Subsection 53(1) - Adjustments to cost base
Paragraph 53(1)(b)
Administrative Policy
16 November 2011 External T.I. 2011-0423861E5 F - paragraph 53(1)b)
Holdco, whose common shares of Opco have a nominal adjusted cost base ("ACB") and paid-up capital ("PUC"), a fair market value ("FMV") of $2...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (a) - Subparagraph (a)(i) - Clause (a)(i)A) | example of capital gain for CDA purposes being less than the s. 40 capital gain | 511 |
Subparagraph 53(1)(b)(ii)
Administrative Policy
S3-F2-C1 - Capital Dividends
1.30 Where a deduction under subsection 112(1) is permitted on a dividend that results from an increase in paid-up capital, subparagraph...
27 November 2018 CTF Roundtable Q. 2, 2018-0780071C6 - Impact of 55(2) deeming rules
CRA indicated that a dividend arising on a paid-up capital increase to which s. 55(2) applied remains a dividend for s. 53(1)(b)(i) purposes but...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 52 - Subsection 52(2) | property dividended has cost equal to FMV where subject to s. 55(2) | 104 |
| Tax Topics - Income Tax Act - Section 52 - Subsection 52(3) | cost under s. 52(3) for stock dividend amount to which s. 55(2) applied | 69 |
| Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (a) - Subparagraph (a)(i) | 53(1)(b)(ii) and 52(3)(a) exclusion limited to where 55(2) did not apply to the stock dividend or PUC increase | 70 |
| Tax Topics - Income Tax Act - Section 112 - Subsection 112(3) - Paragraph 112(3)(b) - Subparagraph 112(3)(b)(i) | stop-loss rule does not apply to the extent of the application of s. 55(2) | 92 |
Articles
Rick McLean, Jeff Oldewening, Jonas Lau, "Capital Gains Stripping and Surplus Stripping", 2017 Annual CTF Conference draft paper
Potential double taxation if safe income crystallized by way of PUC bump (p. 20)
Consequently, for a safe income crystallization, where a PUC bump...
Paragraph 53(1)(c)
See Also
Burman v. The Queen, 2003 DTC 1007 (TCC)
The failure of the taxpayer to draw salary from a company of which she was a shareholder did not represent a contribution of capital that could be...
Administrative Policy
2021 Ruling 2021-0911211R3 - Foreign Takeover
The acquisition of a non-resident target (Target) by a Canadian corporation (Opco) and its Canadian parent (Parent) entailed:
- Parent forming two...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base | shares issued to a Canadian parent in consideration for it issuing shares on a Delaware merger had a cost equal to such shares’ FMV/ shares transferred on absorptive merger at FMV | 903 |
| Tax Topics - Income Tax Act - Section 84 - Subsection 84(1) - Paragraph 84(1)(b) | permitted increase in PUC of shares of subsidiary to which a contribution of shares was made, equal to those shares’ FMV | 111 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition - Paragraph (k) - Subparagraph (k)(ii) | deposit of shares to voting trust arrangement was not a disposition | 40 |
| Tax Topics - General Concepts - Payment & Receipt | borrowing and payment of funds pursuant to an internal payment direction agreement | 49 |
27 October 2017 Internal T.I. 2017-0694231I7 - Subsection 247(2), surplus, and FAPI
Where, as a result of an s. 247(2) transfer pricing adjustment respecting a transaction between Canco and CFA for the sale of goods or provision...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | s. 247(2) transfer pricing adjustment for sales undercharges to a CFA does not decrease the ES of the CFA | 166 |
| Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(2) | effect on surplus balances of foreign transfer-pricing adjustment might be reversed under Reg. 5907(2) | 157 |
| Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(1) - Earnings - Paragraph (a) | surplus could be adjusted by transfer-pricing adjustment | 140 |
26 May 2016 IFA Roundtable Q. 6, 2016-0642081C6 - German Organschafts
Under an “Organschaft,” a German parent (“Parentco”) and its German subsidiary (“Subco”) can enter into an agreement under which Subco...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 90 - Subsection 90(2) | profit transfer payments by German sub to its German parent deemed to be dividends under s. 90(2) | 319 |
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(a) - Subparagraph 95(2)(a)(ii) - Clause 95(2)(a)(ii)(B) | profit transfer payments made by a German sub to German parent are s. 90(2) dividends not within s. 95(2)(a)(ii)(B) after 2016 | 153 |
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) | loss compensation payment under Organschaft | 123 |
1 December 2009 Internal T.I. 2009-0324951I7 F - Prix de base rajusté des actions d'une société
The individuals Shareholders of the Corporation incur capital expenditures respecting its Building. In indicating that there generally was an...
