Income Tax Act — I-3.3 18
borrowed money used in respect of or for the acquisition of land, and (b) interest paid or payable in the year by a taxpayer in respect of borrowed money that may reasonably be considered (having regard to all the circumstances) to have been used to assist, directly or indirectly, (i) another person with whom the taxpayer does not deal at arm’s length, (ii) a corporation of which the taxpayer is a specified shareholder, or (iii) a partnership of which the taxpayer’s share of any income or loss is 10% or more, to acquire land to be used or held by that person, corporation or partnership otherwise than as described in paragraph 18(2)(c) or 18(2)(d), except where the assistance is in the form of a loan to that person, corporation or partnership and a reasonable rate of interest on the loan is charged by the taxpayer; ( intérêts sur une dette concernant l’acquisition d’un fonds de terre ) land does not, except to the extent that it is used for the provision of parking facilities for a fee or charge, include (a) any property that is a building or other structure affixed to land, (b) the land subjacent to any property described in paragraph (a), or (c) such land immediately contiguous to the land described in paragraph (b) that is a parking area, driveway, yard, garden or similar land as is necessary for the use of any property described in paragraph (a). ( fonds de terre ) Costs relating to construction of building or ownership of land (3.1) Notwithstanding any other provision of this Act, in computing a taxpayer’s income for a taxation year, (a) no deduction shall be made in respect of any outlay or expense made or incurred by the taxpayer (other than an amount deductible under paragraph 20(1)(a), 20(1)(aa) or 20(1)(qq) or subsection 20(29)) that can reasonably be regarded as a cost attributable to the period of the construction, renovation or alteration of a building by or on behalf of the taxpayer, a person with whom the taxpayer does not deal at arm’s length, a corporation of which the taxpayer is a specified shareholder or a partnership of which the taxpayer’s share of any income or loss is 10% or more and relating to the construction, renovation or alteration, or a cost attributable to that period and relating to the ownership during that period of land (i) that is subjacent to the building, or (ii) that (A) is immediately contiguous to the land subjacent to the building, (B) is used, or is intended to be used, for a parking area, driveway, yard, garden or any other similar use, and (C) is necessary for the use or intended use of the building; and (b) the amount of such an outlay or expense shall, to the extent that it would otherwise be deductible in computing the taxpayer’s income for the year, be included in computing the cost or capital cost, as the case may be, of the building to the taxpayer, to the person with whom the taxpayer does not deal at arm’s length, to the corporation of which the taxpayer is a specified shareholder or to the partnership of which the taxpayer’s share of any income or loss is 10% or more, as the case may be. Included costs (3.2) For the purposes of subsection 18(3.1), costs relating to the construction, renovation or alteration of a building or to the ownership of land include (a) interest paid or payable by a taxpayer in respect of borrowed money that cannot be identified with a particular building or particular land, but that can reasonably be considered (having regard to all the circumstances) as interest on borrowed money used by the taxpayer in respect of the construction, renovation or alteration of a building or the ownership of land; and (b) interest paid or payable by a taxpayer in respect of borrowed money that may reasonably be considered (having regard to all the circumstances) to have been used to assist, directly or indirectly, (i) another person with whom the taxpayer does not deal at arm’s length, (ii) a corporation of which the taxpayer is a specified shareholder, or (iii) a pa