Marginal note:Death of a taxpayer
70 (1) In computing the income of a taxpayer for the taxation year in which the taxpayer died,
(a) an amount of interest, rent, royalty, annuity (other than an amount with respect to an interest in an annuity contract to which paragraph 148(2)(b) applies), remuneration from an office or employment, or other amount payable periodically, that was not paid before the taxpayer’s death, shall be deemed to have accrued in equal daily amounts in the period for or in respect of which the amount was payable, and the value of the portion thereof so deemed to have accrued to the day of death shall be included in computing the taxpayer’s income for the year in which the taxpayer died; and
(b) paragraph 12(1)(t) shall be read as follows:
“12(1)(t) the amount deducted under subsection 127(5) or 127(6) in computing the taxpayer’s tax payable for the year or a preceding taxation year to the extent that it was not included in computing the taxpayer’s income for a preceding taxation year under this paragraph or is not included in an amount determined under paragraph 13(7.1)(e) or 37(1)(e) or subparagraph 53(2)(c)(vi) or 53(2)(h)(ii) or for I in the definition undepreciated capital cost in subsection 13(21) or L in the definition cumulative Canadian exploration expense in subsection 66.1(6);”
Marginal note:Amounts receivable
(2) Where a taxpayer who has died had at the time of death rights or things (other than any capital property or any amount included in computing the taxpayer’s income by virtue of subsection 70(1)), the amount of which when realized or disposed of would have been included in computing the taxpayer’s income, the value thereof at the time of death shall be included in computing the taxpayer’s income for the taxation year in which the taxpayer died, unless the taxpayer’s legal representative has, not later than the day that is one year after the date of death of the taxpayer or the day that is 90 days after the mailing of any notice of assessment in respect of the tax of the taxpayer for the year of death, whichever is the later day, elected otherwise, in which case the legal representative shall file a separate return of income for the year under this Part and pay the tax for the year under this Part as if
(a) the taxpayer were another person;
(b) that other person’s only income for the year were the value of the rights or things; and
(c) subject to sections 114.2 and 118.93, that other person were entitled to the deductions to which the taxpayer was entitled under sections 110, 118 to 118.7 and 118.9 for the year in computing the taxpayer’s taxable income or tax payable under this Part, as the case may be, for the year.
Marginal note:Rights or things transferred to beneficiaries
(3) Where before the time for making an election under subsection 70(2) has expired, a right or thing to which that subsection would otherwise apply has been transferred or distributed to beneficiaries or other persons beneficially interested in the estate or trust,
(a) subsection 70(2) is not applicable to that right or thing; and
(b) an amount received by one of the beneficiaries or persons on the realization or disposition of the right or thing shall be included in computing the income of the beneficiary or person for the taxation year in which the beneficiary or person received it.
Marginal note:Exception
(3.1) For the purposes of this section, rights or things do not include an interest in a life insurance policy (other than an annuity contract of a taxpayer where the payment therefor was deductible in computing the taxpayer’s income because of paragraph 60(l) or was made in circumstances in which subsection 146(21) applied), eligible capital property, land included in the inventory of a business, a Canadian resource property or a foreign resource property.
Marginal note:Revocation of election
(4) An election made under subsection 70(2) may be revoked by a notice of revocation signed by the legal representative of the taxpayer and filed with the Minister within the time that an election under that subsection may be made.
Marginal note:Capital property of a deceased taxpayer
(5) Where in a taxation year a taxpayer dies,
(a) the taxpayer shall be deemed to have, immediately before the taxpayer’s death, disposed of each capital property of the taxpayer and received proceeds of disposition therefor equal to the fair market value of the property immediately before the death;
(b) any person who as a consequence of the taxpayer’s death acquires any property that is deemed by paragraph 70(5)(a) to have been disposed of by the taxpayer shall be deemed to have acquired it at the time of the death at a cost equal to its fair market value immediately before the death;
(c) where any depreciable property of the taxpayer of a prescribed class that is deemed by paragraph 70(5)(a) to have been disposed of is acquired by any person as a consequence of the taxpayer’s death (other than where the taxpayer’s proceeds of disposition of the property under paragraph 70(5)(a) are redetermined under subsection 13(21.1)) and the amount that was the capital cost to the taxpayer of the property exceeds the amount determined under paragraph 70(5)(b) to be the cost to the person thereof, for the purposes of sections 13 and 20 and any regulations made for the purpose of paragraph 20(1)(a),
(i) the capital cost to the person of the property shall be deemed to be the amount that was the capital cost to the taxpayer of the property, and
(ii) the excess shall be deemed to have been allowed to the person in respect of the property under regulations made for the purpose of paragraph 20(1)(a) in computing income for taxation years that ended before the person acquired the property; and
(d) where a property of the taxpayer that was deemed by paragraph 70(5)(a) to have been disposed of is acquired by any person as a consequence of the taxpayer’s death and the taxpayer’s proceeds of disposition of the property under paragraph 70(5)(a) are redetermined under subsection 13(21.1), notwithstanding paragraph 70(5)(b),
(i) where the property was depreciable property of a prescribed class and the amount that was the capital cost to the taxpayer of the property exceeds the amount so redetermined under subsection 13(21.1), for the purposes of sections 13 and 20 and any regulations made for the purpose of paragraph 20(1)(a),
(A) its capital cost to the person shall be deemed to be the amount that was its capital cost to the taxpayer, and
(B) the excess shall be deemed to have been allowed to the person in respect of the property under regulations made for the purpose of paragraph 20(1)(a) in computing income for taxation years that ended before the person acquired the property, and
(ii) where the property is land (other than land to which subparagraph 70(5)(d)(i) applies), its cost to the person shall be deemed to be the amount that was the taxpayer’s proceeds of disposition of the land as redetermined under subsection 13(21.1).