16 May 2005 Internal T.I. 2005-0119061I7 F - Montant d'aide-actions
Regarding a subscription for shares of its subsidiary by M Co, the Directorate stated:
If M Co pays more for the shares than their fair market...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) - Subpargraph 12(1)(x)(viii) | funding of film production company by shares rather than loan would not give rise to assistance | 181 |
| Tax Topics - Income Tax Act - Section 125.4 - Subsection 125.4(1) - Assistance - Paragraph (a) | conversion of loan that was taxable assistance into shares is not itself assistance] | 192 |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Excluded Obligation - Paragraph (a) | conversion of loan that was taxable assistance under s. 12(1)(x) into shares with lower FMV would not give rise to forgiven amount | 304 |
| Tax Topics - Income Tax Regulations - Regulation 1106 - Subsection 1106(1) - Excluded Production - Paragraph (a) - Subparagraph (a)(iii) | transfer of all the revenues to a film implies a transfer of its copyright | 191 |
| Tax Topics - General Concepts - Ownership | transfer of the economic benefit of copyright entails transfer of its ownership | 149 |
5 December 2003 External T.I. 2002-0165195 - Debt Forgiveness in Foreign Affiliates
Canco is a corporation resident in Canada that has subsidiaries in the US and the UK. Canco has a US subsidiary ("CFA1"), which has US dollar...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Commercial Debt Obligation | hybrid (active business/FAPI) debt is commercial debt obligation | 136 |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(5) | 136 | |
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(g.1) | 78 | |
| Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(1) - Earnings | 63 | |
| Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(2) - Paragraph 5907(2)(f) | forgiveness gain did not relate to active business items | 123 |
14 July 1999 External T.I. 9917685 - FOREIGN AFFILIATE EARNINGS COMPUTATION
When FAl (wholly-owned by Canco) makes a capital contributes of depreciable capital property with a fair market value of $200, and a cost of $100,...
92 C.R. - Q.28
Discussion of distinction between phrases "contribution of capital" and "contributed surplus"
The acquisition of par value shares at a price in...
10 January 1992 CGA Roundtable, Q. 19, 7-912224
A corporation converts a debt owed to one of its shareholders, with whom it does not deal at arm’s length, to shares when the corporation is in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(7) | 56 | |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) | 72 | |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(a) | FMV of debt rather than amount owing | 57 |
September 1991 Memorandum (Tax Window, No. 9, p. 7, ¶1444)
Where a corporation issues par value shares for cash in excess of their par value, the subscriber's ACB is computed by reference to the purchase...
88 C.R. - Q.36 (p. 53:49)
[A] transaction that otherwise increase the capital of a corporation in respect of that increase may result in a contribution of capital for the...
87 C.R. - Q.68 (p. 47:38)
To what extent would a contribution of capital to an insolvent corporation permit an increase in the cost of shares owned by the contributor under...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(a) | 34 |
IT-456R "Capital Property - Some Adjustments to Cost Base," para. 2
A contribution of capital occurs where a debt owing by a corporation to a shareholder is absolutely forgiven.
Articles
Tremblay, "Contributions to Capital - Cost Basis", Canadian Current Tax, October, 1987, p. 1
A court might decide that the fraction is not intended to result in an unfair denial of a portion of an eventual loss, and is merely intended to...
Paragraph 53(1)(e)
Subparagraph 53(1)(e)(i)
Administrative Policy
10 May 2017 External T.I. 2017-0687051E5 F - Addition to ACB of a partnership interest
Is an amount included in a corporation’s income under s. 34.2(2) added by virtue of s. 53(1)(e) to the adjusted cost base of its partnership...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 34.2 - Subsection 34.2(2) | no partnership-interest ACB addition for inclusion | 57 |
2016 Ruling 2015-0617101R3 - 99(1) and timing of ACB adjustment
Background
LPco (a wholly-owned Canadian subsidiary of Parentco) acquired all the shares of GPco (holding all the Class “A” units of a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) | on a s. 98(5) wind-up, the ACB of the transferor partner’s interest is bumped by YTD income | 105 |
| Tax Topics - Income Tax Act - Section 99 - Subsection 99(1) | year ending with termination was final partnership year | 116 |
10 October 2014 APFF Roundtable Q. 22, 2014-0538161C6 - APFF Conference, Q. 22 - ACB of interests in a partnership
X Inc. and Y Inc. each hold "tracking units" in a Quebec general partnership ("SENC AB") which, in turn, holds the units of two subsidiary LPs...
