Income Tax Act — I-3.3 142.5
Income treatment for profits and losses 142.5 (1) Where, in a taxation year that begins after October 1994, a taxpayer that is a financial institution in the year disposes of a property that is a mark-to-market property for the year, (a) there shall be included in computing the taxpayer’s income for the year the profit, if any, from the disposition; and (b) there shall be deducted in computing the taxpayer’s income for the year the loss, if any, from the disposition. Mark-to-market requirement (2) Where a taxpayer that is a financial institution in a taxation year holds, at the end of the year, a mark-to-market property for the year, the taxpayer shall be deemed (a) to have disposed of the property immediately before the end of the year for proceeds equal to its fair market value at the time of disposition, and (b) to have reacquired the property at the end of the year at a cost equal to those proceeds. Mark-to-market debt obligation (3) Where a taxpayer is a financial institution in a particular taxation year that begins after October 1994, the following rules apply with respect to a specified debt obligation that is a mark-to-market property of the taxpayer for the particular year: (a) paragraph 12(1)(c) and subsections 12(3) and 20(14) and (21) do not apply to the obligation in computing the taxpayer’s income for the particular year; (b) there shall be included in computing the taxpayer’s income for the particular year an amount received by the taxpayer in the particular year as, on account of, in lieu of payment of, or in satisfaction of, interest on the obligation, to the extent that the interest was not included in computing the taxpayer’s income for a preceding taxation year; and (c) for the purpose of paragraph 142.5(3)(b), where the taxpayer was deemed by subsection 142.5(2) or paragraph 142.6(1)(b) to have disposed of the obligation in a preceding taxation year, no part of an amount included in computing the income of the taxpayer for that preceding year because of the disposition shall be considered to be in respect of interest on the obligation. Proceeds — mark-to-market property (4) For greater certainty, if a taxpayer is a financial institution in a taxation year and disposes of a share that is mark-to-market property of the taxpayer for the year, the taxpayer’s proceeds from the disposition do not include any amount that would otherwise be proceeds from the disposition to the extent that the amount is deemed by subsection 84(2) or (3) to be a dividend received except to the extent the dividend is deemed by subparagraph 88(2)(b)(ii) not to be a dividend. (5) to (7) [Repealed, 2013, c. 34, s. 288] First deemed disposition of debt obligation (8) Where (a) in a particular taxation year that ends after October 30, 1994, a taxpayer disposed of a specified debt obligation that is a mark-to-market property of the taxpayer for the following taxation year, and (b) either (i) the disposition occurred because of subsection 142.5(2) and the particular year includes October 31, 1994, or (ii) the disposition occurred because of paragraph 142.6(1)(b), the following rules apply: (c) subsection 20(21) does not apply to the disposition, and (d) where (i) an amount has been deducted under paragraph 20(1)(p) in respect of the obligation in computing the taxpayer’s income for the particular year or a preceding taxation year, and (ii) section 12.4 does not apply to the disposition, there shall be included in computing the taxpayer’s income for the particular year the amount, if any, by which (iii) the total of all amounts referred to in subparagraph 142.5(8)(d)(i) exceeds (iv) the total of all amounts included under paragraph 12(1)(i) in respect of the obligation in computing the taxpayer’s income for the particular year or a preceding taxation 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 de