Marginal note:Eligible capital property of deceased
(5.1) Notwithstanding subsection 24(1), where at any time a taxpayer dies and any person (in this subsection referred to as the beneficiary), as a consequence of the taxpayer’s death, acquires an eligible capital property of the taxpayer in respect of a business carried on by the taxpayer immediately before that time (otherwise than by way of a distribution of property by a trust that claimed a deduction under paragraph 20(1)(b) in respect of the property or in circumstances to which subsection 24(2) applies),
(a) the taxpayer shall be deemed to have disposed of the property, immediately before the taxpayer’s death, for proceeds equal to 4/3 of that proportion of the cumulative eligible capital of the taxpayer in respect of the business that the fair market value immediately before that time of the property is of the fair market value immediately before that time of all of the eligible capital property of the taxpayer in respect of the business;
(b) subject to paragraph 70(5.1)(c), the beneficiary shall be deemed to have acquired a capital property at the time of the taxpayer’s death at a cost equal to the proceeds referred to in paragraph 70(5.1)(a);
(c) where the beneficiary continues to carry on the business previously carried on by the taxpayer, the beneficiary shall be deemed to have, at the time of the taxpayer’s death, acquired an eligible capital property and made an eligible capital expenditure at a cost equal to the total of
(i) the proceeds referred to in paragraph 70(5.1)(a), and
(ii) 4/3 of that proportion of the amount, if any, determined for F in the definition cumulative eligible capital in subsection 14(5) in respect of the business of the taxpayer at that time that the fair market value immediately before that time of the particular property is of the fair market value immediately before that time of all eligible capital property of the taxpayer in respect of the business,
and for the purposes of determining at any time the beneficiary’s cumulative eligible capital in respect of the business, an amount equal to 3/4 of the amount determined under subparagraph 70(5.1)(c)(ii) shall be added to the amount otherwise determined, in respect of the business, for P in the definition cumulative eligible capital in subsection 14(5); and
(d) for the purpose of determining, after that time, the amount required by paragraph 14(1)(b) to be included in computing the income of the beneficiary in respect of any subsequent disposition of the property of the business, there shall be added to the amount determined for Q in the definition cumulative eligible capital in subsection 14(5) the amount determined by the formula
A × B/C
where
- A
- is the amount, if any, determined for Q in that definition in respect of the business of the taxpayer immediately before that time,
- B
- is the fair market value immediately before that time of the particular property, and
- C
- is the fair market value immediately before that time of all eligible capital property of the taxpayer in respect of the business.
Marginal note:Resource properties and land inventories of a deceased taxpayer
(5.2) Where in a taxation year a taxpayer dies,
(a) the taxpayer is deemed to have, immediately before the taxpayer’s death, disposed of each Canadian resource property and foreign resource property of the taxpayer and received proceeds of disposition for that property equal to its fair market value immediately before the death;
(a.1) subject to subparagraph (b)(ii), any particular person who as a consequence of the taxpayer’s death acquires any property that is deemed by paragraph (a) to have been disposed of by the taxpayer is deemed to have acquired the property at the time of the death at a cost equal to the fair market value of the property immediately before the death;
(b) notwithstanding paragraph 70(5.2)(a), where the taxpayer was resident in Canada immediately before the taxpayer’s death, any Canadian resource property or foreign resource property of the taxpayer that is, on or after the death and as a consequence of the death, transferred or distributed to a spouse or common-law partner of the taxpayer described in paragraph 70(6)(a) or a trust described in paragraph 70(6)(b) and it can be shown within the period ending 36 months after the death or, where written application therefor has been made to the Minister by the taxpayer’s legal representative within that period, within such longer period as the Minister considers reasonable in the circumstances, that the property vested indefeasibly in the spouse or common-law partner or trust, as the case may be,
(i) the taxpayer shall be deemed to have, immediately before the death, disposed of the property and received proceeds of disposition therefor equal to such amount as is specified by the taxpayer’s legal representative in the return of income of the taxpayer filed under paragraph 150(1)(b), not exceeding its fair market value immediately before the death, and
(ii) the spouse, common-law partner or trust, as the case may be, is deemed to have acquired the property at the time of the death at a cost equal to the amount determined in respect of the disposition under subparagraph (i);
(c) the taxpayer is deemed to have, immediately before the taxpayer’s death, disposed of each property that was land included in the inventory of a business of the taxpayer and received proceeds of disposition for that property equal to its fair market value immediately before the death;
(c.1) subject to subparagraph (d)(ii), any particular person who as a consequence of the taxpayer’s death acquires any property that is deemed by paragraph (c) to have been disposed of by the taxpayer is deemed to have acquired the property at the time of the death at a cost equal to the fair market value of the property immediately before the death; and
(d) notwithstanding paragraph 70(5.2)(c), where the taxpayer was resident in Canada immediately before the taxpayer’s death, any property that is land included in the inventory of a business of the taxpayer is, on or after the death and as a consequence of the death, transferred or distributed to a spouse or common-law partner of the taxpayer described in paragraph 70(6)(a) or a trust described in paragraph 70(6)(b) and it can be shown within the period ending 36 months after the death of the taxpayer or, where written application therefor has been made to the Minister by the taxpayer’s legal representative within that period, within such longer period as the Minister considers reasonable in the circumstances, that the property vested indefeasibly in the spouse or common-law partner or trust, as the case may be,
(i) the taxpayer shall be deemed to have, immediately before the death, disposed of the land and received proceeds of disposition therefor equal to its cost amount to the taxpayer immediately before the death, and
(ii) the spouse or common-law partner or trust, as the case may be, shall be deemed to have acquired the property at the time of the death at a cost equal to those proceeds.
