Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Marginal note:Disposition of farmland by partnership

101. Where a taxpayer was a member of a partnership at the end of a taxation year of the partnership in which the partnership disposed of land used in a farming business of the partnership, there may be deducted in computing the taxpayer’s income for the taxpayer’s taxation year in which the taxation year of the partnership ended, 1/2 of the total of all amounts each of which is an amount in respect of that taxation year of the taxpayer or any preceding taxation year of the taxpayer ending after 1971, equal to the taxpayer’s loss, if any, for the year from the farming business, to the extent that the loss

• (a) was, by virtue of section 31, not deductible in computing the taxpayer’s income for the year;

• (b) was not deducted for the purpose of computing the taxpayer’s taxable income for the taxpayer’s taxation year in which the partnership’s taxation year in which the land was disposed of ended, or for any preceding taxation year of the taxpayer;

• (c) did not exceed that proportion of the total of

  • (i) taxes (other than income or profits taxes or taxes imposed by reference to the transfer of the property) paid by the partnership in its taxation year ending in the year or payable by it in respect of that taxation year to a province or a Canadian municipality in respect of the property, and

  • (ii) interest paid by the partnership in its taxation year ending in the year or payable by it in respect of that taxation year, pursuant to a legal obligation to pay interest on borrowed money used to acquire the property or on any amount as consideration payable for the property,

  (to the extent that the taxes and interest were included in computing the loss of the partnership for that taxation year from the farming business), that

  • (iii) the taxpayer’s loss from the farming business for the year

  is of

  • (iv) the partnership’s loss from the farming business for its taxation year ending in the year; and

• (d) did not exceed the remainder obtained when

  • (i) the total of each of the taxpayer’s losses from the farming business for taxation years preceding the year (to the extent that those losses are included in computing the amount determined under this section in respect of the taxpayer)

  is deducted from

  • (ii) twice the amount of the taxpayer’s taxable capital gain from the disposition of the land.

Definition of “Canadian partnership”

• 102. (1) In this subdivision, “Canadian partnership” means a partnership all of the members of which were, at any time in respect of which the expression is relevant, resident in Canada.

• Marginal note:Member of a partnership

  (2) In this subdivision, a reference to a person or a taxpayer who is a member of a particular partnership shall include a reference to another partnership that is a member of the particular partnership.