I-3 - Taxation Act

Section 189 Disposition versions

2019-06-19

189. Where, at any time, an individual ceases to carry on a business and the individual’s spouse, or a corporation controlled directly or indirectly in any manner whatever by the individual, subsequently carries on the business and acquires all of the property included in Class 14.1 of Schedule B to the Regulation respecting the Taxation Act (chapter I-3, r. 1) in respect of the business owned by the individual immediately before that time and that had value at that time, the following rules apply:

(a)  the individual is deemed to have, immediately before that time, disposed of the property and received proceeds of disposition equal to the lesser of the capital cost and the cost amount to the individual of the property immediately before the disposition;

(b)  the spouse or corporation, as the case may be, is deemed to have acquired the property at a cost equal to those proceeds; and

(c)  for the purposes of sections 93 to 104, Chapter III of Title III and any regulations enacted under paragraph a of section 130, if the amount that was the capital cost to the individual of the property exceeds the amount determined under section 436 to be the cost to the person that acquired the property,

i.  the capital cost to the person of the property is deemed to be the amount that was the capital cost to the individual of the property, and

ii.  the excess is deemed to have been allowed to the person as depreciation under paragraph a of section 130 in respect of the property for taxation years that ended before the person acquired the property.

1972, c. 23, s. 178; 1990, c. 59, s. 104; 1993, c. 16, s. 96; 1994, c. 22, s. 117; 1996, c. 39, s. 55; 1997, c. 3, s. 71; 2003, c. 2, s. 65; 2005, c. 1, s. 72; 2019, c. 14, s. 87.

2006-03-01

189. Where at any time an individual has ceased to carry on a business and thereafter the individual’s spouse, or a corporation controlled directly or indirectly in any manner whatever by the individual, carries on the business and acquires all of the property that was incorporeal capital property in respect of the business owned by the individual before that time and that had value at that time, the following rules apply:

(a)  in computing the individual’s income for the individual’s first taxation year ending after that time, section 188 shall read without reference to paragraph a thereof and the reference in paragraph c thereof to “the amount deducted by the taxpayer by reason of paragraph a” shall read as a reference to “an amount equal to the taxpayer’s eligible incorporeal capital amount in respect of the business immediately before that time”;

(b)  in computing the eligible incorporeal capital amount of the spouse or the corporation in respect of the business, the spouse or corporation is deemed to have acquired an incorporeal capital property and to have disbursed an incorporeal capital amount at that time at a cost equal to 4/3 of the aggregate of the individual’s eligible incorporeal capital amount in respect of the business immediately before that time and the amount determined under subparagraph a of the second paragraph of section 107 in respect of the business of the individual at that time;

(c)  for the purpose of computing the eligible incorporeal capital amount in respect of the business of the spouse or corporation after that time, an amount equal to the amount determined under subparagraph a of the second paragraph of section 107 in respect of the business of the individual at that time shall be added to the amount otherwise determined under subparagraph i of that subparagraph a; and

(d)  for the purpose of computing after that time, in respect of any subsequent disposition of property of the business, the amount to be included under paragraph b of section 105 in computing the income of the spouse or corporation, an amount equal to the amount determined under subparagraph ii of subparagraph a of the second paragraph of section 107 in respect of the business of the individual immediately before the individual ceases carrying on business shall be added to the amount otherwise determined under that subparagraph ii.

1972, c. 23, s. 178; 1990, c. 59, s. 104; 1993, c. 16, s. 96; 1994, c. 22, s. 117; 1996, c. 39, s. 55; 1997, c. 3, s. 71; 2003, c. 2, s. 65; 2005, c. 1, s. 72.