Income Tax Act — I-3.3 73
trust does not make an election under subparagraph 104(4)(a)(ii.1). Interpretation (1.1) For greater certainty, a property is, for the purposes of subsections (1) and (1.01), deemed to be property of the individual referred to in subsection (1) that has been transferred to a particular transferee where, (a) under the laws of a province or because of a decree, order or judgment of a competent tribunal made in accordance with those laws, the property (i) is acquired or is deemed to have been acquired by the particular transferee, (ii) is deemed or declared to be property of, or is awarded to, the particular transferee, or (iii) has vested in the particular transferee; and (b) the property was or would, but for those laws, have been a capital property of the individual referred to in subsection (1). Capital cost and amount deemed allowed to spouse, etc., or trust (2) If a transferee is deemed by subsection (1) to have acquired any particular depreciable property of a prescribed class of a taxpayer for an amount determined under paragraph (1)(b) and the capital cost to the taxpayer of the particular property exceeds the amount determined under that paragraph, in applying sections 13 and 20 and any regulations made under paragraph 20(1)(a) (a) the capital cost to the transferee of the particular property is deemed to be the amount that was the capital cost to the taxpayer of the particular property; and (b) the excess is deemed to have been allowed to the transferee in respect of the particular property under regulations made under paragraph 20(1)(a) in computing income for taxation years before the acquisition of the particular property. When subsection (3.1) applies (3) Subsection (3.1) applies to a taxpayer and a child of the taxpayer in respect of property that has been transferred, at any time, by the taxpayer to the child, where (a) the property was, before the transfer, land in Canada or depreciable property in Canada of a prescribed class, of the taxpayer; (b) the child of the taxpayer was resident in Canada immediately before the transfer; and (c) the property has been used principally in a farming or fishing business in which the taxpayer, the taxpayer’s spouse or common-law partner, a child of the taxpayer or a parent of the taxpayer was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot). Inter vivos transfer of farm or fishing property to child (3.1) If, because of subsection (3), this subsection applies to the taxpayer and a child of the taxpayer in respect of a property transferred by the taxpayer to the child of the taxpayer, the following rules apply: (a) where, immediately before the transfer, the property was depreciable property of a prescribed class, the taxpayer is deemed to have disposed of the property, at the time of the transfer, for proceeds of disposition equal to (i) in any case to which neither subparagraph (ii) nor (iii) applies, the taxpayer’s proceeds of disposition otherwise determined, (ii) the greater of the amounts referred to in clauses (A) and (B), if the taxpayer’s proceeds of disposition otherwise determined exceed the greater of (A) the fair market value of the property immediately before the time of the transfer, and (B) the lesser of (I) the capital cost to the taxpayer of the property, and (II) the amount, determined immediately before the time of the disposition of the property, that is that proportion of the undepreciated capital cost of property of that class to the taxpayer that the capital cost to the taxpayer of the property is of the capital cost to the taxpayer of all property of that class that had not, at or before that time, been disposed of, or (iii) if the taxpayer’s proceeds of disposition otherwise determined are less than the lesser of the amounts referred to in clauses (ii)(A) and (B), the lesser of those am