Marginal note:Fair market value
(5.3) For the purposes of subsections (5) and 104(4) and section 128.1, the fair market value at any time of any property deemed to have been disposed of at that time as a consequence of a particular individual’s death or as a consequence of the particular individual becoming or ceasing to be resident in Canada shall be determined as though the fair market value at that time of any life insurance policy, under which the particular individual (or any other individual not dealing at arm’s length with the particular individual at that time or at the time the policy was issued) was a person whose life was insured, were the cash surrender value (as defined in subsection 148(9)) of the policy immediately before the particular individual died or became or ceased to be resident in Canada, as the case may be.
Marginal note:NISA on death
(5.4) Where a taxpayer who dies has at the time of death a net income stabilization account, all amounts held for or on behalf of the taxpayer in the taxpayer’s NISA Fund No. 2 shall be deemed to have been paid out of that fund to the taxpayer immediately before that time.
Marginal note:Where transfer or distribution to spouse or spouse trust
(6) Where any property of a taxpayer who was resident in Canada immediately before the taxpayer’s death that is a property to which subsection 70(5) would otherwise apply is, as a consequence of the death, transferred or distributed to
(a) the taxpayer’s spouse or common-law partner who was resident in Canada immediately before the taxpayer’s death, or
(b) a trust, created by the taxpayer’s will, that was resident in Canada immediately after the time the property vested indefeasibly in the trust and under which
(i) the taxpayer’s spouse or common-law partner is entitled to receive all of the income of the trust that arises before the spouse’s or common-law partner’s death, and
(ii) no person except the spouse or common-law partner may, before the spouse’s or common-law partner’s death, receive or otherwise obtain the use of any of the income or capital of the trust,
if it can be shown, within the period ending 36 months after the death of the taxpayer or, where written application therefor has been made to the Minister by the taxpayer’s legal representative within that period, within such longer period as the Minister considers reasonable in the circumstances, that the property has become vested indefeasibly in the spouse or common-law partner or trust, as the case may be, the following rules apply:
(c) paragraphs 70(5)(a) and 70(5)(b) do not apply in respect of the property,
(d) subject to paragraph 70(6)(d.1), the taxpayer shall be deemed to have, immediately before the taxpayer’s death, disposed of the property and received proceeds of disposition therefor equal to
(i) where the property was depreciable property of a prescribed class, the lesser of the capital cost and the cost amount to the taxpayer of the property immediately before the death, and
(ii) in any other case, its adjusted cost base to the taxpayer immediately before the death,
and the spouse or common-law partner or trust, as the case may be, shall be deemed to have acquired the property at the time of the death at a cost equal to those proceeds,
(d.1) where the property is an interest in a partnership (other than an interest in a partnership to which subsection 100(3) applies),
(i) the taxpayer shall, except for the purposes of paragraph 98(5)(g), be deemed not to have disposed of the property as a consequence of the taxpayer’s death,
(ii) the spouse or common-law partner or the trust, as the case may be, shall be deemed to have acquired the property at the time of the death at a cost equal to its cost to the taxpayer, and
(iii) each amount added or deducted in computing the adjusted cost base to the taxpayer of the property shall be deemed to be required by subsection 53(1) or 53(2) to be added or deducted, as the case may be, in computing the adjusted cost base to the spouse or common-law partner or the trust, as the case may be, of the property; and
(e) where the property was depreciable property of the taxpayer of a prescribed class, paragraph (5)(c) applies as if the references therein to “paragraph 70(6)(a)” and to “paragraph 70(6)(b)” were read as references to “paragraph 70(6)(d)”.