1 October 2013 External T.I. 2013-0491571E5 - Partial disposition of partnership interest - ACB
Where a partner disposes of some of its units of a partnership during the year, is there an ACB adjustment for the entire amount of the income...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 43 - Subsection 43(1) | disposition of some partnership units a part disposition | 150 |
9 March 2012 External T.I. 2011-0416611E5 - disposition under paragraph 38(a.3)
Since s. 53(1)(e)(i)(A) does not explicitly say that the Act is to be read without reference to s. 38(a.3), there is no authority for adding...
15 December 2010 External T.I. 2009-0349911E5 F - Calcul du PBR d'une participation dans une SEC
CRA affirmed its position as follows:
… Income Tax Technical News No. 5 … states, in accordance with subparagraph 53(1)(e)(i), that in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.1) | withdrawal equalling capital gain realized in year by LP triggered negative ACB gain to limited partner | 204 |
15 July 2008 External T.I. 2008-0275471E5 F - Société de personnes/Ajustement au PBR
CRA indicated that until the amendment to s. 99(1) was passed, it intended to apply the law so that the income or loss of a partnership for its...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 99 - Subsection 99(1) | CRA was prepared to rule to avoid double taxation problem prior to the s. 99(1) amendment | 173 |
10 January 2008 External T.I. 2007-0227191E5 F - REVENUS D'UNE SOCIÉTÉ DE PERS. - PART PRIVILÉGIÉE
In connection with a query on the implications of holding a preferred unit in a partnership, i.e., a unit that confers on its holder a preferred...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1) | common and preferred units can be used as a mechanism for profits to be allocated to each partner’s interest (a single property) | 185 |
29 October 2002 External T.I. 2002-014633
When presented with a situation where a taxpayer retired from a partnership on September 30, 2001 and at December 31, 2001 had a residual interest...
15 April 2003 External T.I. 2002-0139305 F - Immigration
At the time of Mr. X’s immigration in 1988, he held an interest in a US rental property partnership (with no debt) which he had acquired in 1983...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 128.1 - Subsection 128.1(1) - Paragraph 128.1(1)(c) | ss. 128.1(1)(b) and (c), unlike former s. 48(3), apply also for CCA/recapture purposes | 163 |
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | FTC can be generated where recapture of depreciation, and denied capital loss, are realized on a US rental building | 67 |
30 November 1997 Ruling 9803733 - TIMING OF ADJUSTMENTS TO PARTNERSHIP ACB.
Where a limited partner leaves the partnership before the year end, so that s. 98.1(1)(b) deems the retired partner not to have disposed of its...
Income Tax Technical News, No. 9, 10 February 1997
In the Technical News No. 5, dated July 28, 1995, we mention that in computing the adjusted cost base (ACB) of a partner's partnership interest at...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Other Legislation/Constitution - Federal - Indian Act - Section 87 | 30 | |
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii) | events must be beyond borrower's control | 79 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | loss transfer must be to affiliated person - related not enough | 50 |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | 71 | |
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(c.3) - Subparagraph 88(1)(c.3)(ii) | 159 | |
| Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(12) | 71 |
Income Tax Technical News, No. 5, 28 July 1995
For fiscal periods ending after 28 July 1995, the adjustments to the ACB of a partnership interest in respect of the income or loss of the...
27 May 1994 External T.I. 9407285 - PARTNERSHIP - GENERAL
Where an investment partnership provides that a partner who redeems his units partway through the year for their current fair market value shall...
7 June 1991 T.I. (Tax Window, No. 7, p. 9, ¶1366)
Where a partnership is wound-up under s. 98(5), the last fiscal period of the partnership will be considered to have ended immediately before the...
11 March 1991 T.I. (Tax Window, No. 1, p. 5, ¶1155)
Where a corporation which has withdrawn from a partnership has the right to receive the amount in its capital account over time plus interest...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 49 |
18 April 1990 T.I. (September 1990 Access Letter, ¶1425)
Where B disposes of its partnership interest to the other partner, A, with the result that the partnership ceases to exist, B's share of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) | 56 |
88 C.R. - Q.22
Where the accrued gain on the partnership assets is equal to the accrued gain on the partnership units, RC accepts that the gain which the...
