Income Tax Regulations

• 1703 (1) Where a taxpayer is an individual and his income for the taxation year includes income from a business the fiscal period of which does not coincide with the calendar year, in respect of depreciable properties acquired for the purpose of gaining or producing income from the business, a reference in this Part to

  • (a) “the taxation year” shall be deemed to be a reference to the fiscal period of the business; and

  • (b) “the end of the taxation year” shall be deemed to be a reference to the end of the fiscal period of the business.

Depreciable Cost

• (2) In this Part, depreciable cost to a taxpayer of property means, except as otherwise provided, the actual cost of the property to the taxpayer or the amount at which he is deemed under subsection 13(7) of the Act to have acquired the property, as the case may be.

• (3) Notwithstanding the other provisions of this section, in the case of property the cost of which to a partnership has been determined under paragraph 20(5)(a) of the Income Tax Application Rules, the depreciable cost to the taxpayer of the property for the purposes of this Part shall be deemed to be an amount equal to the cost to the partnership of the particular property as determined under that paragraph.

Personal Use of Property

• (4) Where a taxpayer has, in a taxation year, regularly used a property in part for the purpose of gaining or producing income from farming or fishing and in part for a purpose other than gaining or producing income, the depreciable cost to the taxpayer of the property for the purposes of this Part is the proportion of the amount that would otherwise be the depreciable cost that the use regularly made of the property for the purpose of gaining or producing income from farming or fishing is of the whole use regularly made of the property.

Grants, Subsidies or Other Government Assistance

• (5) Where a taxpayer has received or is entitled to receive a grant, subsidy or other assistance from a government, municipality or other public authority in respect of or for the acquisition of property, the depreciable cost to the taxpayer of the property for the purposes of this Part is the amount that would otherwise be the depreciable cost minus the amount of the grant, subsidy or other assistance.

Transactions Not at Arm’s Length

• (6) Where property did belong to a person (in this subsection referred to as the “original owner”) and has, by one or more transactions between persons not dealing at arm’s length, become vested in a taxpayer, the depreciable cost to the taxpayer of the property for the purposes of this part is the lesser of

  • (a) the actual capital cost of the property to the taxpayer; and

  • (b) the amount by which the actual capital cost of the property to the original owner exceeds the aggregate of

    • (i) the total amount of depreciation for the property that, since the commencement of 1917, has been or should have been taken into account in accordance with the practice of the Department of National Revenue in ascertaining the income of the original owner and all intervening owners for the purposes of the Income War Tax Act or in ascertaining a loss for a year when there was no income under that Act,

    • (ii) any accumulated depreciation reserves that the original owner or an intervening owner had for the property at the commencement of 1917 and that were recognized by the Minister for the purposes of the Income War Tax Act, and

    • (iii) the aggregate of the deductions, if any, allowed under this Part in respect of the property to the original owner and all intervening owners.

Property Acquired From a Parent

• (7) Notwithstanding subsection (6), where depreciable property has been acquired by a taxpayer under such circumstances that the provisions of section 85H of the Act as it read in its application to the 1971 and prior taxation years are applicable for the determination of the capital cost of the property, the depreciable cost to the taxpayer of the property for the purposes of this Part is the capital cost as determined under that section.

Property Acquired by Gift

• (8) Subsection (6) does not apply in respect of property which a taxpayer has acquired by gift.