Marginal note:Transfer or distribution of NISA to spouse or trust
(6.1) Where a property that is a net income stabilization account of a taxpayer is, on or after the taxpayer’s death and as a consequence thereof, transferred or distributed to
(a) the taxpayer’s spouse or common-law partner, or
(b) a trust, created by the taxpayer’s will, under which
(i) the taxpayer’s spouse or common-law partner is entitled to receive all of the income of the trust that arises before the spouse’s or common-law partner’s death, and
(ii) no person except the spouse or common-law partner may, before the spouse’s or common-law partner’s death, receive or otherwise obtain the use of any of the income or capital of the trust,
subsections 70(5.4) and 73(5) do not apply in respect of the taxpayer’s NISA Fund No. 2 if it can be shown, within the period ending 36 months after the death of the taxpayer or, where written application therefor has been made to the Minister by the taxpayer’s legal representative within that period, within such longer period as the Minister considers reasonable in the circumstances, that the property has vested indefeasibly in the spouse or common-law partner or trust, as the case may be.
Marginal note:Election
(6.2) Subsection 70(6) or 70(6.1) does not apply to any property of a deceased taxpayer in respect of which the taxpayer’s legal representative elects, in the taxpayer’s return of income under this Part (other than a return of income filed under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) for the year in which the taxpayer died, to have subsection 70(5) or 70(5.4), as the case may be, apply.
Marginal note:Special rules applicable in respect of trust for benefit of spouse
(7) Where a trust created by a taxpayer’s will would, but for the payment of, or provision for payment of, any particular testamentary debts in respect of the taxpayer, be a trust to which subsection 70(6) or 70(6.1) applies,
(a) for the purpose of determining the day on or before which a return (in this subsection referred to as the “taxpayer’s return”) of the taxpayer’s income for the taxation year in which the taxpayer died is required to be filed by the taxpayer’s legal representatives, subsection 150(1) shall be read without reference to paragraph 150(1)(b) and as if paragraph 150(1)(d) read as follows:
“150(1)(d) in the case of any other person, by the person’s legal representative within 18 months after the person’s death; or;” and
(b) where the taxpayer’s legal representative so elects in the taxpayer’s return (other than a return of income filed under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) and lists therein one or more properties (other than a net income stabilization account) that were, on or after the taxpayer’s death and as a consequence thereof, transferred or distributed to the trust, the total fair market value of which properties immediately after the taxpayer’s death was not less than the total of the non-qualifying debts in respect of the taxpayer,
(i) subsection 70(6) does not apply in respect of the properties so listed, and
(ii) notwithstanding the payment of, or provision for payment of, any such particular testamentary debts, the trust shall be deemed to be a trust described in subsection 70(6),
except that, where the fair market value, immediately after the taxpayer’s death, of all of the properties so listed exceeds the total of the non-qualifying debts in respect of the taxpayer (the amount of which excess is referred to in this subsection as the “listed value excess”) and the taxpayer’s legal representative designates in the taxpayer’s return one property so listed (other than money) that is capital property other than depreciable property,
(iii) the amount of the taxpayer’s capital gain or capital loss, as the case may be, from the disposition of that property deemed by subsection 70(5) to have been made by the taxpayer is that proportion of that capital gain or capital loss otherwise determined that
(A) the amount, if any, by which the fair market value of that property immediately after the taxpayer’s death exceeds the listed value excess,
is of
(B) the fair market value of that property immediately after the taxpayer’s death, and
(iv) the cost to the trust of that property is
(A) where the taxpayer has a capital gain from the disposition of that property deemed by subsection 70(5) to have been made by the taxpayer, the total of
(I) its adjusted cost base to the taxpayer immediately before the taxpayer’s death, and
(II) the amount determined under subparagraph 70(7)(b)(iii) to be the taxpayer’s capital gain from the disposition of that property, or
(B) where the taxpayer has a capital loss from the disposition of that property deemed by subsection 70(5) to have been made by the taxpayer, the amount by which
(I) its adjusted cost base to the taxpayer immediately before the taxpayer’s death
exceeds
(II) the amount determined under subparagraph 70(7)(b)(iii) to be the taxpayer’s capital loss from the disposition of that property.
Marginal note:Meaning of certain expressions in s. (7)
(8) In subsection 70(7),
(a) the fair market value at any time of any property subject to a mortgage or hypothec is the amount, if any, by which the fair market value at that time of the property otherwise determined exceeds the amount outstanding at that time of the debt secured by the mortgage or hypothec, as the case may be;
(b) non-qualifying debt in respect of a taxpayer who has died and by whose will any trust has been created that would, but for the payment of, or provision for payment of, any particular testamentary debts in respect of the taxpayer, be a trust described in subsection 70(6), means any such particular testamentary debt in respect of the taxpayer other than
(i) any estate, legacy, succession or inheritance duty payable, in consequence of the taxpayer’s death, in respect of any property of, or interest in, the trust, or
(ii) any debt secured by a mortgage or hypothec on property owned by the taxpayer immediately before the taxpayer’s death; and
(c) testamentary debt, in respect of a taxpayer who has died, means
(i) any debt owing by the taxpayer, or any other obligation of the taxpayer to pay an amount, that was outstanding immediately before the taxpayer’s death, and
(ii) any amount payable (other than any amount payable to any person as a beneficiary of the taxpayer’s estate) by the taxpayer’s estate in consequence of the taxpayer’s death,
including any income or profits tax payable by or in respect of the taxpayer for the taxation year in which the taxpayer died or for any previous taxation year, and any estate, legacy, succession or inheritance duty payable in consequence of the taxpayer’s death.
