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

Full Document:  

Act current to 2018-07-05 and last amended on 2018-07-01. Previous Versions

Marginal note:Application of Part I to Crown corporation
  •  (1) This Part applies to a federal Crown corporation as if

    • (a) any income or loss from a business carried on by the corporation as agent of Her Majesty, or from a property of Her Majesty administered by the corporation, were an income or loss of the corporation from the business or the property, as the case may be; and

    • (b) any property, obligation or debt of any kind whatever held, administered, entered into or incurred by the corporation as agent of Her Majesty were a property, obligation or debt, as the case may be, of the corporation.

  • Marginal note:Presumption

    (2) Notwithstanding any other provision of this Act, a prescribed federal Crown corporation and any corporation controlled by such a corporation are each deemed not to be a private corporation and paragraphs 149(1)(d) to (d.4) do not apply to those corporations.

  • Marginal note:Transfers of land for disposition

    (3) Where land of Her Majesty has been transferred to a prescribed federal Crown corporation for purposes of disposition, the acquisition of the property by the corporation and any disposition thereof shall be deemed not to have been in the course of the business carried on by the corporation.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 27;
  • 1998, c. 19, s. 82;
  • 2001, c. 17, s. 17.
Marginal note:Emissions allowances
  •  (1) Notwithstanding section 10, for the purpose of computing a taxpayer’s income from a business, an emissions allowance shall be valued at the cost at which the taxpayer acquired it.

  • Marginal note:Determination of cost of emissions allowances

    (2) If at any particular time a taxpayer that owns one emissions allowance, or two or more identical emissions allowances (for the purposes of this subsection two or more emissions allowances will be considered identical if they could be used to settle the same emissions obligations), acquires one or more other emissions allowances (in this subsection referred to as newly acquired emissions allowances), each of which is identical to each of the previously-acquired emissions allowances, for the purposes of computing, at any subsequent time, the cost of the taxpayer of each of the identical emissions allowances,

    • (a) the taxpayer is deemed to have disposed of each of the previously-acquired emissions allowances immediately before the particular time for proceeds equal to its cost to the taxpayer immediately before the particular time; and

    • (b) the taxpayer is deemed to have acquired each of the identical emissions allowances at the particular time at a cost equal to the amount determined by the formula

      (A + B)/C

      where

      A
      is the total cost to the taxpayer immediately before the particular time of the previously-acquired emissions allowances,
      B
      is the total cost to the taxpayer (determined without reference to this section) of the newly-acquired emissions allowances, and
      C
      is the number of the identical emissions allowances owned by the taxpayer immediately after the particular time.
  • Marginal note:Expense restriction

    (3) Notwithstanding any other provision of this Act, in computing a taxpayer’s income from a business for a taxation year, the total amount deductible in respect of a particular emissions obligation for a taxation year shall not exceed the amount determined by the formula

    A + B x C

    where

    A
    is the total cost of emissions allowances either
    • (a) used by the taxpayer to settle the particular emissions obligation in the year, or

    • (b) held by the taxpayer at the end of the taxation year that can be used to satisfy the particular emissions obligation in respect of the year;

    B
    is the amount determined by the formula

    D − (E + F)

    where

    D
    is the number of emissions allowances required to satisfy the particular emissions obligation in respect of the taxation year,
    E
    is the number of emissions allowances used by the taxpayer to settle the particular emissions obligation in the year, and
    F
    is the number of emissions allowances held by the taxpayer at the end of the taxation year that can be used to satisfy the particular emissions obligation in respect of the year; and
    C
    is the fair market value of an emissions allowance at the end of the taxation year that could be used to satisfy the particular emissions obligation in respect of the year.
  • Marginal note:Income inclusion in following year

    (4) There shall be included in computing the income of a taxpayer for a taxation year as income from a business the amount deducted in respect of an emissions obligation referred to in subsection (3) for the immediately preceding taxation year to the extent that the emissions obligation was not settled in the immediately preceding taxation year.

