Subsection 53(1) - Adjustments to cost base
Paragraph 53(1)(b)
Paragraph 53(1)(c)
See Also
Burman v. The Queen, 2003 DTC 1007 (TCC)
The failure of the taxpayer to draw salary from a company of which she was a shareholder did not represent a contribution of capital that could be...
Administrative Policy
26 May 2016 IFA Roundtable Q. 6, 2016-0642081C6 - German Organschafts
Under an “Organschaft,” a German parent (“Parentco”) and its German subsidiary (“Subco”) can enter into an agreement under which Subco...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 90 - Subsection 90(2) | profit transfer payments by German sub to its German parent deemed to be dividends under s. 90(2) | 319 |
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(a) - Subparagraph 95(2)(a)(ii) - Clause 95(2)(a)(ii)(B) | profit transfer payments made by a German sub to German parent are s. 90(2) dividends not within s. 95(2)(a)(ii)(B) afterr 2016 | 153 |
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) | loss compensation payment under Organschaft | 123 |
5 December 2003 External T.I. 2002-0165195
Canco is a corporation resident in Canada that has subsidiaries in the US and the UK. Canco has a US subsidiary ("CFA1"), which has US dollar...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) | 136 | |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(5) | 136 | |
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(g.1) | 78 | |
| Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(1) - Earnings | 63 | |
| Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(2) - Paragraph 5907(2)(f) | forgiveness gain did not relate to active business items | 123 |
92 C.R. - Q.28
Discussion of distinction between phrases "contribution of capital" and "contributed surplus"
The acquisition of par value shares at a price in...
10 January 1992 CGA Roundtable, Q. 19, 7-912224
A corporation converts a debt owed to one of its shareholders, with whom it does not deal at arm’s length, to shares when the corporation is in...
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|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(7) | 54 | |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) | 70 | |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(a) | FMV of debt rather than amount owing | 55 |
September 1991 Memorandum (Tax Window, No. 9, p. 7, ¶1444)
Where a corporation issues par value shares for cash in excess of their par value, the subscriber's ACB is computed by reference to the purchase...
88 C.R. - Q.36 (p. 53:49)
[A] transaction that otherwise increase the capital of a corporation in respect of that increase may result in a contribution of capital for the...
87 C.R. - Q.68 (p. 47:38)
To what extent would a contributionof capital to an insolvent corporation permit an increase in the cost of shares owned by the contributor under...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(a) | 32 |
IT-456R "Capital Property - Some Adjustments to Cost Base," para. 2
A contribution of capital occurs where a debt owing by a corporation to a shareholder is absolutely forgiven.
Articles
Tremblay, "Contributions to Capital - Cost Basis", Canadian Current Tax, October, 1987, p. 1
A court might decide that the fraction is not intended to result in an unfair denial of a portion of an eventual loss, and is merely intended to...
Paragraph 53(1)(e)
Subparagraph 53(1)(e)(i)
Administrative Policy
10 October 2014 APFF Roundtable Q. 22, 2014-0538161C6 - APFF Conference, Q. 22 - ACB of interests in a partnership
X Inc. and Y Inc. each hold "tracking units" in a limited partnership ("SENC AB") which, in turn, holds the units of two subsidiary LPs ("SENC A,"...
1 October 2013 External T.I. 2013-0491571E5 - Partial disposition of partnership interest - ACB
Where a partner disposes of some of its units of a partnership during the year, is there an ACB adjustment for the entire amount of the income...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 43 - Subsection 43(1) | disposition of some partnership units a part disposition | 150 |
9 March 2012 External T.I. 2011-0416611E5 - disposition under paragraph 38(a.3)
Since s. 53(1)(e)(i)(A) does not explicitly say that the Act is to be read without reference to s. 38(a.3), there is no authority for adding...
29 October 2002 External T.I. 2002-014633
When presented with a situation where a taxpayer retired from a partnership on September 30, 2001 and at December 31, 2001 had a residual interest...