Articles
Margaret D. Paproski, "Partnership Interests and Negative ACB", Business Vehicles, Vol. VI, No. 3, p. 257.
Peter Lee, "Dissolution of Partnership - Calculation of Adjusted Cost Base of Partnership Interest", Business Vehicles, Vol. V, No. 4, 1999, p. 273.
Rinfret, "A Review of the AEC Pipelines Limited Partnership", 1997 Corporate Management Tax Conference Report, c. 7
Discussion of Revenue Canada's policy on timing of adjustments to ACB of partnership interests.
Subparagraph 53(1)(e)(iii)
Administrative Policy
9 March 1992 T.I. (Tax Window, No. 17, p. 3, ¶1789)
Re consequences where the partnership is the beneficiary of a life insurance policy in one of the three individual partners; or where the deceased...
3 December 1991 T.I. (Tax Window, No. 15, p. 4, ¶1673)
Where all the partners of a partnership are corporations the partnership carries life insurance on the individuals who were the voting...
16 November 1990 T.I. (Tax Window, Prelim. No. 2, p. 8, ¶1052)
Where the partnership agreement provides for an income allocation to the retiring partner in the year of death equal to the life insurance...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1.1) | 64 |
84 C.R. - Q.25
Where the partnership agreement provides that net life insurance proceeds will be allocable solely to the deceased partner and will be used to pay...
Subparagraph 53(1)(e)(iv)
See Also
Mitchell v. R., [1996] 2 CTC 2659, 97 DTC 607
The guarantee by the partnership of various obligations of a limited partnership of which he was a member did not form part of the adjusted cost...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(14) | 49 | |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) | set-off | 130 |
Administrative Policy
27 June 2016 External T.I. 2016-0637341E5 F - Partnerships - Negative ACB
Rather than making current distributions of its cash flow to a limited partner, those sums are lent by the LP to the limited partner – then at...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(2) - Paragraph 53(2)(c) - Subparagraph 53(2)(c)(v) | loan advances to a limited partner may give rise to immediate s. 53(2)(c)(v) grind | 261 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.1) | loans by LP to partner potentially gave rise to negative ACB gain | 164 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.13) | retention of partnership profits not a contribution | 146 |
2016 Ruling 2016-0651621R3 - Partnership carried on by sole proprietor
A partnership was wound-up under s. 98(5) as a result of the limited partner transferring its interest under s. 85(1) to the general partner....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) | the assumption by a partner of a debt owing to it by a partnership bumped the partner’s ACB | 198 |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Forgiven Amount - Element B - Paragraph B(a) | no forgiven amount where partner assumed debt owing to it by partnership | 48 |
25 April 2013 Internal T.I. 2013-0478511I7 F - Distribution à un commanditaire
After addressing the usual case where a capital gains distribution by a limited partnership (“SEC”) would be respected as such for ITA...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate | real estate capital gains flowed through to limited partner retained character | 226 |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(f) | allocated capital gains retained their character unless re services performed by partner in course of separate business | 397 |
| Tax Topics - Excise Tax Act - Section 272.1 - Subsection 272.1(1) | distinction between return on partnership investment and services rendered by partner in the course of a separate business | 295 |
8 October 2010 Roundtable, 2010-0373371C6 F - Souscription des unités d'une SEC
The 100 units of a limited partnership (LP), which on an FMV basis has a deficit of $108,000 (i.e., liabilities of $110,000 and assets of $2,000),...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(a) | subscription for units of an underwater LP represented an acquisition whose deemed cost was nil | 217 |
3 October 2007 External T.I. 2007-0230671E5 F - Paragraphe 12 du IT-338R2
CRA confirmed that the following statement from IT-338R2, para. 12 continues to represent its position, notwithstanding the archiving of the...
2000 Ruling 2000-0028423 - partnership dissolution under 98(3)
On a winding-up of a partnership, "for the purposes of determining the ACB to each Partner of that Partner's interest in the Partnership for the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(iv) | 38 | |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate | capital property retained that character on s. 98(3) wind-up | 43 |
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) | 0% undivided interest | 38 |
2000 Ruling 2000-0028423 - partnership dissolution under 98(3)
In determining the ACB to a partner of its interest in a partnership for the purposes of s. 98(3), that ACB will be increased by liabilities of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(iv) | 82 | |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate | capital property retained that character on s. 98(3) wind-up | 43 |
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) | 0% undivided interest | 38 |
29 June 2000 External T.I. 1999-0011495 - ACB Partnership Interest
Where a debt owing to a partner is converted into capital, the amount of such "contribution" and, therefore, the quantum of the resulting increase...