Marginal note:Transfer of farm property to child
(9) If any land in Canada or depreciable property in Canada of a prescribed class of a taxpayer to which subsection (5) would otherwise apply was, before the taxpayer’s death, used principally in a farming business in which the taxpayer, the taxpayer’s spouse or common-law partner or any of the taxpayer’s children was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot), the property is, as a consequence of the death, transferred or distributed to a child of the taxpayer who was resident in Canada immediately before the death and it can be shown, within the period ending 36 months after the death or, if written application that this subsection apply has been made to the Minister by the taxpayer’s legal representative within that period, within any longer period that the Minister considers reasonable in the circumstances, that the property has vested indefeasibly in the child,
(a) paragraphs 70(5)(a) and 70(5)(b) do not apply in respect of the property,
(b) the taxpayer shall be deemed to have, immediately before the taxpayer’s death, disposed of the property and received proceeds of disposition therefor equal to
(i) where the property was depreciable property of a prescribed class, the lesser of the capital cost and the cost amount to the taxpayer of the property immediately before the death, and
(ii) where the property is land (other than land to which subparagraph 70(9)(b)(i) applies), its adjusted cost base to the taxpayer immediately before the death,
and the child shall be deemed to have acquired the property at the time of the death at a cost equal to those proceeds, and
(c) where the property was depreciable property of a prescribed class, paragraphs 70(5)(c) and 70(5)(d) apply as if the references therein to “paragraph 70(9)(a)” and “paragraph 70(9)(b)” were read as “paragraph 70(9)(b)”,
except that, where the taxpayer’s legal representative so elects in the taxpayer’s return of income under this Part for the year in which the taxpayer died, paragraph 70(9)(b) shall be read as follows:
“70(9)(b) the taxpayer shall be deemed to have, immediately before the taxpayer’s death, disposed of the property and received proceeds of disposition therefor equal to such amount as the legal representative elects in the taxpayer’s return of income under this Part for the year in which the taxpayer died, not greater than the greater of nor less than the lesser of
(i) where the property was depreciable property of a prescribed class,
(A) its fair market value immediately before the death, and
(B) the lesser of the capital cost and the cost amount to the taxpayer of the property immediately before the death, and
(ii) where the property is land (other than land to which subparagraph 70(9)(b)(i) applies),
(A) its fair market value immediately before the death, and
(B) its adjusted cost base to the taxpayer immediately before the death,
and the child shall be deemed to have acquired the property at the time of the death at a cost equal to those proceeds, except that for the purpose of this paragraph, where the elected amount exceeds the greater of the amounts determined under clauses 70(9)(b)(i)(A) and 70(9)(b)(i)(B) or (ii)(A) and (B), as the case may be, it shall be deemed to be equal to the greater thereof, and where the elected amount is less than the lesser of the amounts determined under clauses 70(9)(b)(i)(A) and 70(9)(b)(i)(B) or (ii)(A) and (B), as the case may be, it shall be deemed to be equal to the lesser thereof, and”.
Marginal note:Transfer of farm property from trust to settlor’s children
(9.1) Where any property in Canada of a taxpayer that is land or depreciable property of a prescribed class has been transferred or distributed to a trust described in subsection (6) or 73(1) (as that subsection applied to transfers before 2000) or a trust to which subparagraph 73(1.01)(c)(i) applies and the property or a replacement property for that property in respect of which the trust has made an election under subsection 13(4) or 44(1) was, immediately before the death of the taxpayer’s spouse or common-law partner who was a beneficiary under the trust, used in the business of farming and has, on the death of the spouse or common-law partner and as a consequence of the death, been transferred or distributed to and vested indefeasibly in an individual who was a child of the taxpayer and who was resident in Canada immediately before the death of the spouse or common-law partner, the following rules apply:
(a) subsections 104(4) and 104(5) do not apply to the trust in respect of the property,
(b) the trust shall be deemed to have, immediately before the spouse’s or common-law partner’s death, disposed of the property and received proceeds of disposition therefor equal to
(i) where the property was depreciable property of a prescribed class, the lesser of the capital cost and the cost amount to the trust of the property immediately before the death, and
(ii) where the property is land (other than land to which subparagraph 70(9.1)(b)(i) applies), its adjusted cost base to the trust immediately before the death,
and the child shall be deemed to have acquired the property at the time of the death at a cost equal to those proceeds,
(c) where any depreciable property of a prescribed class that is deemed by paragraph 70(9.1)(b) to have been disposed of by the trust is acquired by a child of the taxpayer as a consequence of the spouse’s or common-law partner’s death (other than where the trust’s proceeds of disposition of the property under paragraph 70(9.1)(b) are redetermined under subsection 13(21.1)) and the amount that was the capital cost to the trust of the property exceeds the amount determined under paragraph 70(9.1)(b) to be the cost to the child of the property, for the purposes of sections 13 and 20 and any regulations made for the purpose of paragraph 20(1)(a),
(i) its capital cost to the child shall be deemed to be the amount that was its capital cost to the trust, and
(ii) the excess shall be deemed to have been allowed to the child in respect of the property under regulations made for the purpose of paragraph 20(1)(a) in computing income for taxation years that ended before the child acquired the property, and
