Cost Amount


Praxair Canada Inc. v. The Queen, 93 DTC 5100, [1993] 1 CTC 130 (FCTD)

The taxpayer received Class C preference shares of a company in satisfaction of subordinated debentures and unpaid interest owing to it by the company. Walsh J. accepted the taxpayer's argument that the "amount" received by the taxpayer was less than the par value of the preference shares and stated that "it is therefore the value in terms of money of the right or thing which must be included for tax purposes under 12(1)(c)" (pp. 5105 - 5106).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) pref shares received in exchange for debentures had an FMV less than their par value, so that no receipt of unpaid debenture interest 168

The Queen v. Dresden Farm Equipment Ltd., 89 DTC 5019 (FCA)

The taxpayer had no "cost amount" for inventory held by it on consignment because it had incurred no cost for the purchase of the goods. Therefore, it had no property whose value could be determined under the lower of cost and market rule.

Administrative Policy

5 October 2015 Internal T.I. 2014-0522241I7, rev'd supra - T1135: Mineral rights situated outside of Canada

nil cost amount for foreign resource property

After finding that a foreign resource property is tangible property for purposes of s. 233, CRA stated:

…[T]he CRA has a longstanding position that the cost amount of foreign resource property is nil.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 233.3 - Subsection 233.3(1) - Specified Foreign Property foreign mineral right is tangible property 171

31 May 1999 External T.I. 9906745 - FOREIGN PROPERTY - COST AMOUNT

Because the delisting or suspension of trading of a share does not cause the taxpayer to cease to own its share, or cause a disposition of its share, such event will not result in a reduction in the cost amount of its share.

30 November 1995 Ruling 9609943 - FORWARD CONTRACT, MARKETABLE SECURITY

The cost amount for purposes of s. 206(2) of investments in exchange-traded futures contracts and forward currency contracts will be equal to the brokerage fees and other costs incidental to entering into the contract, and will not include an amount in respect to the contract price or amounts paid as initial or variation margin.

92 CPTJ - Q.8

The cost amount of a Canadian resource property is nil irrespective of the existence of undeducted resource pools.

30 July 1992 T.I. 921871 (April 1993 Access Letter, p. 153, ¶C248-131)

Accounts receivable normally would be considered to be capital property, with the result that their cost amount normally would be determined under paragraph (b). Otherwise, their cost amount would be determined under paragraph (f).

D'Aurelio, "International Issues: A Revenue Canada Perspective", 1990 Conference Report, C. 44, under "Cost Amount of Debt Denominated in Foreign Currency and the Meaning of the Words 'Amount Outstanding at That Time'"

11 December 1989 T.I. (May 1990 Access Letter, ¶1222)

The "amount" of a receivable or other debt is interpreted to mean the face amount of the debt or right to receive an amount and not necessarily its fair market value.


Chris Falk, Stefanie Morand, Brian O'Neill, "Is there Always Certainty Regarding Tax Basis? – Limitations on Expenditures Pursuant to Sections 143.3 and 143.4", draft version of paper for CTF 2043 Conference Report.

Whether money has cost amount (pp. 10-11)

Section 143.3 applies to limit the cost of "property" acquired by the taxpayer, and does not include an express carve-out for money. …

It may be that the Department of Finance determined that a clarifying rule was unnecessary since the general scheme of the Act suggests that money does not have a cost amount and that a taxpayer does not realize a gain or loss on the disposition of money, other than in the context of foreign currency fluctuations. [fn 62: That does not mean, however, that money could not have a "cost", such that a clarifying rule would have been welcome.] By way of example:

• paragraph 88(l)(d) refers to "the cost amount to the subsidiary of the property immediately before the winding-up, plus the amount of any money of the subsidiary on hand immediately before the winding-up";…[also citing, ss. 88(1)(d), 87(9), 98(3)(a)(ii), 89(1) – GRIP. 108(1) – cost amount, 132(4)].

Paragraph (e)

Administrative Policy

12 April 2016 External T.I. 2015-0595461E5 - Australian Super Fund & T1135

cost amount of pension rights includes future amounts to which legal entitlement

An Australian Superannuation Fund (or “Super Fund”) is a government-regulated trust that has been registered and approved by the Australian Government and is funded by contributions from employers and individuals over their working lives in order to provide retirement incomes. After concluding that a Canadian beneficiary’s interest is considered to be specified foreign property, and the individual is required to file T1135s reporting inter alia the “cost amount” of the individual’s interest in the fund, CRA stated:

Provided the Super Fund described above is a pension and an employee benefit plan, the cost amount of the interest in the Super Fund will be the amount the individual has a right to receive in respect of the Super Fund. This includes all amounts to which the individual has a legal right to receive, even if the amounts are to be received in the future.

...[W]here it is not possible to determine the cost amount of a specified foreign property, taxpayers should use their best efforts to reasonably estimate the cost amount... .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 233.3 - Subsection 233.3(1) - Specified Foreign Property - Paragraph (n) Australian pension fund subject to 10%-15% tax rate not an exempt fund 309
Tax Topics - Income Tax Act - Section 162 - Subsection 162(7) no penalty for reasonably estimating an unknown amount, e.g., the “cost amount” of a pension interest 172
Tax Topics - Income Tax Act - Section 233.2 - Subsection 233.2(1) - Exempt Trust Australian Superannuation Fund not an exempt trust due to taxability 107

Paragraph (f)

Administrative Policy

7 October 2011 Roundtable, 2011-0399441C6 F - T1135 - coût indiqué d'une assurance-vie

adjusted cost basis of policy is generally its “cost” under para. (f)

The definition of reporting entity in s. 233.3 references its “cost amount” of specified foreign property. Is the cost amount of an interest in a life insurance policy the adjusted cost basis ("ACB”) as defined in s. 148(9), or the premiums paid? After noting that para. (f) of the s. 248(1) “cost amount” definition referenced the cost to the taxpayer of the property as determined for the purpose of computing the taxpayer’s income, CRA stated:

[T]he "adjusted cost basis" of a holder's interest in a life insurance policy, as defined in subsection 148(9), can generally be considered a reasonable estimate of the cost of the property for the purposes of the application of the rules of section 233.3.

Words and Phrases
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 233.3 - Subsection 233.3(1) - Reporting Entity cost amount of foreign policy is its adjusted cost basis 88