor corporation, the application of...
3 May 2000 T.I. 993323
"Subsection 13(5.1) of the Act does not require that the leasehold interest must have been included in Class 13 of Schedule II of the Regulations...
28 March 2000 External T.I. 2000-0007445 F - Fusion et paragraphe 13(5.1)
Where a parent corporation owning an immovable amalgamates with a subsidiary with a leasehold interest in that immovable, CCRA's administrative...
IT-464R "Capital Cost Allowance - Leasehold Interest"
29 January 1997 External T.I. 9640135 - SUBSECTION 13(5.1) OF THE ACT
Where the taxpayer had a leasehold interest in land and acquired the land, s. 13(5.1)(b) would deem the property to be depreciable property of a...
30 August 1989 T.I. AC 58003
The capital cost of a property to a taxpayer for purposes of s. 13(5.1)(b) is the capital cost after taking into account subsection 13(5.2)....
Subsection 13(5.2) - Deemed cost and depreciation
Administrative Policy
10 October 2024 APFF Roundtable Q. 9, 2024-1028901C6 F - Exercice d’une option d’achat et vente du véhicule
An individual, after having paid $12,500 in lease expenses during the first 48 months of an automobile lease, exercises the option under the lease...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(3) | portion of lease payments added to ACB of purchase option only to the extent reasonably attributable thereto | 216 |
17 February 2021 External T.I. 2018-0768051E5 F - Contrat de crédit-bail
Regarding a lease to “Aco” of a truck tractor (the “Vehicle”) with a term of 48 months and a bargain purchase option at maturity, CRA...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii) | leasing contract cannot be recharacterized as a secured loan funding an acquisition of depreciable property | 246 |
| Tax Topics - Income Tax Act - Section 68 | lease payments for vehicle lease with bargain purchase option are allocated between ACB of option and deductible lease payments | 301 |
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(3) | a portion of the lease payments under a lease with a bargain purchase option recharacterized as consideration for the option | 146 |
| Tax Topics - Income Tax Act - Section 16.1 - Subsection 16.1(1) | truck tractor is prescribed property | 26 |
| Tax Topics - General Concepts - Substance | lease payments, but not the lease itself, could be recharacterized | 93 |
2 April 2013 External T.I. 2012-0470591E5 F - Sale of automobile acquired after being leased
Where the lessee of an automobile acquired the automobile for continued use in its business, would it be included in Class 10.1 (by reason of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(5.2) - Paragraph 13(5.2)(b) | the deemed s. 13(5.2)(b) cost addition is recognized for s. 13(2) purposes | 90 |
IT-233R "Lease-Option Agreements; Sale-Leaseback Agreements"
General discussion.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 16 - Subsection 16(1) | 33 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | 21 | |
| Tax Topics - Income Tax Act - Section 16 - Subsection 16(1) | 50 |
Paragraph 13(5.2)(b)
Administrative Policy
2 April 2013 External T.I. 2012-0470591E5 F - Sale of automobile acquired after being leased
Where the lessee of an automobile acquired the automobile for continued use in its business, would it be included in Class 10.1 (by reason of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(5.2) | s. 13(5.2)(b) addition must be taken into account for s. 13(2) purposes, including re no recapture | 172 |
Subsection 13(5.4) - Idem [Deemed recapture]
Articles
Atlas, "Income Tax Issues in Real Estate Leasing", 1989 Corporate Management Tax Conference, p. 3:18
S.13(5.4) will only rarely apply.
Subsection 13(6) - Misclassified property
Administrative Policy
S3-F4-C1 - General Discussion of Capital Cost Allowance
Reassessment or deemed transfer
1.130 It sometimes happens that a taxpayer claims and is allowed CCA as a result of the property being placed in...
IT-190R2 "Capital Cost Allowance - Transferred and Misclassified Property".
21 November 1991 T.I. (Tax Window, No. 13, p. 5, ¶1604)
Where a taxpayer has a property which would have been in Class 34 but for the revocation of a certificate from the Ministry of Energy, Mines and...
