Income Tax Act — I-3.3 79.1
Definitions 79.1 (1) In this section, creditor has the meaning assigned by subsection 79(1); ( créancier ) debt has the meaning assigned by subsection 79(1); ( dette ) person has the meaning assigned by subsection 79(1); ( personne ) property has the meaning assigned by subsection 79(1); ( bien ) specified amount has the meaning assigned by subsection 79(1); ( montant déterminé ) specified cost to a person of a debt owing to the person means (a) where the debt is capital property of the person, the adjusted cost base to the person of the debt, and (b) in any other case, the amount, if any, by which (i) the cost amount to the person of the debt exceeds (ii) such portion of that cost amount as would be deductible in computing the person’s income (otherwise than in respect of the principal amount of the debt) if the debt were established by the person to have become a bad debt or to have become uncollectable. ( coût déterminé ) Seizure of property (2) Subject to subsection (2.1) and for the purpose of this section, a property is seized at any time by a person in respect of a debt where (a) the beneficial ownership of the property is acquired or reacquired at that time by the person; and (b) the acquisition or reacquisition of the property is in consequence of another person’s failure to pay to the person all or part of the specified amount of the debt. Exception (2.1) For the purpose of this section, foreign resource property is deemed not to be seized at any time from (a) an individual or a corporation, if the individual or corporation is non-resident at that time; or (b) a partnership (other than a partnership each member of which is resident in Canada at that time). Creditor’s capital gains reserves (3) Where a property is seized at any time in a particular taxation year by a creditor in respect of a debt, for the purpose of computing the income of the creditor for the particular year, the amount claimed by the creditor under subparagraph 40(1)(a)(iii) or 44(1)(e)(iii) in computing the creditor’s gain for the preceding taxation year from any disposition before the particular year of the property shall be deemed to be the amount, if any, by which the amount so claimed exceeds the total of all amounts each of which is an amount determined under paragraph 79.1(6)(a) or 79.1(6)(b) in respect of the seizure. Creditor’s inventory reserves (4) Where a property is seized at any time in a particular taxation year by a creditor in respect of a debt, for the purpose of computing the income of the creditor for the particular year, the amount deducted under paragraph 20(1)(n) in computing the income of the creditor for the preceding taxation year in respect of any disposition of the property before the particular year shall be deemed to be the amount, if any, by which the amount so deducted exceeds the total of all amounts each of which is an amount determined under paragraph 79.1(6)(a) or 79.1(6)(b) in respect of the seizure. Adjustment where disposition and reacquisition of capital property in same year (5) Where a property is seized at any time in a taxation year by a creditor in respect of one or more debts and the property was capital property of the creditor that was disposed of by the creditor at a previous time in the year, the proceeds of disposition of the property to the creditor at the previous time shall be deemed to be the lesser of the amount of the proceeds (determined without reference to this subsection) and the amount that is the greater of (a) the amount, if any, by which the amount of such proceeds (determined without reference to this subsection) exceeds such portion of the proceeds as is represented by the specified amounts of those debts immediately before that time, and (b) the cost amount to the creditor of the property immediately before the previous time. Cost of seized properties for creditor (6) Where a particular property is seized at any time in a taxation year by a creditor in respect of one or more debts,