1998 Ruling 980373
Where a limited partner leaves the partnership before the year end, so that s. 98.1(1)(b) deems the retired partner not to have disposed of its...
Income Tax Technical News, No. 5, 28 July 1995
For fiscal periods ending after 28 July 1995, the adjustments to the ACB of a partnership interest in respect of the income or loss of the...
27 May 1994 External T.I. 5-940728
Where an investment partnership provides that a partner who redeems his units partway through the year for their current fair market value shall...
7 June 1991 T.I. (Tax Window, No. 7, p. 9, ¶1366)
Where a partnership is wound-up under s. 98(5), the last fiscal period of the partnership will be considered to have ended immediately before the...
11 March 1991 T.I. (Tax Window, No. 1, p. 5, ¶1155)
Where a corporation which has withdrawn from a partnership has the right to receive the amount in its capital account over time plus interest...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 49 |
18 April 1990 T.I. (September 1990 Access Letter, ¶1425)
Where B disposes of its partnership interest to the other partner, A, with the result that the partnership ceases to exist, B's share of the...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) | 56 |
88 C.R. - Q.22
Where the accrued gain on the partnership assets is equal to the accrued gain on the partnership units, RC accepts that the gain which the...
Articles
Margaret D. Paproski, "Partnership Interests and Negative ACB", Business Vehicles, Vol. VI, No. 3, p. 257.
Peter Lee, "Dissolution of Partnership - Calculation of Adjusted Cost Base of Partnership Interest", Business Vehicles, Vol. V, No. 4, 1999, p. 273.
Rinfret, "A Review of the AEC Pipelines Limited Partnership", 1997 Corporate Management Tax Conference Report, c. 7
Discussion of Revenue Canada's policy on timing of adjustments to ACB of partnership interests.
Subparagraph 53(1)(e)(iii)
Administrative Policy
9 March 1992 T.I. (Tax Window, No. 17, p. 3, ¶1789)
Re consequences where the partnership is the beneficiary of a life insurance policy in one of the three individual partners; or where the deceased...
3 December 1991 T.I. (Tax Window, No. 15, p. 4, ¶1673)
Where all the partners of a partnership are corporations the partnership carries life insurance on the individuals who were the voting...
16 November 1990 T.I. (Tax Window, Prelim. No. 2, p. 8, ¶1052)
Where the partnership agreement provides for an income allocation to the retiring partner in the year of death equal to the life insurance...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1.1) | 64 |
84 C.R. - Q.25
Where the partnership agreement provides that net life insurance proceeds will be allocable solely to the deceased partner and will be used to pay...
Subparagraph 53(1)(e)(iv)
See Also
Mitchell v. The Queen, 96 DTC o (TCC)
The guarantee by the partnership of various obligations of a limited partnership of which he was a member did not form part of the adjusted cost...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(14) | 47 | |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) | set-off | 126 |
Administrative Policy
27 June 2016 External T.I. 2016-0637341E5 F - Partnerships - Negative ACB
Rather than making current distributions of its cash flow to a limited partner, those sums are lent by the LP to the limited partner – then at...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(2) - Paragraph 53(2)(c) - Subparagraph 53(2)(c)(v) | loan advances to a limited partner may give rise to immediate s. 53(2)(c)(v) grind | 261 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.1) | loans by LP to partner potentially gave rise to negative ACB gain | 168 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.13) | retention of partnership profits not a contribution | 150 |
2000 Ruling 2000-002842
On a winding-up of a partnership, "for the purposes of determining the ACB to each Partner of that Partner's interest in the Partnership for the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(iv) | 38 | |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate | 43 | |
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) | 0% undivided interest | 38 |
2000 Ruling 2000-002842
In determining the ACB to a partner of its interest in a partnership for the purposes of s. 98(3), that ACB will be increased by liabilities of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(iv) | 82 | |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate | 43 | |
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) | 0% undivided interest | 38 |
29 June 2000 External T.I. 1999-001149
Where a debt owing to a partner is converted into capital, the amount of the "contribution" and, therefore, the increase in ACB of the partner's...