Subsection 13(7) - Rules applicable
Paragraph 13(7)(a)
Cases
C.A.E. Inc. v. Canada, 2013 DTC 5084 [at at 5944], 2013 FCA 92
The taxpayer, which leased flight simulators which it had manufactured, subsequently sold those simulators. The Minister denied capital cost...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Depreciable Property | characterization of depreciable property or inventory done on annual basis | 371 |
| Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(a) | applied to conversion of depreciable property into inventory | 184 |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Machinery and Equipment | 371 | |
| Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(1) - Paragraph 1102(1)(b) | 370 |
Administrative Policy
22 June 2015 Internal T.I. 2014-0553731I7 - Deduction of Terminal Loss - Wind-up
On the winding-up of Subco into Parentco (which had held only investments) under s. 88(1), Parentco received the "Property," which had been...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) | deemed depreciable property in fact not used for income-producing purpose | 199 |
| Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(14) | depreciable property of sub deemed to be depreciable property when acquired by parent | 444 |
26 November 2013 Annual CTF Roundtable, 2013-0493811C6 - Change in use
Respecting the statements in C.A.E. that the change of use rules apply to the conversion of inventory to depreciable property or vice versa, CRA...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(a) | CAE not followed | 135 |
28 May 2004 Internal T.I. 2004-0065101I7 F - Tenures à bail - Catégorie 13 et loyers
The taxpayer carried on its business in rented premises to which it made leasehold improvements, and then relocated to leased premises (to which...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Start-Up and Liquidation Costs | rent on premises continued to be deductible after they were vacated | 136 |
| Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(1) - Paragraph 1102(1)(c) | vacated leased premises continued to qualify as Class 13 property | 136 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Disposition of Property | no disposition when premises were vacated (but not abandoned) | 254 |
6 February 2002 External T.I. 2001-0100565 F - CHANGEMENT D'USUAGE ET PERTE FINALE
An individual ceased to carry on his personal business and decided to keep the computer and furniture previously used in his business. CCRA...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(a) | change to personal use of assets on business termination engages ss. 45(1)(a) and 13(7)(a), but not if all use ceases | 62 |
IT102R2 "Conversion of property, other than real property, from or to inventory" 22 July 1985
8. Where capital property is converted to inventory, the action of conversion does not constitute a disposition within the meaning of paragraphs...
IT-218R "Profit, Capital Gains and Losses from the Sale of Real Estate, including Farmland and Inherited Land and Conversion of Real Estate from Capital Property to Inventory and Vice Versa" 16 September 19864
10....where real estate is converted from capital property to inventory...for real estate that is used for the purpose of gaining or producing...
Paragraph 13(7)(b)
Administrative Policy
10 June 2019 Internal T.I. 2019-0796221I7 F - Qualification d’un véhicule à titre de « voiture de tourisme »
A "passenger vehicle” initially acquired for personal use and subsequently converted to taxi use will at that time be considered by virtue of s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Automobile | a passenger vehicle ceases to qualify as such when it commences to be used as a taxi given the s. 13(7)(b) deemed acquisition | 102 |
S1-F3-C2 - Principal Residence
Limitation on change of use
2.61 If a taxpayer has completely or partially changed the use of property from principal residence to...
26 January 2007 External T.I. 2005-0157751E5 F - Don d'un duplex et changement d'usage
Mrs. X, who owned a duplex, 2/3 of which was her principal residence and 1/3 of which was rented to a third party, made a gift of the duplex to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) | generally appropriate to allocate the deemed proceeds between residence and rental portion on building square footage basis, with land to follow suit | 110 |
29 June 1995 Internal T.I. 9511027 - CHANGE IN USE
S.13(7)(a) or (b) does not apply where a motor vehicle acquired for the purpose of producing income from employment, begins to be used for the...