  • Marginal note:Proceeds of disposition

    (5) If a taxpayer surrenders an emissions allowance to settle an emissions obligation, the taxpayer’s proceeds from the disposition of the emissions allowance are deemed to be equal to the taxpayer’s cost of the emissions allowance.

  • Marginal note:Loss restriction event

    (6) Notwithstanding subsection (1), each emissions allowance held at the end of the taxpayer’s taxation year that ends immediately before the time at which the taxpayer is subject to a loss restriction event is to be valued at the cost at which the taxpayer acquired the property, or its fair market value at the end of the year, whichever is lower, and after that time the cost at which the taxpayer acquired the property is, subject to a subsequent application of this subsection and subsection (2), deemed to be that lower amount.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2016, c. 12, s. 10.
Marginal note:Farming or fishing business
  •  (1) For the purpose of computing the income of a taxpayer for a taxation year from a farming or fishing business, the income from the business for that year may, if the taxpayer so elects, be computed in accordance with a method (in this section referred to as the “cash method”) whereby the income therefrom for that year shall be deemed to be an amount equal to the total of

    • (a) all amounts that

      • (i) were received in the year, or are deemed by this Act to have been received in the year, in the course of carrying on the business, and

      • (ii) were in payment of or on account of an amount that would, if the income from the business were not computed in accordance with the cash method, be included in computing income from the business for that or any other year,

    • (b) with respect to a farming business, such amount, if any, as is specified by the taxpayer in respect of the business in the taxpayer’s return of income under this Part for the year, not exceeding the amount, if any, by which

      • (i) the fair market value at the end of the year of inventory owned by the taxpayer in connection with the business at that time

      exceeds

      • (ii) the amount determined under paragraph 28(1)(c) for the year,

    • (c) with respect to a farming business, the amount, if any, that is the lesser of

      • (i) the taxpayer’s loss from the business for the year computed without reference to this paragraph and to paragraph 28(1)(b), and

      • (ii) the value of inventory purchased by the taxpayer that was owned by the taxpayer in connection with the business at the end of the year, and

    • (d) the total of all amounts each of which is an amount included in computing the taxpayer’s income for the year from the business because of subsection 13(1), 80(13) or 80.3(3) or (5),

    minus the total of

    • (e) all amounts, other than amounts described in section 30, that

      • (i) were paid in the year, or are deemed by this Act to have been paid in the year, in the course of carrying on the business,

      • (ii) in the case of amounts paid, or deemed by this Act to have been paid, for inventory, were in payment of or on account of an amount that would be deductible in computing the income from the business for the year or any other taxation year if that income were not computed in accordance with the cash method, and

      • (iii) in any other case, were in payment of or on account of an amount that would be deductible in computing the income from the business for a preceding taxation year, the year or the following taxation year if that income were not computed in accordance with the cash method,

    • (e.1) all amounts, other than amounts described in section 30, that

      • (i) would be deductible in computing the income from the business for the year if that income were not computed in accordance with the cash method,

      • (ii) are not deductible in computing the income from the business for any other taxation year, and

      • (iii) were paid in a preceding taxation year in the course of carrying on the business,

    • (f) the total of all amounts each of which is the amount, if any, included under paragraph 28(1)(b) or 28(1)(c) in computing the taxpayer’s income from the business for the immediately preceding taxation year, and

    • (g) the total of all amounts each of which is an amount deducted for the year under paragraph 20(1)(a) or (uu), subsection 20(16), section 30 or subsection 80.3(2) or (4) in respect of the business,

    except that paragraphs 28(1)(b) and 28(1)(c) do not apply in computing the income of the taxpayer for the taxation year in which the taxpayer dies.

  • Marginal note:Acquisition of inventory

    (1.1) Where at any time, and in circumstances where paragraph 69(1)(a) or 69(1)(c) applies, a taxpayer acquires inventory that is owned by the taxpayer in connection with a farming business the income from which is computed in accordance with the cash method, for the purposes of this section an amount equal to the cost to the taxpayer of the inventory shall be deemed

    • (a) to have been paid by the taxpayer at that time and in the course of carrying on that business, and

    • (b) to be the only amount so paid for the inventory by the taxpayer,

    and the taxpayer shall be deemed to have purchased the inventory at the time it was so acquired.