4 June 1992 T.I. 920847 (December 1992 Access Letter, p. 34, ¶C245-044)
Where, in connection the dissolution of a partnership under s. 98(3) and the recontribution of the property to a new partnership under s. 97(2), a...
89 C.R. - Q.35
Where one of the partners of a two-person partnership retires or dies, the continuing partner who has assumed the liabilities of the partnership...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) | 28 |
89 C.M.TC - Q.8
where a limited partner has assumed partnership debt as part of the consideration given for the acquisition of his partnership interest, the debt...
IT-338R "Partnership Interests - Effects on Adjusted Cost Base Resulting from the Admission or Retirement of a Partner"
Where on a dissolution of a partnership to which s. 98(5) applies the continuing partner has assumed the liabilities of the partnership, that...
IT-471R "Merger of Partnerships" under "Work in Progress"
The ACB of each partner's interest in a partnership immediately before a distribution of undivided interest pursuant to s. 98(3) will include the...
Subparagraph 53(1)(e)(vi)
Administrative Policy
15 August 2024 External T.I. 2024-1031811E5 - ACB of partnership interest - 53(1)(e)(vi)
2009-0349911E5 dealt with a limited partnership (“LP”) which, in February 2008, realized a capital gain, of which $100,000 was allocable to a...
Subparagraph 53(1)(e)(viii)
Administrative Policy
Income Tax Technical News, No. 12 under "Meals and Beverages at Golf Clubs"
"Amounts referred in subparagraph 53(1)(e)(viii) will not increase the ACB of the partner's interest in the partnership until after the end of the...
8 September 1997 External T.I. 9642025 - ACB OF PARTNERSHIP INTEREST - RESOURCE CONTEXT
In considering a situation where all the assets of a resource partnership are distributed on a pro-rata basis to the partners without an election...
94 C.P.T.J. - Q. 4
Re whether there is a timely adjustment to the partners' ACB where there is a pro-rata distribution of resource properties of a partnership...
Paragraph 53(1)(f)
Administrative Policy
7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 4, 2022-0940941C6 - Stop-loss Rules
On March 15, 2022, an individual disposes of all of his shares (being 2,000) of ABC Pubco, and realizes a capital loss of $10,000. On March 16,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.3) | suspended loss rules engaged by shareholder, and shareholder’s RRSP acquiring and then holding identical shares during the 61-day period | 107 |
| Tax Topics - Income Tax Act - Section 54 - Superficial Loss | formula for prorating superficial loss is inapplicable where the number of shares held by affiliated persons has increased at the end of the 61-day period | 239 |
Paragraph 53(1)(f.1)
Administrative Policy
31 March 2016 External T.I. 2014-0524391E5 F - Debt parking
A corporation disposes of debt of a subsidiary at a substantial loss to another corporation which is related to it (and the subsidiary) by virtue...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(8) | debt parking rule can apply even if no capital loss is recognized/ applies before s. 53(1)(f.1) add-back | 154 |
12 September 1990 T.I. (Tax Window, Prelim. No. 1, p. 10, ¶1016)
Where a non-interest-bearing debt is transferred at a loss between two corporations controlled by the same person, the loss will be added to the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) | 67 |
16 February 1990 T.I. (July 1990 Access Letter, ¶1320)
Where a wholly-owned subsidiary transfer shares, which are capital property to it, at a loss to its parent which thereafter holds the shares as...
2014 Ruling 2013-0514191R3 - Debt restructuring, forgiveness and winding-up
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Principal Amount | non-application of s. 39(2) to exchange of U.S.-dollar notes | 142 |
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) | s. 51.1 exchange of U.S.-dollar notes | 142 |
| Tax Topics - Income Tax Act - Section 51.1 | s. 51.1 exchange of U.S.-dollar notes | 142 |
| Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(4) | s. 51.1 exchange of U.S.-dollar notes and ATR-66 debt slide | 430 |
Paragraph 53(1)(h)
Administrative Policy
3 May 2010 Internal T.I. 2010-0359631I7 F - Dépenses liées à une résidence non habitée
Following the death of their mother, two adult sisters inherited a property, for which expenses for property taxes, maintenance and insurance were...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base | property taxes not added to ACB of inherited property before its sale | 133 |
88 C.R. - Q.68
Where money borrowed to buy land cannot be related to particular parcels, the interest should generally be allocated to all land held during the...