4 June 1992 T.I. 920847 (December 1992 Access Letter, p. 34, ¶C245-044)
Where, in connection the dissolution of a partnership under s. 98(3) and the recontribution of the property to a new partnership under s. 97(2), a...
89 C.R. - Q.35
Where one of the partners of a two-person partnership retires or dies, the continuing partner who has assumed the liabilities of the partnership...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) | 26 |
89 C.M.TC - Q.8
where a limited partner has assumed partnership debt as part of the consideration given for the acquisition of his partnership interest, the debt...
IT-338R "Partnership Interest - Effects on Adjusted Cost Base Resulting from the Admission or Retirement of a Partner"
Where on a dissolution of a partnership to which s. 98(5) applies the continuing partner has assumed the liabilities of the partnership, that...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) | 10 |
IT-471R "Merger of Partnerships"
The ACB of each partner's interest in a partnership immediately before a distribution of undivided interest pursuant to s. 98(3) will include the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) | 0 | |
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) | 0 |
Subparagraph 53(1)(e)(viii)
Administrative Policy
Income Tax Technical News, No. 12 under "Adjusted Cost Base of Partnership Interest - Subparagraph 53(1)(e)(viii)
"Amounts referred in subparagraph 53(1)(e)(viii) will not increase the ACB of the partner's interest in the partnership until after the end of the...
8 September 1997 T.I. 964202
In considering a situation where all the assets of a resource partnership are distributed on a pro-rata basis to the partners without an election...
94 C.P.T.J. - Q. 4
Re whether there is a timely adjustment to the partners' ACB where there is a pro-rata distribution of resource properties of a partnership...
Paragraph 53(1)(f.1)
Administrative Policy
31 March 2016 External T.I. 2014-0524391E5 F - Debt parking
A corporation disposes of debt of a subsidiary at a substantial loss to another corporation which is related to it (and the subsidiary) by virtue...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(8) | debt parking rule can apply even if no capital loss is recognized | 154 |
12 September 1990 T.I. (Tax Window, Prelim. No. 1, p. 10, ¶1016)
Where a non-interest-bearing debt is transferred at a loss between two corporations controlled by the same person, the loss will be added to the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) | 67 |
16 February 1990 T.I. (July 1990 Access Letter, ¶1320)
Where a wholly-owned subsidiary transfer shares, which are capital property to it, at a loss to its parent which thereafter holds the shares as...
2014 Ruling 2013-0514191R3 - Debt restructuring, forgiveness and winding-up
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Principal Amount | non-application of s. 39(2) to exchange of U.S.-dollar notes | 142 |
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) | s. 51.1 exchange of U.S.-dollar notes | 142 |
| Tax Topics - Income Tax Act - Section 51.1 | s. 51.1 exchange of U.S.-dollar notes | 142 |
| Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(4) | s. 51.1 exchange of U.S.-dollar notes and ATR-66 debt slide | 430 |
Paragraph 53(1)(h)
Administrative Policy
88 C.R. - Q.68
Where money borrowed to buy land cannot be related to particular parcels, the interest should generally be allocated to all land held during the...
Subsection 53(2) - Amounts to be deducted
Paragraph 53(2)(b)
Administrative Policy
2003 Ruling 2002-017470
A great-grandchild foreign subsidiary ("Dco") of a Canadian public corporation ("Aco") and a great-grandchild foreign subsidiary of Aco ("Fco")...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | 132 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | 162 |
Paragraph 53(2)(c)
Administrative Policy
10 January 2005 External T.I. 2004-007593
An amount of foreign non-business income tax allocated by a partnership to a partner and deducted by the partner under s. 20(12) will not result...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(12) | no partnership ACB reduction for partner s. 20(12) deduction | 190 |
Subparagraph 53(2)(c)(i)
Administrative Policy
Income Tax Technical News, No. 5, 28 July 1995
For fiscal periods ending after 28 July 1995, the adjustments to the ACB of a partnership interest in respect of the income or loss of the...