Subparagraph 13(7)(b)(ii)
Clause 13(7)(b)(ii)(B)
Administrative Policy
3 November 2000 External T.I. 2000-0047535 F - CHNT USAGE-UN IMMEUBLE
An individual owned a building containing four units (which were self-contained domestic establishments) and which CCRA treated as separate...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(a) | building of the taxpayer with 4 units treated as 4 separate properties for purposes of the change-in-use rules | 76 |
Paragraph 13(7)(c)
Administrative Policy
3 March 2015 Internal T.I. 2014-0527841I7 F - Avantage imposable pour aéronef
In a situation where there was personal use of a corporate aircraft by the individual shareholder (Mr. A) of the "grandfather" (indirect parent)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | benefits from personal use of corporate aircraft based on the cost of similar benefit from arm's length supplier | 174 |
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1.4) - Paragraph 15(1.4)(c) | s. 15(1.4)(c) applied to extend scope of Massicotte indirect benefit doctrine | 170 |
| Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) | s. 15(1.4)(c) applied to extend scope of Massicotte indirect benefit doctrine | 857 |
September 1991 Memorandum (Tax Window, No. 9, p. 22, ¶1456)
Where there is personal use by a partner of capital property of the partnership, the partnership's entitlement to CCA in respect of the property,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(2.2) - Paragraph 96(2.2)(d) | 41 |
Paragraph 13(7)(d)
Administrative Policy
10 October 2024 APFF Roundtable Q. 11, 2024-1028921C6 F - Récupération d’amortissement liée à un bien de la catégorie 10.1 – travailleur autonome
CRA considers that the CCA deduction for the motor vehicle of a self-employed worker that is used for both business and personal use can be...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 10.1 | choice between technical and simplified method where mixed business and personal use | 108 |
Paragraph 13(7)(e)
See Also
Agence du revenu du Québec v. 7958501 Canada Inc., 2022 QCCA 314
A private company (“SherWeb”), which provided, to paying customers, the use of software developed by it, transferred its software for...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Depreciable Property | software for which no CCA claims had been made because its development costs were deducted as SR&ED, was not depreciable property | 465 |
| Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(1) - Paragraph 1102(1)(d) | software written off as SR&ED was not depreciable property | 240 |
7958501 Canada Inc. v. Agence du revenu du Québec, 2020 QCCQ 2424, aff'd 2022 QCCA 315
The taxpayer (“501”) was formed to acquire the intellectual property (computer programs, trademark and knowhow) of a related corporation...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(1) - Paragraph 1102(1)(d) | s. 37 claims in developing software precluded it from being depreciable property | 179 |
| Tax Topics - Income Tax Act - Section 14 - Subsection 14(5) - Cumulative Eligible Capital - Variable E | software created through currently deductible salary expense was disposed of as eligible capital property rather than depreciable property | 296 |
Administrative Policy
19 January 2017 External T.I. 2015-0576751E5 F - Trust, Disposition of depreciable property, Assumption
Application of s. 13(7)(e) to deemed disposition
Does s. 13(7)(e) apply on a deemed disposition under s. 104(5)? CRA responded:
The Act does not...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 107 - Subsection 107(2) | s. 107(2) generally available where beneficiary assumes trust debt | 168 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Personal Trust | non-commital as to whether assumption of debt could constitute tainting consideration | 183 |
| Tax Topics - Income Tax Act - Section 107 - Subsection 107(2.1) | s. 13(7)(e) applicable to depreciable property distribution | 123 |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | trust cannot have a NAL relationship with itself | 41 |
S1-F3-C2 - Principal Residence
Limitation on change of use
2.61 If a taxpayer has completely or partially changed the use of property from principal residence to...
S3-F4-C1 - General Discussion of Capital Cost Allowance
Overview
1.60 … [T]here are special rules in paragraph 13(7)(e) applicable to depreciable property acquired from a person or partnership with...
8 November 2006 External T.I. 2006-0176171E5 F - Revente d'un bien amortissable - alinéa 13(7)e)
Corporation A sold a building having a cost of $3,800,000 to an associated corporation (Corporation B) for its FMV of $4,200,000, so that s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(1) - Paragraph 39(1)(b) - Subparagraph 39(1)(b)(i) | capital loss denied on sale of building – proceeds reflected in UCC reduction | 108 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - F | application of disposition expenses under Element F | 141 |
20 November 2012 External T.I. 2012-0463191E5 F - Acquisition - personne ayant lien de dépendance
The taxpayer’s son sold a building to the taxpayer at an amount (equal to its fair market value) that exceeded the son’s capital cost. After...
25 September 1996 External T.I. 5-962794
Where a taxpayer designated $12,000 in a s. 110.6(19) election in respect of a property that she had acquired at a cost of $10,000 and had never...
23 May 1996 External T.I. 9604655 - DEEMED REACQUISITION - WHETHER NON-ARM'S LENGTH
Where there is a deemed dispostion and reacquisition of property under s. 149(10), the corporation in question will not be considered to be...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | question of fact whether a corporation deals at arm's length with itself | 74 |
24 June 1994 External T.I. 9325685 - TRANSFER OF PROPERTY TO A PARTNER
Because of the references in the opening of ss.13(7)(e) and 14(3) to "notwithstanding any other provision of this Act", those provisions will...