Paragraph 53(1)(j)
Administrative Policy
9 February 2010 Internal T.I. 2009-0333571I7 F - Paragraphe 7(1.5) - contrepartie reçue
Employees of a Canadian-controlled private corporation then exercised their options to acquire shares of their employer (Corporation A), and then...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.5) | s. 7(1.5) rollover where employees exchanged specific s. 7(1.1) shares for shares of grandparent, even though they also received cash and PUC distribution | 454 |
| Tax Topics - Income Tax Act - Section 116 - Subsection 116(1) | s. 116 certificate required even for shares disposed of under s. 7(1.5) rollover | 283 |
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.4) | non-resident ex-employees will be required to recognize s. 7 benefit deferred by s. 7(1.5) when they dispose of the shares acquired in exchange | 148 |
18 August 2005 External T.I. 2005-0126131E5 - Section 7 Benefit - ACB of CCPC Shares
The ACB addition under s. 53(1)(j) for shares of a CCPC acquired by an employee under a s. 7(2) trust would occur at the time that the trust...
Paragraph 53(1)(n)
Administrative Policy
7 October 2011 Roundtable, 2011-0411971C6 F - Appraisal Fees Deductibility
Before indicating that appraisal fees incurred for revaluing capital property, in order to prepare annual financial statements in accordance with...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Improvements v. Repairs or Running Expense | deductible appraisal fees to revalue fixed assets in accordance with IFRS | 109 |
Subsection 53(2) - Amounts to be deducted
Paragraph 53(2)(b)
Administrative Policy
2003 Ruling 2002-0174703 - Foreign Affiliate Reorganization
A great-grandchild foreign subsidiary ("Dco") of a Canadian public corporation ("Aco") and a great-grandchild foreign subsidiary of Aco ("Fco")...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | 132 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | 162 |
Paragraph 53(2)(c)
Administrative Policy
27 March 2013 External T.I. 2012-0449661E5 F - Subparagraph 53(2)(c) ITA
In response to a query as to “the effect of the application of subsections 40(3.4) and 112(3.1) on the calculation of the adjusted cost base of...
10 January 2005 External T.I. 2004-0075931E5 - adjusted cost base - partnership interest
An amount of foreign non-business income tax allocated by a partnership to a partner and deducted by the partner under s. 20(12) will not result...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(12) | no partnership ACB reduction for partner s. 20(12) deduction | 190 |
Subparagraph 53(2)(c)(i)
Administrative Policy
29 August 2007 Internal T.I. 2007-0219931I7 F - Perte sur taux de change - société de personnes
Canco and a US resident who each held a 50% interest in a US partnership each advanced US$1 million to the partnership and then converted those...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) | s. 39(2) gain to partnership when USD advance owing by it is converted to units | 90 |
Income Tax Technical News, No. 5, 28 July 1995
For fiscal periods ending after 28 July 1995, the adjustments to the ACB of a partnership interest in respect of the income or loss of the...
Clause 53(2)(c)(i)(B)
Administrative Policy
13 January 2009 External T.I. 2008-0296981E5 F - Ajustement au PBR d'une participation
A taxpayer who invested $30,000 in a farming limited partnership was thereafter allocated farm losses for the partnership’s first two taxation...
Subparagraph 53(2)(c)(v)
Cases
Tesainer v. Canada, 2009 DTC 5749, 2009 FCA 33
Damages received by the taxpayers who were limited partners of a former partnership ("Fenix") from lawyers, as a result of their claim (along with...