Subparagraph 53(2)(c)(v)
Cases
Tesainer v. Canada, 2009 DTC 5749, 2009 FCA 33
Damages received by the taxpayers who were limited partners of a former partnership ("Fenix") from lawyers, as a result of their claim (along with...
Stursberg v. The Queen, 93 DTC 5271 (FCA)
The other partners of the partnership consented to a reduction in the taxpayer's partnership interest from 40% to 15%, and to an increase in the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | 112 |
See Also
Tesainer v. The Queen, 2008 DTC 2807, 2008 TCC 101
Damages received by the taxpayer who, along with other partners of a real estate partnership, received damages from the law firm which had handled...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 70 |
Administrative Policy
27 June 2016 External T.I. 2016-0637341E5 F - Partnerships - Negative ACB
Rather than making current distributions of its cash flow to a limited partner, those sums are lent by the LP to the limited partner – then at...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.1) | loans by LP to partner potentially gave rise to negative ACB gain | 168 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.13) | retention of partnership profits not a contribution | 150 |
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(iv) | assumption of loan can be contribution, but not retained profits | 177 |
11 April 1995 T.I. 950865 (C.T.O. "Partnership At-Risk Rules Re Loan")
Prior to the enactment of ss.40(3.1) and (3.2), it had been agreed that excess revenues generated by a limited partnership would be distributed to...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(2.2) - Paragraph 96(2.2)(d) | 160 |
19 April 1990 T.I. (September 1990 Access Letter, ¶1414)
Where the Canadian partners of a U.S. partnership enter into currency feature contracts to close on the anticipated date of distribution of income...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Foreign Exchange | 98 |
Paragraph 53(2)(h)
Articles
Goodman, "The Tax Treatment of Commercial Trusts", 1989 Canadian Tax Journal, July-August issue, p. 1053
Subparagraph 53(2)(h)(i.1)
Administrative Policy
2010 Ruling 2009-0330901R3 - Reorganization of XXXXXXXXXX
Background
Subco, which is held by Parent (also a Canadian corporation), owns all the units of Trust 1 which, in turn, holds all the units of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.1) | recognition of capital loss on distribution of capital gain through redemption of most of trust units by corporate unitholder | 86 |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Forgiven Amount | no forgiven amount on transfer by unit trust to its parent of debt owing by parent | 36 |
4 November 2008 External T.I. 2008-0264181E5 - Income recognition and ACB - trust units
Where a corporation with an October 31 year end receives income distributions from an income trust in February and March 2007 and sells its units...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(1) - Paragraph 39(1)(a) | 154 |
2007 Ruling 2007-0245281R3
This contemplated the winding-up of an income fund (the "Fund") following its acquisition by a "Bidco" in which the Fund sold its assets (mostly...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.3) | capital loss on redemption of trust units following distribution of most of its assets including as capital gains distribution | 110 |
2007 Ruling 2007-0237011R3 - XXXXXXXXXX - foreign buy-out of Canadian MFT
Beginning structure
The Fund, a listed mutual fund trust held units and debt of Trust, which held all the units (being B units) of a Canadian...
11 January 1996 T.I. 952152 (C.T.O. "Effect of Net Capital Loss on Adjusted Costs Base on Trust Units")
Where an s. 104(13.2) designation is made in order that net capital losses of prior taxation years of a unit trust are used to shelter the taxable...
Paragraph 53(2)(k)
Administrative Policy
11 October 1991 T.I. (Tax Window, No. 11, p. 18, ¶1517)
Incentives under the Employee Share Ownership Act (Ontario) reduced the adjusted cost base of the shares purchased by the employee.
Subsection 53(2.1) - Election
Administrative Policy
1993 A.P.F.F. Round Table, Q. 21
The election under s. 53(2.1) may not be made in respect of eligible capital property.
IT-273R2, "Government Assistance - General Comments," para. 12
the election should be made by means of a signed letter accompanying the applicable tax return.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(7.4) | 16 |