Income Tax Act

Marginal note:Additional Business Income

• 34.1 (1) Where

  • (a) an individual (other than a testamentary trust) carries on a business in a taxation year,

  • (b) a fiscal period of the business begins in the year and ends after the end of the year (in this subsection referred to as the “particular period”), and

  • (c) the individual has elected under subsection 249.1(4) in respect of the business and the election has not been revoked,

  there shall be included in computing the individual’s income for the year from the business, the amount determined by the formula

  (A - B) × C/D

  where

  A

  is the total of the individual’s income from the business for the fiscal periods of the business that end in the year,

  B

  is the lesser of

  • (i) the total of all amounts each of which is an amount included in the value of A in respect of the business and that is deemed to be a taxable capital gain for the purpose of section 110.6, and

  • (ii) the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the year,

  C

  is the number of days on which the individual carries on the business that are both in the year and in the particular period, and

  D

  is the number of days on which the individual carries on the business that are in fiscal periods of the business that end in the year.

• Marginal note:Additional income election

  (2) Where

  • (a) an individual (other than a testamentary trust) begins carrying on a business in a taxation year and not earlier than the beginning of the first fiscal period of the business that begins in the year and ends after the end of the year (in this subsection referred to as the “particular period”), and

  • (b) the individual has elected under subsection 249.1(4) in respect of the business and the election has not been revoked,

  there shall be included in computing the individual’s income for the year from the business the lesser of

  • (c) the amount designated in the individual’s return of income for the year, and

  • (d) the amount determined by the formula

    (A - B) × C/D

    where

    A

    is the individual’s income from the business for the particular period,

    B

    is the lesser of

    • (i) the total of all amounts each of which is an amount included in the value of A in respect of the business and that is deemed to be a taxable capital gain for the purpose of section 110.6, and

    • (ii) the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the taxation year that includes the end of the particular period,

    C

    is the number of days on which the individual carries on the business that are both in the year and in the particular period, and

    D

    is the number of days on which the individual carries on the business that are in the particular period.

• Marginal note:Deduction

  (3) There shall be deducted in computing an individual’s income for a taxation year from a business the amount, if any, included under subsection 34.1(1) or 34.1(2) in computing the individual’s income for the preceding taxation year from the business.

• (4) to (7) [Repealed, 2013, c. 40, s. 15]

• Marginal note:No additional income inclusion

  (8) Subsections 34.1(1) and 34.1(2) do not apply in computing an individual’s income for a taxation year from a business where

  • (a) the individual dies or otherwise ceases to carry on the business in the year; or

  • (b) the individual becomes a bankrupt in the calendar year in which the taxation year ends.

• Marginal note:Death of partner or proprietor

  (9) Where

  • (a) an individual carries on a business in a taxation year,

  • (b) the individual dies in the year and after the end of a fiscal period of the business that ends in the year,

  • (c) another fiscal period of the business ends because of the individual’s death (in this subsection referred to as the “short period”), and

  • (d) the individual’s legal representative

    • (i) elects that this subsection apply in computing the individual’s income for the year, or

    • (ii) files a separate return of income under subsection 150(4) in respect of the individual’s business,

  notwithstanding subsection 34.1(8), there shall be included in computing the individual’s income for the year from the business, the amount determined by the formula

  (A - B) × C/D

  where

  A

  is the total of the individual’s income from the business for fiscal periods (other than the short period) of the business that end in the year,

  B

  is the lesser of

  • (i) the total of all amounts, each of which is an amount included in the value of A in respect of the business that is deemed to be a taxable capital gain for the purpose of section 110.6, and

  • (ii) the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the year,

  C

  is the number of days in the short period, and

  D

  is the total number of days in fiscal periods of the business (other than the short period) that end in the year.