Stursberg v. The Queen, 93 DTC 5271, [1993] 2 CTC 76 (FCA)
The other partners of the partnership consented to a reduction in the taxpayer's partnership interest from 40% to 15%, and to an increase in the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | partial disposition of partnership interest to a related corporation, even though proceeds run through the partnership | 114 |
See Also
Tesainer v. The Queen, 2008 DTC 2807, 2008 TCC 101
Damages received by the taxpayer who, along with other partners of a real estate partnership, received damages from the law firm which had handled...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 70 |
Administrative Policy
10 April 2024 External T.I. 2021-0919231E5 - Foreign tax allocation to a partner
Would the allocation of foreign tax by a partnership to a partner be regarded as a withdrawal by the particular partner that reduced the adjusted...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.1) | payment by partnership of withholding or other taxes “on behalf of” its partners produces a s.53(2)(c)(v) reduction at payment time that can trigger negative ACB gain | 251 |
| Tax Topics - General Concepts - Payment & Receipt | payment by partnership of withholding tax treated as a distribution to its partners | 99 |
7 October 2022 APFF Roundtable Q. 5, 2022-0947611C6 F - Limited Partnership and Loans
When will CRA treat loans from a limited partnership received by a limited partner in order to avoid a gain under s. 40(3.1) as a distribution of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.1) | loans made only to avoid s. 40(3.1) gains due to income gains not being added to ACB until next year, may be acceptable | 578 |
16 December 2019 Internal T.I. 2019-0816101I7 - Loans from LTD Partnerships to LTD Partner
CRA indicated that whether a payment made by a limited partnership to a limited partner that was styled as a loan was to be treated as a loan for...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(2.2) - Paragraph 96(2.2)(c) | validity of loan by Ontario LP to limited partner turns on Ontario law | 344 |
| Tax Topics - Income Tax Act - Section 96 | loan by a partnership to partner is a distribution at common law | 146 |
| Tax Topics - Statutory Interpretation - Interpretation Act - Section 8.1 | reference is made to provincial law only where necessary | 198 |
27 June 2016 External T.I. 2016-0637341E5 F - Partnerships - Negative ACB
Rather than making current distributions of its cash flow to a limited partner, those sums are lent by the LP to the limited partner – then at...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.1) | loans by LP to partner potentially gave rise to negative ACB gain | 164 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.13) | retention of partnership profits not a contribution | 146 |
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(iv) | assumption of loan can be contribution, but not retained profits | 177 |
20 August 2008 External T.I. 2008-0288561E5 F - Convention de partage d'une société de personnes
The partnership agreement for a services partnership provides that a partner who has withdrawn will be paid over five years an amount respecting...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1.1) | no income could be allocated under s. 96(1.1) where aggregate income was nil | 119 |
| Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1) | CRA generally does not challenge sharing agreements based on each partner’s contribution | 56 |
30 May 2003 Internal T.I. 2003-0000117 F - ALLOCATION AUTOMOBLE VERSÉE
What is the tax treatment of an allowance paid by a partnership to a partner for the use of the partner’s automobile in the course of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(a) | fees, and usually "loan" interest, paid to a partner will be treated as draws rather than deductible expenses | 171 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) | a loan by a partner to the partnership may be treated as a loan rather than a contribution of capital in special circumstances | 107 |
10 May 2001 Internal T.I. 2001-0066067 F - SOCIÉTÉ DE PERSONNES - PARTAGE REVENU
A partnership between two individuals, A and B, realizes net income of $5,000 in a year before paying salaries of $40,000 and $20,000 to A and B,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(f) | partner salaries are non-deductible | 383 |
11 April 1995 External T.I. 9508655 - PARTNERSHIP AT-RISK RULES RE LOAN
Prior to the enactment of ss.40(3.1) and (3.2), it had been agreed that excess revenues generated by a limited partnership would be distributed to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(2.2) - Paragraph 96(2.2)(d) | 160 |
19 April 1990 T.I. (September 1990 Access Letter, ¶1414)
Where the Canadian partners of a U.S. partnership enter into currency feature contracts to close on the anticipated date of distribution of income...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Foreign Exchange | 98 |
Paragraph 53(2)(h)
Articles
Goodman, "The Tax Treatment of Commercial Trusts", 1989 Canadian Tax Journal, July-August issue, p. 1053
Subparagraph 53(2)(h)(i.1)
Administrative Policy
2010 Ruling 2009-0330901R3 - Reorganization of XXXXXXXXXX
Background
Subco, which is held by Parent (also a Canadian corporation), owns all the units of Trust 1 which, in turn, holds all the units of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.1) | recognition of capital loss on distribution of capital gain through redemption of most of trust units by corporate unitholder | 100 |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Forgiven Amount - Element B - Paragraph B(a) | no forgiven amount on transfer by unit trust to its parent of debt owing by parent | 35 |
23 April 2009 External T.I. 2008-0301241E5 F - Fiducie d'invest. à participation unitaire-75(2)
Units of a unit trust (“UT”) that does not qualify as a mutual fund trust (“MFT”) are issued for FMV monetary consideration to arm’s...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) | s. 75(2) generally not applied to commercial unit trust where single class of units subscribed for on FMV terms | 277 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) | doubtful that s. 248(28)(a) can be applied to preclude ACB grind | 181 |
4 November 2008 External T.I. 2008-0264181E5 - Income recognition and ACB - trust units
Where a corporation with an October 31 year end receives income distributions from an income trust in February and March 2007 and sells its units...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(1) - Paragraph 39(1)(a) | 154 |
2007 Ruling 2007-0245281R3 - windup of income trust on sale of assets:3rd party
This contemplated the winding-up of an income fund (the "Fund") following its acquisition by a "Bidco" in which the Fund sold its assets (mostly...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.3) | capital loss on redemption of trust units following distribution of most of its assets including as capital gains distribution | 110 |
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(21) | trustees making filings on behalf of terminated fund | 48 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | assumed debt traceable to capital distribution | 97 |
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(6) | realization and distribution of target MFT gain | 101 |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) | 90 | |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(5) | 90 |
2007 Ruling 2007-0237011R3 - XXXXXXXXXX - foreign buy-out of Canadian MFT
Beginning structure
The Fund, a listed mutual fund trust held units and debt of Trust, which held all the units (being B units) of a Canadian...