24 July 1991 T.I. (Tax Window, No. 8, p. 18, ¶1430)
Where the aggregate of all gains realized by an individual on the transfer of various capital properties exceeds the capital gains exemption...
29 December 1989 T.I. (May 1990 Access Letter, ¶1223)
Where depreciable property is transferred from the partnership to Opco, the depreciables would not be considered to be transferred from the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | 142 |
Articles
CPA Canada, "Summary of Issues Identified: Capital Gain Inclusion Rate Draft Legislation", 3 September 2024 CPA Canada submission
Formulae in ss. 13(7)(b), (d) and (e) do not properly reflect the change in CGIR and s. 38.01 (pp. 1-4)
- The formulae in ss. 13(7)(b), (d) and (e)...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 38.01 - Paragraph 38.01(b) - Variable E | 163 | |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1.72) | 115 |
Subparagraph 13(7)(e)(i)
Administrative Policy
4 January 2012 Internal T.I. 2011-0408081I7 F - Transactions entre une société et ses actionnaires
A shareholder sells depreciable property to the corporation for a sum exceedingits fair market value ("FMV").
CRA confirmed that the capital cost...
19 September 2001 External T.I. 2001-0086545 F - IMMEUBLE VENDU A PERTE
Respecting whether a taxpayer could claim a capital loss following the disposition of an immovable for which an election was made on February 22,...
Subparagraph 13(7)(e)(ii)
Administrative Policy
4 June 2024 STEP Roundtable Q. 12, 2024-1003521C6 - Gift from NR Relative
A resident individual received a gift of (or alternatively, an inheritance of) a rental property situated in a foreign country from a non-resident...
4 March 2023 Internal T.I. 2023-0994501I7 - Non-resident non-arm's length transfer of property
A non-resident corporation (“US Corp”) sold trademarks at a sales price in excess of their adjusted cost base to a non-arm’s length Canadian...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxpayer | Oceanspan inapplicable where the non-resident’s Canadian tax status is not relevant to the purpose of the provision | 230 |
2019 Ruling 2018-0772921R3 - Loss utilization
Background
Aco, and its subsidiary Bco, had available capital losses that they did not anticipate using. The proposed transactions relate to...
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|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(14) | Class 14.1 property character maintained in circular-transfer transactions | 265 |
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(b) | self-cancelling circular transaction to convert net capital losses into stepped-up UCC | 85 |
Paragraph 13(7)(e.1)
Administrative Policy
13 May 2003 Internal T.I. 2003-0001787 F - CHOIX-IMPACT SUR FNACC
An s. 110.6(19) election was made in 1994 pursuant respecting a rental property that, regarding the building portion, was at a value in excess of...
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| Tax Topics - Statutory Interpretation - Ordinary Meaning | clearly expressed legislative text to be followed, even though contrary to more favourable Finance intent | 67 |
Paragraph 13(7)(f)
Articles
Ralph Neville, "Acquisition of Control and Corporate Losses", 1992 Conference Report (CTF), C. 25
½ step-up rule does not apply for capital gains purposes (p.25:7)
If a designation is made under paragraph 111(4)(e) with respect to depreciable...
Paragraph 13(7)(g)
Administrative Policy
5 October 2018 APFF Roundtable Q. 16, 2018-0768871C6 F - Dépenses de bureau à domicile et d’automobile
In the course of a discussion of the deductibility of home office and automobile expense of an independent contractor where the property is held...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A | capital cost of co-ownership interest | 74 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Depreciable Property | depreciable property must be owned | 78 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Incurring of Expense | payment of expenses of taxpayer by another does not preclude “incurring” by taxpayer | 175 |
| Tax Topics - Income Tax Act - Section 9 - Nature of Income | payment of taxpayer’s expenses by another might give rise to s. 9 or 80 inclusion | 199 |
7 October 2016 APFF Roundtable Q. 5, 2016-0652861C6 F - Véhicules électriques - rabais
By virtue of a program put in place by the Quebec government, a subsidy, which can amount to $8,000, is offered where an electric vehicle is...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(e) | use of manufacturer’s electricity-use standard | 94 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A | installation cost included | 37 |
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(2) | Quebec government assistance does not reduce cost of purchased vehicle, but treated as compensation to dealer-lessor prorated over term of lease | 259 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A | cost not reduced under general principles by government assistance | 139 |
19 January 2004 Internal T.I. 2003-0045911I7 F - Camionnette et définition de automobile
An extended-cab pick-up truck was included in Class 10.1 when it was acquired in 2002 but fell into Class 10 for years commencing after 2002...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(5) - Paragraph 13(5)(a) | when truck is transferred from Class 10.1 to 10, the capital cost as originally limited under s. 13(7)(g) is used for Class 10 purposes | 120 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Automobile | application of s. 13(5) where extended-cab pick-up truck ceased to be an automobile | 90 |
Subsection 13(7.1) - Deemed capital cost of certain property
Cases
Prince Albert Pulp Co. Ltd. v. The Queen, 92 DTC 6189, [1992] 1 CTC 262 (FCA)
In finding that the reduction of capital cost pursuant to s. 13(7.1) occurs in the year in respect of which the investment tax credit was...
