Income Tax Act — I-3.3 56.4
rty is the amount that can reasonably be regarded as being the fair market value of the property if the restrictive covenant were part of the property. Anti-avoidance rule — non-application of paragraph (3)(c) (9) Paragraph (3)(c) does not apply to an amount that would, if this Act were read without reference to subsections (2) to (14), be included in computing a taxpayer’s income from a source that is an office or employment or a business or property under paragraph 3(a). Anti-avoidance — non-application of subsection (7) (10) Subsection (7) does not apply in respect of a taxpayer’s grant of a restrictive covenant if one of the results of not applying section 68 to the consideration received or receivable in respect of the taxpayer’s grant of the restrictive covenant would be that paragraph 3(a) would not apply to consideration that would, if this Act were read without reference to subsections (2) to (14), be included in computing a taxpayer’s income from a source that is an office or employment or a business or property. Clarification if subsection (2) applies — where another person receives the amount (11) For greater certainty, if subsection (2) applies to include in computing a taxpayer’s income an amount received or receivable by another taxpayer, that amount is not to be included in computing the income of that other taxpayer. Clarification if subsection (5) applies (12) For greater certainty, if subsection (5) applies in respect of a restrictive covenant, (a) the amount referred to in paragraph (6)(f) is to be added in computing the amount received or receivable by the vendors as consideration for the disposition of the interest or right referred to in paragraph (6)(b); and (b) the amount that can reasonably be regarded as being in part consideration received or receivable for a restrictive covenant to which clause (7)(b)(ii)(B) or subclause (7)(c)(i)(B)(II) applies is to be added in computing the consideration that is received or receivable by each taxpayer who disposes of shares of the target corporation, or shares of the family corporation, as the case may be, to the extent of the portion of the consideration that is received or receivable by that taxpayer. Filing of prescribed form (13) For the purpose of paragraphs (3)(b) and (c) and subsection (7), an election in prescribed form filed under any of those provisions is to include a copy of the restrictive covenant and be filed (a) if the person who granted the restrictive covenant was a person resident in Canada when the restrictive covenant was granted, by the person with the Minister on or before the person’s filing-due date for the taxation year that includes the day on which the restrictive covenant was granted; and (b) in any other case, with the Minister on or before the day that is six months after the day on which the restrictive covenant is granted. Non-application of section 42 (14) Section 42 does not apply to an amount received or receivable as consideration for a restrictive covenant. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] 2013, c. 34, s. 195; 2016, c. 12, s. 18; 2017, c. 33, s. 15