Income Tax Act — I-3.3 142.5
xation year. Application of subsection (8.2) (8.1) Subsection (8.2) applies to a taxpayer for its transition year if (a) subsection (2) deems the taxpayer to have disposed of a particular specified debt obligation immediately before the end of its transition year (in subsection (8.2) referred to as “the particular disposition”); and (b) the particular specified debt obligation was owned by the taxpayer at the end of its base year and was not a mark-to-market property of the taxpayer for its base year. Rules applicable to first deemed disposition of debt obligation (8.2) If this subsection applies to a taxpayer for its transition year, the following rules apply to the taxpayer in respect of the particular disposition: (a) subsection 20(21) does not apply to the taxpayer in respect of the particular disposition; and (b) if section 12.4 does not apply to the taxpayer in respect of the particular disposition, there shall be included in computing the taxpayer’s income for its transition year the amount, if any, by which (i) the total of all amounts each of which is (A) an amount deducted under paragraph 20(1)(l) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its base year, or (B) an amount deducted under paragraph 20(1)(p) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for a taxation year that preceded its transition year, exceeds (ii) the total of all amounts each of which is (A) an amount included under paragraph 12(1)(d) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its transition year, or (B) an amount included under paragraph 12(1)(i) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its transition year or a preceding taxation year. Transition — property acquired on rollover (9) Where (a) a taxpayer acquired a property before October 31, 1994 at a cost less than the fair market value of the property at the time of acquisition, (b) the property was transferred, directly or indirectly, to the taxpayer by a person that would never have been a financial institution before the transfer if the definition financial institution in subsection 142.2(1) had always applied, (c) the cost is less than the fair market value because subsection 85(1) applied in respect of the disposition of the property by the person, and (d) subsection 142.5(2) deemed the taxpayer to have disposed of the property in its particular taxation year that includes October 31, 1994, the following rules apply: (e) where the taxpayer would, but for this paragraph, have a taxable capital gain for the particular year from the disposition of the property, the part of the taxable capital gain that can reasonably be considered to have arisen while the property was held by a person described in paragraph 142.5(9)(b) shall be deemed to be a taxable capital gain of the taxpayer from the disposition of the property for the taxation year in which the taxpayer disposes of the property otherwise than because of subsection 142.5(2), and not to be a taxable capital gain for the particular year, and (f) where the taxpayer has a profit (other than a capital gain) from the disposition of the property, the part of the profit that can reasonably be considered to have arisen while the property was held by a person described in paragraph 142.5(9)(b) shall be included in computing the taxpayer’s income for the taxation year in which the taxpayer disposes of the property otherwise than because of subsection 142.5(2), and shall not be included in computing the taxpayer’s income for the particular year. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] 1995, c. 21, s. 58; 1998, c. 19, s. 166; 2009, c. 2, s. 47; 2013, c. 34, s. 288; 2018, c. 27, s. 16