  • Marginal note:Valuation of inventory

    (1.2) For the purpose of paragraph 28(1)(c) and notwithstanding section 10, inventory of a taxpayer shall be valued at any time at the lesser of the total amount paid by the taxpayer at or before that time to acquire it (in this section referred to as its “cash cost”) and its fair market value, except that an animal (in this section referred to as a “specified animal”) that is a horse or, where the taxpayer has so elected in respect thereof for the taxation year that includes that time or for any preceding taxation year, is a bovine animal registered under the Animal Pedigree Act, shall be valued

    • (a) at any time in the taxation year in which it is acquired, at such amount as is designated by the taxpayer not exceeding its cash cost to the taxpayer and not less than 70% of its cash cost to the taxpayer; and

    • (b) at any time in a subsequent taxation year, at such amount as is designated by the taxpayer not exceeding its cash cost to the taxpayer and not less than 70% of the total of

      • (i) its value determined under this subsection at the end of the preceding taxation year, and

      • (ii) the total amount paid on account of the purchase price of the animal during the year.

  • Marginal note:Short fiscal period

    (1.3) For each taxation year that is less than 51 weeks, the reference in subsection 28(1.2) to “70” shall be read as a reference to the number determined by the formula

    100 - (30 × A/365)

    where

    A
    is the number of days in the taxation year.
  • Marginal note:Where joint farming or fishing business

    (2) Subsection 28(1) does not apply for the purpose of computing the income of a taxpayer for a taxation year from a farming or fishing business carried on by the taxpayer jointly with one or more other persons, unless each of the other persons by whom the business is jointly carried on has elected to have his or her income from the business for that year computed in accordance with the cash method.

  • Marginal note:Concurrence of Minister

    (3) Where a taxpayer has filed a return of income under this Part for a taxation year wherein the taxpayer’s income for that year from a farming or fishing business has been computed in accordance with the cash method, income from the business for each subsequent taxation year shall, subject to the other provisions of this Part, be computed in accordance with that method unless the taxpayer, with the concurrence of the Minister and on such terms and conditions as are specified by the Minister, adopts some other method.

  • Marginal note:Non-resident

    (4) Notwithstanding subsections 28(1) and 28(5), where at the end of a taxation year a taxpayer who carried on a business the income from which was computed in accordance with the cash method is non-resident and does not carry on that business in Canada, an amount equal to the total of all amounts each of which is the fair market value of an amount outstanding during the year as or on account of a debt owing to the taxpayer that arose in the course of carrying on the business and that would have been included in computing the taxpayer’s income for the year if the amount had been received by the taxpayer in the year, shall (to the extent that the amount was not otherwise included in computing the taxpayer’s income for the year or a preceding taxation year) be included in computing the taxpayer’s income from the business

    • (a) for the year, if the taxpayer was non-resident throughout the year; and

    • (b) for the part of the year throughout which the taxpayer was resident in Canada, if the taxpayer was resident in Canada at any time in the year.

  • (4.1) [Repealed, 2001, c. 17, s. 18]

  • Marginal note:Accounts receivable

    (5) There shall be included in computing the income of a taxpayer for a taxation year such part of an amount received by the taxpayer in the year, on or after disposing of or ceasing to carry on a business or a part of a business, for, on account or in lieu of payment of, or in satisfaction of debts owing to the taxpayer that arose in the course of carrying on the business as would have been included in computing the income of the taxpayer for the year had the amount so received been received by the taxpayer in the course of carrying on the business.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 28;
  • 1994, c. 7, Sch. II, s. 18;
  • 1995, c. 21, s. 7;
  • 1998, c. 19, s. 83;
  • 2001, c. 17, s. 18;
  • 2013, c. 40, s. 13(E);
  • 2014, c. 39, s. 7;
  • 2016, c. 12, s. 11.
 
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