Income Tax Act — I-3.3 80.1
Expropriation assets acquired as compensation for, or as consideration for sale of, foreign property taken by or sold to foreign issuer 80.1 (1) Where in a taxation year ending coincidentally with or after December 31, 1971 a taxpayer resident in Canada has acquired any bonds, debentures, mortgages, hypothecary claims, notes or similar obligations (in this section referred to as “expropriation assets”) issued by the government of a country other than Canada or issued by a person resident in a country other than Canada and guaranteed by the government of that country, (a) as compensation for (i) shares owned by the taxpayer of the capital stock of a foreign affiliate of the taxpayer that carried on business in that country, or (ii) all or substantially all of the property used by the taxpayer in carrying on business in that country, (which shares or property, as the case may be, are referred to in this section as “foreign property”), taken, after June 18, 1971, from the taxpayer by the issuer under the authority of a law of that country, or (b) as consideration for the sale of foreign property sold, after June 18, 1971, by the taxpayer to the issuer, if (i) the sale was, by a law of that country, expressly required to be made, or (ii) the sale was made after notice or other manifestation of an intention to take the foreign property, if the taxpayer has so elected, in prescribed form and within prescribed time, in respect of all of the expropriation assets so acquired by the taxpayer, the following rule applies, namely, an amount in respect of each such expropriation asset, equal to (c) the principal amount of the asset, or (d) where the taxpayer has designated in the taxpayer’s election an amount in respect of the asset that is less than the principal amount thereof, the amount so designated, shall be deemed to be (e) the cost to the taxpayer of the asset, and (f) for the purpose of computing the taxpayer’s proceeds of disposition of the foreign property so taken or sold, the amount received by the taxpayer by virtue of the taxpayer’s acquisition of the asset, except that in no case may the taxpayer designate an amount in respect of any expropriation asset so that the taxpayer’s proceeds of disposition of the foreign property so taken or sold (computed having regard to the provisions of paragraph 80.1(1)(f)) are less than the cost amount to the taxpayer of the foreign property immediately before it was so taken or sold. Election re interest received or to be received on expropriation assets acquired by taxpayer (2) Where a taxpayer has elected in prescribed form and within prescribed time in respect of all amounts (each of which is referred to in this section as an “interest amount”) received or to be received by the taxpayer as or on account of interest on all expropriation assets acquired by the taxpayer as compensation for, or as consideration for the sale of, foreign property taken by or sold to any particular issuer as described in subsection 80.1(1), the following rules apply in respect of each such asset so acquired by the taxpayer: (a) in computing the taxpayer’s income for a taxation year from the asset, there may be deducted, in respect of each interest amount received by the taxpayer in the year on the asset, the lesser of the interest amount and the total of (i) the amount required by paragraph 80.1(2)(b) to be added, by virtue of the receipt by the taxpayer of the interest amount, in computing the adjusted cost base to the taxpayer of the asset, and (ii) the greater of (A) the adjusted cost base to the taxpayer of the asset immediately before the interest amount was so received by the taxpayer, and (B) the adjusted principal amount to the taxpayer of the asset immediately before the interest amount was so received by the taxpayer, and there shall be included, in respect of each amount (in this paragraph referred to as a “capital amount”) received by the taxpayer in the year as, on account or in lieu of payment of,