I-3 - Taxation Act

Section 270 Disposition versions

2015-10-21

270. For the purposes of this Title,

(a)  if an amount is received or receivable by a person or a partnership (in this section referred to as the “vendor”) as consideration for a warranty, covenant or other conditional obligation given or incurred by the vendor in respect of a property (in this section referred to as the “specified property”) disposed of by the vendor, the following rules apply:

i.  if the amount is received or receivable on or before the specified date, it is deemed to be received as consideration for the disposition of the specified property by the vendor and not to be an amount received or receivable by the vendor as consideration for the obligation, and it is to be included in computing the vendor’s proceeds of disposition of the specified property for the taxation year or fiscal period in which the disposition occurred, and

ii.  in any other case, it is deemed to be a capital gain of the vendor from the disposition of a property by the vendor that occurs at the earlier of the time when the amount is received or becomes receivable; and

(b)  if an amount is paid or payable in relation to an outlay or expense made or incurred by the vendor under a warranty, covenant or other conditional obligation given or incurred by the vendor in respect of the specified property disposed of by the vendor, the following rules apply:

i.  if the amount is paid or payable on or before the specified date, it is deemed to reduce the consideration for the disposition of the specified property by the vendor and not to be an amount paid or payable by the vendor as consideration for the obligation, and it is to be deducted in computing the vendor’s proceeds of disposition of the specified property for the taxation year or fiscal period in which the disposition occurred, and

ii.  in any other case, it is deemed to be a capital loss of the vendor from the disposition of a property by the vendor that occurs at the earlier of the time when the amount is paid or becomes payable.

For the purposes of the first paragraph, “specified date” means,

(a)  if the vendor is a partnership, the last day of the vendor’s fiscal period in which the vendor disposed of the specified property; and

(b)  in any other case, the vendor’s filing-due date for the vendor’s taxation year in which the vendor disposed of the specified property.

2015, c. 21, s. 154.

2006-03-01

270. For the purposes of this Title, a taxpayer shall include, in computing the proceeds of disposition of any property, all amounts received or receivable by the taxpayer as consideration for warranties given by the taxpayer or covenants or conditional or contingent obligations contracted by the taxpayer in respect of the disposition of the property.

In computing the taxpayer’s income for the year in which the property was disposed of and for each subsequent taxation year, any outlay or expense made or incurred by the taxpayer in any such year pursuant to or by reason of any obligation referred to in the first paragraph is deemed to be a loss of the taxpayer for that year from the disposition of a capital property and for the purposes of Title VI.5 of Book IV, that capital property is deemed to have been disposed of by the taxpayer in that year.

1972, c. 23, s. 250; 1986, c. 19, s. 46; 1990, c. 59, s. 128; 2003, c. 2, s. 98.