Canadian Pacific Ltd. v. The Queen, 88 DTC 6265, [1988] 1 CTC 429 (FCA)
S.36 does not preclude the application of s. 13(7.1). The capital cost of expenditures that were deemed to be additions to classes of depreciable...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) | 43 |
The Queen v. Consumers' Gas Co. Ltd., 87 DTC 5008, [1987] 1 CTC 79 (FCA)
In finding that compensation received by the taxpayer from both commercial and public customers for changing the location of its pipelines was...
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|---|---|---|
| Tax Topics - General Concepts - Accounting Principles | 35 | |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) | assessment is of dollar amount | 87 |
| Tax Topics - Income Tax Act - Section 181 - Subsection 181(3) | 78 |
The Queen v. AEL Microtel Ltd., 86 DTC 6348, [1986] 2 CTC 108 (FCA)
Although development incentives paid pursuant to the Regional Development Incentives Act (Canada) (the "RDIA") for the acquisition of...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 81 - Subsection 81(1) - Paragraph 81(1)(a) | 65 |
Consumers' Gas Co. Ltd. v. The Queen, 86 DTC 6132, [1986] 1 CTC 380 (FCTD), aff'd 87 DTC 5008, [1987] 1 CTC 79 (FCA)
Reimbursements received by the taxpayer from governmental authorities for relocating its pipelines at their request did not constitute...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Compensation Payments | recurring compensation for moving capital assets on capital account | 105 |
The Queen v. British Columbia Forest Products Ltd., 85 DTC 5577, [1986] 1CTC 1 (FCA)
"Parliament has expressly contemplated that a taxpayer may 'receive' assistance from a government in the form of a 'deduction from tax.'" The...
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|---|---|---|
| Tax Topics - Statutory Interpretation - Context | 87 |
Consumers' Gas Company Ltd. v. The Queen, 82 DTC 6300, [1982] CTC 339 (FCTD), aff'd, 84 DTC 6058, [1984] CTC 83 (FCA)
Amounts received from government (and private) sources to compensate in whole or in part for the cost of relocating pipelines were not a "grant,...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(g) | 33 | |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Disposition of Property | no disposition of abandoned gas mains | 38 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A | cost not reduced by reimbursement right therefor | 134 |
| Tax Topics - Income Tax Act - Section 9 - Compensation Payments | compensation for relocating pipelines was capital | 32 |
Fonthill Lumber Ltd. v. The Queen, 81 DTC 5333, [1981] CTC 406 (FCTD)
The amount of a government forgivable loan is deducted from the capital cost at the time that the conditions for forgiving the loan are met, not...
Ottawa Valley Power Co. v. MNR, 69 DTC 5166, [1969] CTC 242 (Ex Ct), aff'd 70 DTC 6223, [1970] CTC 305, [1970] S.C.R. 941
S.20(6)(h) of the pre-1972 Act did not apply where Ontario Hydro, at its own cost, expended approximately $1.9 million to convert the facilities...
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| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(a) | 117 |
Administrative Policy
27 June 2024 External T.I. 2023-1000391E5 - BC Secondary Suite Incentive Program
The BC Secondary Suite Incentive Program assists qualifying homeowners to create a new secondary suite or accessory dwelling unit (a “Secondary...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) | rental program requiring rent at no more than an affordability limit could correspond with a source of income | 185 |
| Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base | forgivable loan could be cost reduction based on well-accepted business principles | 218 |
| Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(c) - Subparagraph 45(1)(c)(ii) | conversion of part of home to a secondary suite for rental would engage s. 45(1)(c)(ii) | 135 |
| Tax Topics - Income Tax Act - Section 45 - Subsection 45(2) | s. 45(2) would permit claiming principal residence exemption for disposition of secondary suite rather than balance of home | 396 |
| Tax Topics - Income Tax Act - Section 54 - Principal Residence | principal residence could be claimed for secondary rental suite subject to s. 45(2) election, or balance of home, but not both | 353 |
16 February 2024 External T.I. 2023-0984301E5 - Code 5 - Reducing inclusion under para 12(1)(x)
Aco will receive a grant (the “Government Assistance”), described under s. 12(1)(x)(iv), from a Crown corporation for the purpose of creating...
