I-3 - Taxation Act

Section 851.22.38 Disposition versions

2010-04-20

851.22.38. The rules in the second paragraph apply where

(a)  at a particular time, a Canadian affiliate of an entrant bank transfers to the entrant bank property that is a loan, lending asset or a right to receive an unpaid amount in relation to a disposition before the particular time of property by the affiliate, or the entrant bank assumes an obligation of the Canadian affiliate that is an instrument or commitment described in section 140.2 or an obligation in respect of goods, services, lands or movable property described in paragraph a or b of section 150;

(b)  the property is transferred or the obligation is assumed for an amount equal to its fair market value at the particular time;

(c)  the entrant bank begins immediately after the particular time to use or hold the property or owe the obligation in its Canadian banking business; and

(d)  the Canadian affiliate and the entrant bank make a valid election for the purposes of subsection 7 of section 142.7 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) in respect of the transfer or assumption.

The rules to which the first paragraph refers are as follows:

(a)  for the purposes of sections 140, 140.2, 141 and 150 and the first paragraph of section 153 in relation to the obligation or property, the taxation year of the Canadian affiliate that would, but for this section, include the particular time is deemed to end immediately before the particular time; and

(b)  for the purpose of computing the income of the Canadian affiliate and the entrant bank for taxation years that end on or after the particular time,

i.  any amount deducted under sections 140, 140.2 and 150 and the first paragraph of section 153 by the Canadian affiliate in relation to the obligation or property in computing its income for its taxation year that ended immediately before the particular time, or under section 141 in computing its income for that year or for a preceding taxation year, to the extent that the amount has not been included in computing the affiliate’s income under paragraph i of section 87, is deemed to have been so deducted by the entrant bank in computing its income for its last taxation year that ended before the particular time and not to have been deducted by the Canadian affiliate,

ii.  for the purposes of section 150, an amount in respect of the goods, services, land or movable property that was included in computing the Canadian affiliate’s income from a business under paragraph a of section 87 is deemed to have been so included in computing the entrant bank’s income from its Canadian banking business for a preceding taxation year,

iii.  for the purposes of the first paragraph of section 153 in respect of a property described in the first paragraph sold by the Canadian affiliate in the course of a business, the property is deemed to have been disposed of by the entrant bank, and not by the Canadian affiliate, at the time it was disposed of by the Canadian affiliate, and the amount in respect of the sale that was included in computing the Canadian affiliate’s income from a business is deemed to have been included in computing the entrant bank’s income from its Canadian banking business for its taxation year that includes the time at which the property was disposed of, and

iv.  for the purposes of sections 234 and 279 in respect of a property described in the first paragraph disposed of by the Canadian affiliate,

(1)  the property is deemed to have been disposed of by the entrant bank, and not by the Canadian affiliate, at the time it was disposed of by the Canadian affiliate,

(2)  the amount determined under the portion of the first paragraph of section 234 before subparagraph b or subparagraph i of subparagraph a of the first paragraph of section 279, in respect of the Canadian affiliate is deemed to be the amount determined under that provision in respect of the entrant bank, and

(3)  any amount deducted on account of a reserve by the Canadian affiliate under subparagraph b of the first paragraph of section 234 or the portion of subparagraph a of the first paragraph of section 279 before subparagraph i, in computing its gain from the disposition of the property for its last taxation year that ended before the particular time is deemed to have been so deducted by the entrant bank for its last taxation year that ended before the particular time.

2004, c. 8, s. 170; 2009, c. 5, s. 356; 2010, c. 5, s. 80.

2009-05-15

851.22.38. The rules in the second paragraph apply where

(a)  at a particular time, a Canadian affiliate of an entrant bank transfers to the entrant bank property that is a loan, lending asset or a right to receive an unpaid amount in relation to a disposition before the particular time of property by the affiliate, or the entrant bank assumes an obligation of the Canadian affiliate that is an instrument or commitment described in section 140.2 or an obligation in respect of goods, services, lands or movable property described in paragraph a or b of section 150;

(b)  the property is transferred or the obligation is assumed for an amount equal to its fair market value at the particular time;

(c)  the entrant bank begins immediately after the particular time to use or hold the property or owe the obligation in its Canadian banking business; and

(d)  the Canadian affiliate and the entrant bank make a valid election for the purposes of subsection 7 of section 142.7 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) in respect of the transfer or assumption.

The rules to which the first paragraph refers are as follows:

(a)  for the purposes of sections 140, 140.2, 141 and 150 and the first paragraph of section 153 in relation to the obligation or property, the taxation year of the Canadian affiliate that would, but for this section, include the particular time is deemed to end immediately before the particular time; and

