Income Tax Act — I-3.3 127
icular partnership’s tax payable under this Part for the year pursuant to subsection (30) if the particular partnership were a person and its fiscal period were its taxation year, that amount is deemed to be an amount that is the lesser of the amounts described in paragraphs (28)(d) and (e), in respect of a property of the particular partnership, that is required by subsection (28) to be deducted in computing the amount under subsection (8) in respect of the particular partnership at the end of the fiscal period. Meaning of cost (32) For the purposes of subsections (27), (28) and (29), cost of the particular property to a taxpayer shall not exceed the amount paid by the taxpayer to acquire the particular property from a transferor of the particular property and, for greater certainty, does not include amounts paid by the taxpayer to maintain, modify or transform the particular property. Certain non-arm’s length transfers (33) Subsections (27) to (29), (34) and (35) do not apply to a taxpayer or partnership (in this subsection referred to as the “transferor”) that disposes of a property to a person or partnership (in this subsection and subsections (34) and (35) referred to as the “purchaser”), that does not deal at arm’s length with the transferor, if the purchaser acquired the property in circumstances where the cost of the property to the purchaser would have been an expenditure of the purchaser described in subclause 37(8)(a)(ii)(A)(III) or (B)(III) but for subparagraph 2902(b)(iii) of the Income Tax Regulations . Recapture of investment tax credit (34) Where, at any particular time in a taxation year and after February 23, 1998, a purchaser (other than a partnership) converts to commercial use, or disposes of without having previously converted to commercial use, a property (a) that was acquired by the purchaser in circumstances described in subsection (33) or that is another property that incorporates a property acquired in such circumstances; and (b) that was first acquired, or that incorporates a property that was first acquired, by a person or partnership (in this subsection referred to as the “original user”) with which the purchaser did not deal at arm’s length at the time at which the purchaser acquired the property, in the original user’s taxation year or fiscal period that includes the particular time (on the assumption that the original user had such a taxation year or fiscal period) or in any of the original user’s 10 preceding taxation years or fiscal periods, there shall be added to the purchaser’s tax otherwise payable under this Part for the year the lesser of (c) the amount (i) included, in respect of the property, in the investment tax credit of the original user, or (ii) where the original user is a partnership, that can reasonably be considered to have been included in respect of the property in computing the amount determined under subsection (8) in respect of the original user, and (d) the amount determined by applying the percentage that was applied by the original user in determining the amount referred to in paragraph (c) to (i) if the property or the other property is disposed of to a person who deals at arm’s length with the purchaser, the proceeds of disposition of that property, and (ii) in any other case, the fair market value of the property or the other property at the time of the conversion or disposition. Recapture of investment tax credit (35) Where, at any particular time in a fiscal period and after February 23, 1998, a purchaser is a partnership that converts to commercial use, or disposes of without having previously converted to commercial use, a property (a) that was acquired by the purchaser in circumstances described in subsection (33) or that is another property that incorporates a property acquired in such circumstances, and (b) that was first acquired, or that incorporates a property that was first acquired, by a person or partnership (in this subsection referred to as the “orig