Income Tax Act — I-3.3 16.1
otwithstanding subsection 16.1(2), where at any time a particular corporation that has made an election under subsection 16.1(1) in respect of a lease assigns the lease (a) by reason of an amalgamation (within the meaning assigned by subsection 87(1)), or (b) in the course of the winding-up of a Canadian corporation in respect of which subsection 88(1) applies, to another corporation with which it does not deal at arm’s length, the other corporation shall, for the purposes of subsection 16.1(1) and for the purposes of computing its income in respect of the lease after that time, be deemed to be the same person as, and a continuation of, the particular corporation. Replacement property (5) For the purposes of subsection 16.1(1), where at any time a property (in this subsection referred to as a “replacement property”) is provided by a lessor to a lessee as a replacement for a similar property of the lessor (in this subsection referred to as the “original property”) that was leased by the lessor to the lessee, and the amount payable by the lessee for the use of, or the right to use, the replacement property is the same as the amount that was so payable in respect of the original property, the replacement property shall be deemed to be the same property as the original property. Additional property (6) For the purposes of subsection 16.1(1), where at any particular time (a) an addition or alteration (in this subsection referred to as “additional property”) is made by a lessor to a property (in this subsection referred to as the “original property”) of the lessor that is the subject of a lease, (b) the lessor and the lessee of the original property have jointly elected under subsection 16.1(1) in respect of the original property, and (c) as a consequence of the addition or alteration, the total amount payable by the lessee for the use of, or the right to use, the original property and the additional property exceeds the amount so payable in respect of the original property, the following rules apply: (d) the lessee shall be deemed to have leased the additional property from the lessor at the particular time, (e) the term of the lease of the additional property shall be deemed to be greater than one year, (f) the lessor and the lessee shall be deemed to have jointly elected under subsection 16.1(1) in respect of the additional property, (g) the prescribed rate in effect at the particular time in respect of the additional property shall be deemed to be equal to the prescribed rate in effect in respect of the original property at the particular time, (h) the additional property shall be deemed not to be prescribed property, and (i) the excess referred to in paragraph 16.1(6)(c) shall be deemed to be an amount payable by the lessee for the use of, or the right to use, the additional property. Renegotiation of lease (7) For the purposes of subsection 16.1(1), where at any time (a) a lease (in this subsection referred to as the “original lease”) of property is renegotiated in the course of a bona fide renegotiation, and (b) as a result of the renegotiation, the amount payable by the lessee of the property for the use of, or the right to use, the property is altered in respect of a period after that time (otherwise than because of an addition or alteration to which subsection 16.1(6) applies), the original lease shall be deemed to have expired and the renegotiated lease shall be deemed to be a new lease of the property entered into at that time. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] R.S., 1985, c. 1 (5th Supp.), s. 16.1; 1994, c. 7, Sch. II, s. 12; 1999, c. 22, s. 7; 2013, c. 34, s. 94