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| Tax Topics - Income Tax Act - Section 12 - Subsection 12(2.2) | s. 12(2.2) election can be made for statutory deductions or amounts deductible under s. 9 in respect of affordable housing project | 173 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A | cost of building includes cost of construction but not statutory deductions or amounts deductible under s. 9 | 73 |
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) - Subparagraph 12(1)(x)(vi) | s. 13(7.1) (or s. 53(2)(k)) overrides the application of s. 12(1)(x) re government assistance to construct or repair affordable housing | 127 |
2 April 2014 External T.I. 2014-0521041E5 F - Application de 13(7.1)
A taxpayer receives government assistance to build a manure pit. Does s. 13(7.1) apply automatically and, if it does not apply, is the s. 13(7.4)...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(7.4) | general requirements for s. 13(7.4) to apply | 207 |
31 January 2013 Internal T.I. 2012-0466641I7 F - Réduction du coût en capital d'un bien
The entitlement to the Quebec investment tax credit does not arise until the very end of the taxation year in which the eligible expenditures were...
6 September 2011 External T.I. 2010-0389011E5 F - L'interprétation de " est en droit de recevoir"
Is a taxpayer "entitled to receive" the amount of the investment tax credit for manufacturing and processing equipment in Québec (the “Credit")...
22 January 2008 External T.I. 2006-0165521E5 F - Prime versé à l'emprunteur
A borrower who receives a number of loans under the Quebec Immigrant Investor Program has a major investment project following the acquisition of...
22 January 2007 External T.I. 2006-0212641E5 F - Crédit de taxe sur le capital du Québec
Under s. 1135.1 et seq., a corporation may benefit from a non-refundable capital tax credit for a taxation year, equal to 5% of the amount of the...
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| Tax Topics - Income Tax Act - Section 127 - Subsection 127(11.1) - Paragraph 127(11.1)(b) | Quebec tax credit for qualified investments is deducted under s. 127(11.1)(b) in accordance with the ITTN No. 29 timing | 298 |
4 October 2002 Internal T.I. 2002-0139807 F - REMBOURSEMENT DE TPS
The Directorate indicated that a GST rebate claimed by employee respecting CCA deducted for Year 1 on car, but with the rebate claimed in Year 2,...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(8) - Paragraph 6(8)(b) | GST rebate claimed by employee re CCA on car after its sale reduces UCC pursuant to J of formula rather than under s. 13(7.1) | 98 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - J | GST rebate received after sale of asset would not, under J of UCC formula, produce recapture | 126 |
2 January 2002 External T.I. 2001-0094555 F - Subsidies and Assistance Payments
Quebec government assistance to the taxpayer to increase the productive capacity of its facilities took the form of covering a portion of the...
12 October 1992 External T.I. 5-922359
S. "13(7.1) of the Act does not apply in general in respect of business arrangements between a public authority and a taxpayer where the public...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Exempt Receipts/Business | 66 | |
| Tax Topics - Income Tax Act - Section 9 - Expense Reimbursement | 66 |
19 September 1990 Memorandum 902190
A government loan which is unconditionally repayable would not constitute government assistance for purposes of s. 13(7.1). However, where a...
Articles
John Tobin, "Infrastructure and P3 Projects", 2017 Conference Report (Canadian Tax Foundation), 10:1-31
Whether P3 progress payments are cost reductions or revenue (p. 10:9-10)
One challenge is determining how to treat progress payments during the...