(b)  for the purpose of computing the income of the Canadian affiliate and the entrant bank for taxation years that end on or after the particular time,

i.  any amount deducted under sections 140, 140.2 and 150 and the first paragraph of section 153 by the Canadian affiliate in relation to the obligation or property in computing its income for its taxation year that ended immediately before the particular time, or under section 141 in computing its income for that year or for a preceding taxation year, to the extent that the amount has not been included in computing the affiliate’s income under paragraph i of section 87, is deemed to have been so deducted by the entrant bank in computing its income for its last taxation year that ended before the particular time and not to have been deducted by the Canadian affiliate,

ii.  for the purposes of section 150, an amount in respect of the goods, services, land or movable property that was included in computing the Canadian affiliate’s income from a business under paragraph a of section 87 is deemed to have been so included in computing the entrant bank’s income from its Canadian banking business for a preceding taxation year,

iii.  for the purposes of the first paragraph of section 153 in respect of a property described in the first paragraph sold by the Canadian affiliate in the course of a business, the property is deemed to have been disposed of by the entrant bank, and not by the Canadian affiliate, at the time it was disposed of by the Canadian affiliate, and the amount in respect of the sale that was included in computing the Canadian affiliate’s income from a business is deemed to have been included in computing the entrant bank’s income from its Canadian banking business for its taxation year that includes the time at which the property was disposed of, and

iv.  for the purposes of sections 234 and 279 in respect of a property described in the first paragraph disposed of by the Canadian affiliate,

(1)  the property is deemed to have been disposed of by the entrant bank, and not by the Canadian affiliate, at the time it was disposed of by the Canadian affiliate,

(2)  the amount determined under the portion of the first paragraph of section 234 before subparagraph b or subparagraph i of subparagraph a of the first paragraph of section 279, in respect of the Canadian affiliate is deemed to be the amount determined under that provision in respect of the entrant bank, and

(3)  any amount claimed as a deduction on account of a reserve by the Canadian affiliate under subparagraph b of the first paragraph of section 234 or the portion of subparagraph a of the first paragraph of section 279 before subparagraph i, in computing its gain from the disposition of the property for its last taxation year that ended before the particular time is deemed to have been so claimed as a deduction by the entrant bank for its last taxation year that ended before the particular time.

2004, c. 8, s. 170; 2009, c. 5, s. 356.

2006-03-01

851.22.38. The rules in the second paragraph apply where

(a)  at a particular time, a Canadian affiliate of an entrant bank transfers to the entrant bank property that is a loan, lending asset or a right to receive an unpaid amount in relation to a disposition before the particular time of property by the affiliate, or the entrant bank assumes an obligation of the Canadian affiliate that is an instrument or commitment described in section 140.2 or an obligation in respect of goods, services, lands or movable property described in paragraph a or b of section 150;

(b)  the property is transferred or the obligation is assumed for an amount equal to its fair market value at the particular time;

(c)  the entrant bank begins immediately after the particular time to use or hold the property or owe the obligation in its Canadian banking business; and

(d)  the Canadian affiliate and the entrant bank make a valid election for the purposes of subsection 7 of section 142.7 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement) in respect of the transfer or assumption.

The rules to which the first paragraph refers are as follows:

(a)  for the purposes of sections 140, 140.2, 141 and 150 and the first paragraph of section 153 in relation to the obligation or property, the taxation year of the Canadian affiliate that would, but for this section, include the particular time is deemed to end immediately before the particular time; and

(b)  for the purpose of computing the income of the Canadian affiliate and the entrant bank for taxation years that end on or after the particular time,

i.  any amount deducted under sections 140, 140.2 and 150 and the first paragraph of section 153 by the Canadian affiliate in relation to the obligation or property in computing its income for its taxation year that ended immediately before the particular time, or under section 141 in computing its income for that year or for a preceding taxation year, to the extent that the amount has not been included in computing the affiliate’s income under paragraph i of section 87, is deemed to have been so deducted by the entrant bank in computing its income for its last taxation year that ended before the particular time and not to have been deducted by the Canadian affiliate,

ii.  for the purposes of section 150, an amount in respect of the goods, services, land or movable property that was included in computing the Canadian affiliate’s income from a business under paragraph a of section 87 is deemed to have been so included in computing the entrant bank’s income from its Canadian banking business for a preceding taxation year,

iii.  for the purposes of the first paragraph of section 153 in respect of a property described in the first paragraph sold by the Canadian affiliate in the course of a business, the property is deemed to have been disposed of by the entrant bank, and not by the Canadian affiliate, at the time it was disposed of by the Canadian affiliate, and the amount in respect of the sale that was included in computing the Canadian affiliate’s income from a business is deemed to have been included in computing the entrant bank’s income from its Canadian banking business for its taxation year that includes the time at which the property was disposed of, and

iv.  for the purposes of sections 234 and 279 in respect of a property described in the first paragraph disposed of by the Canadian affiliate,

(1)  the property is deemed to have been disposed of by the entrant bank, and not by the Canadian affiliate, at the time it was disposed of by the Canadian affiliate,

(2)  the amount determined under the portion of the first paragraph of section 234 before subparagraph b or subparagraph i of paragraph a of section 279, in respect of the Canadian affiliate is deemed to be the amount determined under that provision in respect of the entrant bank, and

(3)  any amount claimed as a reserve by the Canadian affiliate under subparagraph b of the first paragraph of section 234 or the portion of paragraph a of section 279 before subparagraph i, in computing its gain from the disposition of the property for its last taxation year that ended before the particular time is deemed to have been so claimed by the entrant bank for its last taxation year that ended before the particular time.

2004, c. 8, s. 170.