Income Tax Act — I-3.3 13
ing are deemed to be the lesser of (i) the amount, if any, by which (A) the total of the fair market value of the building at the particular time and the fair market value of the land immediately before its disposition exceeds (B) the lesser of the fair market value of the land immediately before its disposition and the amount, if any, by which the cost amount to the vendor of the land (determined without reference to this subsection) exceeds the total of the capital gains (determined without reference to subparagraphs 40(1)(a)(ii) and (iii)) in respect of dispositions of the land within 3 years before the particular time by the taxpayer or by a person with whom the taxpayer was not dealing at arm’s length to the taxpayer or to another person with whom the taxpayer was not dealing at arm’s length, and (ii) the greater of (A) the fair market value of the building at the particular time, and (B) the lesser of the cost amount and the capital cost to the taxpayer of the building immediately before its disposition, and notwithstanding any other provision of this Act, the proceeds of disposition of the land are deemed to be the amount, if any, by which (iii) the total of the proceeds of disposition of the building and of the land determined without reference to this subsection and subsection 13(21.2) exceeds (iv) the proceeds of disposition of the building as determined under this paragraph, and the cost to the purchaser of the land shall be determined without reference to this subsection; and (b) where paragraph 13(21.1)(a) does not apply with respect to the disposition and, at any time before the disposition, the taxpayer or a person with whom the taxpayer did not deal at arm’s length owned the land subjacent to, or immediately contiguous to and necessary for the use of, the building, the proceeds of disposition of the building are deemed to be an amount equal to the total of (i) the proceeds of disposition of the building determined without reference to this subsection and subsection 13(21.2), and (ii) 1/2 of the amount by which the greater of (A) the cost amount to the taxpayer of the building, and (B) the fair market value of the building immediately before its disposition exceeds the proceeds of disposition referred to in subparagraph 13(21.1)(b)(i). Loss on certain transfers (21.2) Where (a) a person or partnership (in this subsection referred to as the “transferor”) disposes at a particular time (otherwise than in a disposition described in any of paragraphs (c) to (g) of the definition superficial loss in section 54) of a depreciable property — other than, for the purposes of computing the exempt surplus or exempt deficit and taxable surplus or taxable deficit of a foreign affiliate of a taxpayer, in respect of the taxpayer, where the transferor is the affiliate or is a partnership of which the affiliate is a member, depreciable property that is, or would be, if the transferor were a foreign affiliate of the taxpayer, excluded property (within the meaning assigned by subsection 95(1)) of the transferor — of a particular prescribed class of the transferor, (b) the lesser of (i) the capital cost to the transferor of the transferred property, and (ii) the proportion of the undepreciated capital cost to the transferor of all property of the particular class immediately before that time that (A) the fair market value of the transferred property at that time is of (B) the fair market value of all property of the particular class immediately before that time exceeds the amount that would otherwise be the transferor’s proceeds of disposition of the transferred property at the particular time, and (c) on the 30th day after the particular time, a person or partnership (in this subsection referred to as the “subsequent owner”) who is the transferor or a person affiliated with the transferor owns or has a right to acquire the transferred property (other than a right, as security only, derived from a mortgage, hypothec, agreement for sa