Paragraph 13(7.1)(f)
Administrative Policy
28 June 2010 External T.I. 2009-0350241E5 F - Crédit d'impôt pour investissement du Québec
After finding that the Quebec investment tax credit under the Taxation Act (“TA”) reduces the cost of depreciable property under s. 13(7.1)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) - Subparagraph 12(1)(x)(vi) | Quebec investment tax credit is deducted under s. 13(7.1) rather than included under s. 12(1)(x) | 90 |
| Tax Topics - Income Tax Act - Section 127 - Subsection 127(9) - Government Assistance | Quebec investment tax credit is government assistance | 46 |
6 November 2007 External T.I. 2007-0234681E5 F - Crédit de taxe sur le capital - moment
Regarding whether the Quebec capital tax credit should be recognized at the end of a taxation year notwithstanding that it has not yet been...
Subsection 13(7.2)
Administrative Policy
7 June 2010 External T.I. 2009-0331731E5 F - CII et crédit de taxe sur le capital du Québec
A limited partnership ("LP") with an October 31 fiscal period acquires property eligible for the Quebec investment tax credit for manufacturing...
Subsection 13(7.4) - Deemed capital cost
See Also
GMAC Leaseco Corporation v. The Queen, 2015 DTC 1141 [at at 908], 2015 TCC 146
GMAC received "support payments" from GMC in order to inflate the residual values stated in its leases of cars to GMC customers, thereby reducing...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) | amount subject to potential repayment obligation was not received | 258 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Timing | capital tax accrued from day to day | 226 |
| Tax Topics - Income Tax Act - Section 9 - Compensation Payments | payments received in consideration for reducing lease payments were compensation for lost lease income, and s. 9 income | 284 |
| Tax Topics - Income Tax Act - Section 9 - Computation of Profit | surcharges received by lessor at lease termination for excess use were income | 264 |
| Tax Topics - Income Tax Act - Section 9 - Timing | inducement payments received by lessor from manufacturer not income until potential repayment obligation quantified | 221 |
Administrative Policy
2 April 2014 External T.I. 2014-0521041E5 F - Application de 13(7.1)
A taxpayer receives government assistance to build a manure pit. Does s. 13(7.1) apply automatically and, if it does not apply, is the s. 13(7.4)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(7.1) | no s. 13(7.4) election required where s. 13(7.1) applies | 123 |
4 May 1992 Tax Executive's Roundtable, Question 11 (December 1992 Access Letter, p. 48)
RC does not insist on any particular format for the election, but requires some positive indication that the election has been made.
27 February 1991 Memorandum (Tax Window, Prelim. No. 3, p. 25, ¶1131; July 1991 Access Letter)
If an inducement payment can be used at the sole discretion of the taxpayer to reduce the cost of current capital expenditures, the amount will be...
IT-273R2, "Government Assistance - General Comments," para. 15
the election should be made by means of a signed letter accompanying the applicable tax return.
Subsection 13(7.5) - Deemed capital cost
Administrative Policy
S3-F4-C1 - General Discussion of Capital Cost Allowance
Access road example
1.48 …
Example 4
In order to be able to establish a sports arena at a particular location, a taxpayer builds a road to the...
Paragraph 13(7.5)(b)
Administrative Policy
27 March 2014 External T.I. 2014-0520941E5 F - Industrial mineral mine and related expenditures
The costs of a temporary access road to a quarry would not be considered to be in respect of a "specified temporary access road" as defined in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 17 | access road to quarry was Class 17 property notwithstanding that not owned | 164 |
| Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(1) - Paragraph 1100(1)(g) | ordinary meaning of "mineral" | 43 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Start-Up and Close-Down Expenditures | expenditures deductible where incurred prior to acquisition decision | 154 |
25 January 2012 External T.I. 2011-0426921E5 - Treatment of expenditures for constructing a road
general summary of s. 13(7.5)(b) without specific guidance given.
Subsection 13(9)
Administrative Policy
S3-F4-C1 - General Discussion of Capital Cost Allowance
Deemed disposition on asset migration
1.107 … In applying paragraph 13(7)(a) in respect of a person not resident in Canada, subsection 13(9)...
16 September 2011 Internal T.I. 2010-0383571I7 - Transfer of Property to a US Head Office
where depreciable equipment used in the Canadian branch of a US corporation is moved to its US head office, s. 13(9) will apply to cause s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 76.1 - Subsection 76.1(1) | 37 |
Subsection 13(16) - Election concerning vessel
Administrative Policy
16 August 1995 External T.I. 9512405 - VESSELS - PARTIAL DISPOSITION & 13(16) ELECTION
A partial disposition of a vessel will qualify as a disposition of a vessel for purposes of s. 13(16).