I-3 - Taxation Act

Section 234 Disposition versions

2010-04-20

234. Unless otherwise provided in this Part, the gain from the disposition of property shall be computed by subtracting from the proceeds of disposition the aggregate of

(a)  the adjusted cost base of that property immediately before the disposition and the expenses made or incurred by the taxpayer for the purpose of making the disposition; and

(b)  subject to section 234.1, an amount as a reserve that is equal to the least of

i.  a reasonable amount as a reserve in respect of the portion of the proceeds of disposition of the property that is payable to the taxpayer after the end of the year and that can reasonably be regarded as a portion of the amount by which the proceeds of disposition of the property exceed the aggregate of the amounts referred to in subparagraph a in respect of the property,

ii.  an amount equal to the product obtained by multiplying 1/5 of the amount by which the proceeds of disposition of the property exceed the aggregate of the amounts referred to in subparagraph a in respect of the property by the amount by which four exceeds the number of preceding taxation years of the taxpayer ending after the disposition of the property, and

iii.  the amount allowed as a deduction for the year under subparagraph iii of paragraph a of subsection 1 of section 40 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) in computing, for the purposes of that Act, the taxpayer’s gain for the year from that disposition or, if the amount that is so allowed as a deduction is equal to the maximum amount that the taxpayer may claim as a deduction in that computation under that subparagraph iii in respect of the disposition, the amount that the taxpayer specifies and that is not less than that maximum amount.

In each subsequent year, the taxpayer shall regard as a gain the amount of the reserve established under subparagraph b of the first paragraph for the preceding year and claim an amount as a new reserve, without exceeding the amount of that gain, computed in accordance with that paragraph.

Sections 21.4.6 and 21.4.7 apply, with the necessary modifications, in relation to a deduction claimed under subparagraph iii of paragraph a of subsection 1 of section 40 of the Income Tax Act.

1972, c. 23, s. 221; 1975, c. 22, s. 36; 1984, c. 15, s. 54; 1996, c. 39, s. 63; 1997, c. 14, s. 52; 1997, c. 85, s. 57; 2010, c. 5, s. 25.

2006-03-01

234. Unless otherwise provided in this Part, the gain from the disposition of property shall be computed by subtracting from the proceeds of disposition the aggregate of

(a)  the adjusted cost base of that property immediately before the disposition and the expenses made or incurred by the taxpayer for the purpose of making the disposition; and

(b)  subject to section 234.1, an amount not exceeding the least of

i.  the reasonable amount that the taxpayer may claim as a reserve in respect of the portion of the gain equal to such proportion that the portion of the proceeds of disposition that are payable to the taxpayer after the end of the year is of the total proceeds of disposition,

ii.  the amount equal to the product obtained when 1/5 of the gain is multiplied by the amount, if any, by which 4 exceeds the number of preceding taxation years of the taxpayer ending after the disposition of the property, and

iii.  the amount that the taxpayer may claim as a deduction for the year, under subparagraph iii of paragraph a of subsection 1 of section 40 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement), in computing, for the purposes of that Act, the taxpayer’s gain for the year from that disposition.

In each subsequent year, the taxpayer shall regard as a gain the amount of the reserve established under subparagraph b of the first paragraph for the preceding year, but he may claim an amount as a new reserve computed in accordance with such paragraph.

1972, c. 23, s. 221; 1975, c. 22, s. 36; 1984, c. 15, s. 54; 1996, c. 39, s. 63; 1997, c. 14, s. 52; 1997, c. 85, s. 57.