I-3 - Taxation Act

Section 851.39 Disposition versions

2006-03-01

851.39. For the purposes of this Title, an at-risk adjustment in respect of an expenditure of a particular taxpayer, other than the cost of a partnership interest to which sections 613.2 to 613.4 apply, is, subject to the second paragraph, any amount or benefit that the particular taxpayer, or another taxpayer not dealing at arm’s length with the particular taxpayer, is entitled, either immediately or in the future and either absolutely or contingently, to receive or to obtain, whether by way of reimbursement, compensation, revenue guarantee, proceeds of disposition, loan or any other form of indebtedness, or in any other form or manner whatever, granted or to be granted for the purpose of reducing the impact, in whole or in part, of

(a)  any loss that the taxpayer may sustain in respect of the expenditure; or

(b)  where the expenditure is the cost or capital cost of a property, any loss from the holding or disposition of the property.

An at-risk adjustment does not include an amount or benefit to the extent that

(a)  the amount or benefit is, in respect of the taxpayer, referred to in paragraph e of section 399, paragraph h of section 412 or paragraph e of section 418.6; or

(b)  the entitlement to the amount or benefit arises

i.  because of a contract of insurance with an insurance corporation dealing at arm’s length with the taxpayer, and, where the expenditure is the cost of an interest in a partnership, with each member of the partnership, under which the taxpayer is insured against any claim arising as a result of a liability incurred in the ordinary course of carrying on the business of the taxpayer or the partnership,

ii.  as a consequence of the death of the taxpayer,

iii.  in respect of an amount not included in the expenditure, determined without reference to paragraph b of section 851.41, or

iv.  by reason of an excluded obligation, as defined in the regulations made under section 359.1, in relation to a share issued to the taxpayer or, where the expenditure is the cost of an interest in a partnership, to the partnership.

2001, c. 7, s. 132.