(d) where the property of the trust that is deemed by paragraph 70(9.1)(b) to have been disposed of is acquired by a child of the taxpayer as a consequence of the spouse’s or common-law partner’s death and the trust’s proceeds of disposition of the property under paragraph 70(9.1)(b) are redetermined under subsection 13(21.1), notwithstanding paragraph 70(9.1)(b),
(i) where the property was depreciable property of a prescribed class and the amount that was its capital cost to the trust exceeds the amount so redetermined under subsection 13(21.1), for the purposes of sections 13 and 20 and any regulations made for the purpose of paragraph 20(1)(a),
(A) its capital cost to the child shall be deemed to be the amount that was its capital cost to the trust, and
(B) the excess shall be deemed to have been allowed to the child in respect of the property under regulations made for the purpose of paragraph 20(1)(a) in computing income for taxation years that ended before the child acquired the property, and
(ii) where the property is land (other than land to which subparagraph 70(9.1)(d)(i) applies), its cost to the child shall be deemed to be the amount that was the trust’s proceeds of disposition as redetermined under subsection 13(21.1),
except that, where the trust so elects in its return of income under this Part for its taxation year in which the spouse or common-law partner died, paragraph 70(9.1)(b) shall be read as follows:
“70(9.1)(b) the trust shall be deemed to have, immediately before the spouse’s or common-law partner’s death, disposed of the property and received proceeds of disposition therefor equal to such amount as the trust elects in its return of income under this Part for the year in which the spouse or common-law partner died, not greater than the greater of nor less than the lesser of
(i) where the property was depreciable property of a prescribed class,
(A) its fair market value immediately before the death, and
(B) the lesser of the capital cost and the cost amount to the trust of the property immediately before the death, and
(ii) where the property is land (other than land to which subparagraph 70(9.1)(b)(i) applies),
(A) its fair market value immediately before the death, and
(B) its adjusted cost base to the trust immediately before the death,
and the child shall be deemed to have acquired the property at the time of the death at a cost equal to those proceeds, except that for the purpose of this paragraph, where the elected amount exceeds the greater of the amounts determined under clauses 70(9.1)(b)(i)(A) and 70(9.1)(b)(i)(B) or (ii)(A) and (B), as the case may be, it shall be deemed to be equal to the greater thereof, and where the elected amount is less than the lesser of the amounts determined under clauses 70(9.1)(b)(i)(A) and 70(9.1)(b)(i)(B) or (ii)(A) and (B), as the case may be, it shall be deemed to be equal to the lesser thereof,”.
Marginal note:Transfer of family farm corporations and partnerships
(9.2) Where at any time property of a taxpayer that was, immediately before the taxpayer’s death, a share of the capital stock of a family farm corporation of the taxpayer or an interest in a family farm partnership of the taxpayer to which subsection 70(5) would otherwise apply is, as a consequence of the death, transferred or distributed to a child of the taxpayer who was resident in Canada immediately before the death and it can be shown, within the period ending 36 months after the death or, where written application therefor has been made to the Minister by the taxpayer’s legal representative within that period, within such longer period as the Minister considers reasonable in the circumstances, that the property has vested indefeasibly in the child,
(a) subsection 70(5) does not apply in respect of the property, and
(b) where the property is a share of the capital stock of a family farm corporation, the taxpayer shall be deemed to have, immediately before the taxpayer’s death, disposed of the property and received proceeds of disposition therefor equal to its adjusted cost base to the taxpayer immediately before the death, and the child shall be deemed to have acquired the property at the time of the death at a cost equal to those proceeds, and
(c) where the property is an interest in a family farm partnership (other than an interest in a partnership to which subsection 100(3) applies),
(i) the taxpayer shall, except for the purpose of paragraph 98(5)(g), be deemed not to have disposed of the property as a consequence of the taxpayer’s death,
(ii) the child shall be deemed to have acquired the property at the time of the death at a cost equal to the cost to the taxpayer of the interest, and
(iii) each amount added or deducted in computing the adjusted cost base to the taxpayer of the property shall be deemed to be required by subsection 53(1) or 53(2) to be added or deducted, as the case may be, in computing its adjusted cost base to the child,
except that, where the taxpayer’s legal representative so elects in the taxpayer’s return of income under this Part for the year in which the taxpayer died, paragraph 70(9.2)(c) does not apply and paragraph 70(9.2)(b) shall be read as follows:
“70(9.2)(b) the taxpayer shall be deemed to have, immediately before the taxpayer’s death, disposed of the property and received proceeds of disposition therefor equal to such amount as the legal representative elects in the taxpayer’s return of income under this Part for the year in which the taxpayer died, not greater than the greater of nor less than the lesser of
(i) its fair market value immediately before the death, and
(ii) its adjusted cost base to the taxpayer immediately before the death,
and the child shall be deemed to have acquired the property at the time of the death at a cost equal to those proceeds, except that for the purpose of this paragraph, where the elected amount exceeds the greater of the amounts determined under subparagraphs 70(9.2)(b)(i) and 70(9.2)(b)(ii), it shall be deemed to be equal to the greater thereof, and where the elected amount is less than the lesser of the amounts determined under subparagraphs 70(9.2)(b)(i) and 70(9.2)(b)(ii), it shall be deemed to be equal to the lesser thereof, and”.