19 January 2005 External T.I. 2004-0075601E5 F - Fiducie de fonds commun de placement
Where a mutual fund unitholder receives a cash distribution of interest income, a taxable capital gain and of the non-taxable portion of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(25.3) | cost under s. 248(25.3) for distribution of ordinary income or capital gain made as units distribution | 83 |
6 January 2005 External T.I. 2004-0087221E5 F - Modification de la déclaration d'une société
Where a corporation under-reported the capital gain on the disposition of mutual fund trust units because it did not receive T3 reporting of a...
11 January 1996 External T.I. 9521525 - EFFECT OF NET CAPITAL LOSS ON ACB OF TRUST UNITS
Where an s. 104(13.2) designation is made in order that net capital losses of prior taxation years of a unit trust are used to shelter the taxable...
Clause 53(2)(h)(i.1)(B)
Subclause 53(2)(h)(i.1)(B)(I)
Administrative Policy
7 November 2007 Internal T.I. 2007-0253861I7 F - Partie non-imposable du gain en capital
The TSO indicated that the taxpayer had increased that ACB of the taxpayer’s units by the non-taxable portion of capital gains realized on share...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 132.1 - Subsection 132.1(2) | no ACB increase under s. 132.1(2) if no previous reduction under s. 53(2)(h)(i.1) | 273 |
Paragraph 53(2)(k)
Administrative Policy
2 November 2023 APFF Roundtable Q. 11, 2023-0983621C6 F - Paragraph 12(1)(x) and Non-Refundable Tax Credit
The synergy tax credit for Québec businesses ("CSEQ") is provided under s. 776.1.38 of the Taxation Act (“T.A.”) in an amount equal to 30% of...
28 April 2004 Internal T.I. 2004-0071331I7 F - Régime d'investissement coopératif du Québec
S. 965.35 of the Taxation Act (Quebec) provided a deduction from taxable income based on the adjusted cost base of a qualifying security. The...
11 October 1991 T.I. (Tax Window, No. 11, p. 18, ¶1517)
Incentives under the Employee Share Ownership Act (Ontario) reduced the adjusted cost base of the shares purchased by the employee.
Paragraph 53(2)(l)
Administrative Policy
16 May 2003 External T.I. 2002-0178685 F - CALCUL DU COUT D'UN TITRE DE CREANCE
In confirming that the accrued interest component of a debt obligation is included in its cost amount and ACB to registered plans or individuals...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(14) | overview of s. 20(14) and s. 53(2)(l) | 43 |
Subsection 53(2.1) - Election
Administrative Policy
19 January 2005 External T.I. 2004-0091601E5 F - Incitatif versé - taux d'intérêt réduit
In order to finance $400,000 of the $500,000 purchase price of a rental property, the taxpayer receives a 5-year mortgage loan from a financial...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(2.2) | s. 12(2.2) election available to reduce mortgage interest, re cashback received from mortgage lender, to reduce extra interest incurred in two initial years | 171 |
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) - Subparagraph 12(1)(x)(v) | s. 12(1)(x) applies (subject to s. 12(2.2) election) to lump-sum mortgage interest rebate except to the extent the amount was reported as s. 9 income | 116 |
1993 A.P.F.F. Round Table, Q. 21
The election under s. 53(2.1) may not be made in respect of eligible capital property.
IT-273R2, "Government Assistance - General Comments," para. 15
Election should be made by means of a signed letter accompanying the return
12. The election is made by means of a signed letter accompanying the...