Marginal note:Transfer of family farm corporation or partnership from trust to children of settlor
(9.3) Where property of a taxpayer has been transferred or distributed to a trust described in subsection (6) or 73(1) (as that subsection applied to transfers before 2000) or a trust to which subparagraph 73(1.01)(c)(i) applies and the property was,
(a) immediately before the transfer or distribution, a share of the capital stock of a family farm corporation of the taxpayer or an interest in a family farm partnership of the taxpayer, and
(b) immediately before the death of the taxpayer’s spouse or common-law partner who was a beneficiary under the trust,
(i) a share in the capital stock of a Canadian corporation that would be a share in the capital stock of a family farm corporation if paragraph (a) of the definition share of the capital stock of a family farm corporation in subsection (10) were read without the words “in which the person or a spouse, common-law partner, child or parent of the person was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot)”, or
(ii) an interest in a partnership that carried on the business of farming in Canada in which it used all or substantially all of its property,
and has, at any time after April 10, 1978, on the death of the spouse or common-law partner and as a consequence thereof, been transferred or distributed to and become vested indefeasibly in a child of the taxpayer who was resident in Canada immediately before the death of the spouse or common- law partner, the following rules apply:
(c) subsection 104(4) does not apply to the trust in respect of the property,
(d) where the property is a share of the capital stock of a family farm corporation, the trust shall be deemed to have disposed of the share immediately before the death of the spouse or common-law partner and to have received proceeds of disposition therefor equal to its adjusted cost base to the trust immediately before the death of the spouse or common-law partner, and the child shall be deemed to have acquired the property for an amount equal to those proceeds, and
(e) where the property is an interest in a family farm partnership (other than an interest in a partnership to which subsection 100(3) applies),
(i) the trust shall, except for the purposes of paragraph 98(5)(g), be deemed not to have disposed of the property as a consequence of the death of the spouse or common-law partner,
(ii) the child shall be deemed to have acquired the property for an amount equal to the cost thereof to the trust, and
(iii) each amount added or deducted in computing the adjusted cost base to the trust of the property shall be deemed to be required by subsection 53(1) or 53(2) to be added or deducted, as the case may be, in computing the adjusted cost base to the child of the property,
except that, where the trust so elects in its return of income under this Part for its taxation year in which the spouse or common-law partner died, paragraph 70(9.3)(e) shall not apply and paragraph 70(9.3)(d) shall be read as follows:
“70(9.3)(d) the trust shall be deemed to have disposed of the property immediately before the death of the spouse or common-law partner and to have received proceeds of disposition therefor equal to such amount as the trust elects, not greater than the greater of or less than the lesser of
(i) the fair market value of the property immediately before the death of the spouse or common-law partner, and
(ii) the adjusted cost base to the trust of the property immediately before the death of the spouse or common-law partner,
and the child shall be deemed to have acquired the property for an amount equal to those proceeds, except that for the purposes of this paragraph, where the elected amount exceeds the greater of the amounts determined under subparagraphs 70(9.3)(d)(i) and 70(9.3)(d)(ii), it shall be deemed to be equal to the greater thereof, and where the elected amount is less than the lesser of the amounts determined under those subparagraphs, it shall be deemed to be equal to the lesser thereof,”.
Marginal note:Transfer to parent
(9.6) Where
(a) any property has been acquired by a taxpayer in circumstances where any of subsections 70(9), 70(9.1), 70(9.2), 70(9.3) and 73(3) and 73(4) applied,
(b) as a consequence of the death of the taxpayer after 1983 the property has been transferred or distributed to a parent of the taxpayer, and
(c) the taxpayer’s legal representative has so elected in the taxpayer’s return of income under this Part for the year in which the taxpayer died,
subsection 70(9) or 70(9.2), as the case may be, shall apply in respect of the transfer or distribution as if the references therein to “child” were read as references to “parent”.
Marginal note:Leased farm property
(9.8) For the purposes of subsections 70(9) and 14(1), paragraph 20(1)(b), subsection 73(3) and paragraph (d) of the definition qualified farm property in subsection 110.6(1), where at any time any property of the taxpayer was used by
(a) a corporation a share of the capital stock of which is a share of the capital stock of a family farm corporation of the taxpayer, the taxpayer’s spouse or common-law partner or any of the taxpayer’s children, or
(b) a partnership an interest in which is an interest in a family farm partnership of the taxpayer, the taxpayer’s spouse or common-law partner or any of the taxpayer’s children
in the course of carrying on the business of farming in Canada, the property shall be deemed to have been used at that time by the taxpayer in the business of farming.
Marginal note:Definitions
(10) In this section,
child
enfant
child of a taxpayer includes
(a) a child of the taxpayer’s child, (b) a child of the taxpayer’s child’s child, and
(c) a person who, at any time before the person attained the age of 19 years, was wholly dependent on the taxpayer for support and of whom the taxpayer had, at that time, in law or in fact, the custody and control; (enfant)
interest in a family farm partnership
participation dans une société de personnes agricole familiale
interest in a family farm partnership of a person at a particular time means an interest owned by the person at that time in a partnership where, at that time, all or substantially all of the fair market value of the property of the partnership was attributable to
(a) property that has been used by
(i) the partnership,
(ii) the person,
(iii) a spouse, common-law partner, child or parent of the person, or
(iv) a corporation a share of the capital stock of which was a share of the capital stock of a family farm corporation of the person or of a spouse, common-law partner, child or parent of the person,
principally in the course of carrying on a farming business in Canada in which the person or a spouse, common-law partner, child or parent of the person was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot),
(b) shares of the capital stock or indebtedness of one or more corporations all or substantially all of the fair market value of the property of which was attributable to property described in paragraph (c), or
(c) properties described in paragraph (a) or (b). (participation dans une société de personnes agricole familiale)
share of the capital stock of a family farm corporation
action du capital-actions d’une société agricole familiale
share of the capital stock of a family farm corporation of a person at a particular time means a share of the capital stock of a corporation owned by the person at that time where, at that time, all or substantially all of the fair market value of the property owned by the corporation was attributable to
(a) property that has been used by
(i) the corporation or any other corporation, a share of the capital stock of which was a share of the capital stock of a family farm corporation of the person or of a spouse, common-law partner, child or parent of the person,
(i.1) a corporation controlled by a corporation referred to in subparagraph (i),
(ii) the person,
(iii) a spouse, common-law partner, child or parent of the person, or
(iv) a partnership, an interest in which was an interest in a family farm partnership of the person or of a spouse, common-law partner, child or parent of the person,
principally in the course of carrying on a farming business in Canada in which the person or a spouse, common-law partner, child or parent of the person was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot),
(b) shares of the capital stock or indebtedness of one or more corporations all or substantially all of the fair market value of the property of which was attributable to property described in paragraph (c), or
(c) properties described in paragraph (a) or (b). (action du capital-actions d’une société agricole familiale)
Marginal note:Application of s. 138(12)
(11) The definitions in subsection 138(12) apply to this section.
Marginal note:Value of NISA
(12) For the purpose of the definition share of the capital stock of a family farm corporation in subsection 10, the fair market value of a net income stabilization account shall be deemed to be nil.
Marginal note:Capital cost of certain depreciable property
(13) For the purposes of this section and, where a provision of this section (other than this subsection) applies, for the purposes of sections 13 and 20 (but not for the purposes of any regulation made for the purpose of paragraph 20(1)(a)),
(a) the capital cost to a taxpayer of depreciable property of a prescribed class disposed of immediately before the taxpayer’s death, or
(b) the capital cost to a trust, to which subsection 70(9.1) applies, of depreciable property of a prescribed class disposed of immediately before the death of the spouse or common-law partner described in that subsection,
shall, in respect of property that was not disposed of by the taxpayer or the trust before that time, be the amount that it would be if subsection 13(7) were read without reference to
(c) the expression “the lesser of” in paragraph 13(7)(b) and clause (d)(i)(A) thereof, and
(d) subparagraph 13(7)(b)(ii), subclause 13(7)(d)(i)(A)(II), clause 13(7)(d)(i)(B) and paragraph (e) thereof.
Marginal note:Order of disposal of depreciable property
(14) Where 2 or more depreciable properties of a prescribed class are disposed of at the same time as a consequence of a taxpayer’s death, this section and paragraph (a) of the definition cost amount in subsection 248(1) apply as if each property so disposed of were separately disposed of in the order designated by the taxpayer’s legal representative or, in the case of a trust described in subsection 70(9.1), by the trust and, where the taxpayer’s legal representative or the trust, as the case may be, does not designate an order, in the order designated by the Minister.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- R.S., 1985, c. 1 (5th Supp.), s. 70
- 1994, c. 7, Sch. II, s. 48, Sch. VIII, s. 28, c. 21, s. 33
- 1995, c. 3, s. 18
- 1996, c. 21, s. 14
- 1998, c. 19, s. 108
- 2000, c. 12, s. 142
- 2001, c. 17, ss. 52, 208(E)
- 2002, c. 9, s. 27
- Date modified: