,canada ,cu/oms                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act
  ,m1n+ ( ,eligi# ,capital ,exp5diture
,numb]3 ,,it-#adc;,r#c
,date3 ,augu/ #bi1 #bjjb
,ref];e3 ,! def9i;n ( 8eligi# capital
  exp5diture0 9 subsec;n #ad7#e7 7al
  sec;ns #fh & #fi1 ! def9i;n ( 8eligi#
  capital prop]ty0 9 sec;n #ed1 !
  def9i;n ( 8cumulative eligi# capital0
  9 subsec;n #ad7#e71 & p>agraphs
  #ac7#g.e77b71 7c7 & 7d7 (! ,9come ,tax
  ,act2 & class #ad ( ,s*$ule ,,ii 6!
  ,9come ,tax ,regul,ns7

  ,at ! ,canada ,cu/oms & ,rev5ue ,ag5cy
7,,ccra71 we issue 9come tax 9t]pret,n
bullet9s 7,,it's7 9 ord] 6provide
te*nical 9t]pret,ns & posi;ns reg>d+
c]ta9 provi.ns 3ta9$ 9 9come tax law4
,due 6_! te*nical nature1 ,,it's >e   #a
             ,,it-#adc;,r#c          a#a
us$ prim>ily 0\r /aff1 tax speciali/s1 &
o!r 9dividuals :o h an 9t]e/ 9 tax
matt]s4 ,= ^? r1d]s :o pref] a less
te*nical explan,n (! law1 we (f] o!r
public,ns1 s* z tax guides & pamphlets4
  ,:ile ! -;ts 9 a "picul> p>agraph 9 an
,,it may relate 6provi.ns (! law 9 =ce
at ! "t !y 7 made1 s* -;ts >e n a
sub/itute =! law4 ,! r1d] %d1 "!=e1
3sid] s* -;ts 9 li<t (! relevant
provi.ns (! law 9 =ce =! "picul> tax,n
ye> 2+ 3sid]$1 tak+ 96a3.t ! e6ect ( any
relevant am5d;ts 6^? provi.ns or
relevant c\rt deci.ns o3urr+ af ! date
on : ! -;ts 7 made4
  ,subject 6! abv1 an 9t]pret,n or
posi;n 3ta9$ 9 an ,,it g5],y applies z
(! date on : x 0 publi%$1 un.s o!rwise
specifi$4 ,if "! is a subsequ5t *ange 9
t 9t]pret,n or posi;n &! *ange is
b5eficial 6taxpay]s1 x is usu,y e6ective
= future assess;ts & reassess;ts4 ,if1
on ! o!r h&1 ! *ange is n fav\ra#
6taxpay]s1 x w norm,y 2 e6ective =!   #b
             ,,it-#adc;,r#c          b#a
curr5t & subsequ5t tax,n ye>s or =
transac;ns 5t]$ 96af ! date on : ! *ange
is publi%$4
  ,if y h any -;ts reg>d+ matt]s 4cuss$
9 an ,,it1 pl1se s5d !m to3

  ,manag]1 ,te*nical ,public,ns &
    ,projects ,sec;n
  ,9come ,tax ,rul+s ,directorate
  ,policy & ,legisl,n ,bran*
  ,canada ,cu/oms & ,rev5ue ,ag5cy
  ,ottawa ,,on ,k#a;,a #j;,l#e

  ,mo/ ( \r public,ns >e availa# on \r
,web site at3 _+www.ccra.gc.ca_:

                 ,3t5ts
    
,applic,n
,summ>y
,4cus.n & ,9t]pret,n
  ,9troduc;n 7p>agraphs #a-b7
  ,specific ,exclu.ns 7p>agraphs #c-d7
  ,gdwill 7p>agraphs #e-g7            #c
             ,,it-#adc;,r#c          c#a
  ,cu/om] ,li/s & ,l$g] ,a3.ts 7p>agraph
    #h7
  ,tradem>ks1 ,pat5ts1 ,fran*ises &
    ,lic;es 9 ,mortma9 7p>agraphs #i-ab7
  ,exp5ses ( ,9corpor,n1 ,reorganiz,n or
    ,amalgam,n 7p>agraphs #ac-ad7
  ,f9es1 ,p5alties & ,legal ,damages
    7p>agraphs #ae-af7
  ,political ,3tribu;ns 7p>agraph #ag7
  ,exp5ses ( ,issu+ ,%>es or ,borr[+
    ,m"oy 7p>agraph #ah7
  ,brok]age ,fees on ,pur*ase ( ,%>es1
    ,deb5tures1 etc4 7p>agraph #ai7
  ,appraisal ,co/s 7p>agraphs #bj-bb7
  ,legal & ,a3.t+ ,fees 7p>agraph #bc7
  ,milk ,quotas & ,o!r ,gov]n;t ,"rs or
    ,lic;es 7p>agraph #bd7
  ,/ock ,ex*ange ,s1ts & ,memb]%ips
    7p>agraphs #be-bf7
  ,9iti,n or ,admis.n ,fees 7p>agraphs
    #bg-bh7
  ,ease;ts 7p>agraph #bi7
  
                                      #d
             ,,it-#adc;,r#c          d#a
  ,capital ,exp5ditures 9 ,respect (
    ,ano!r ,p]son's ,prop]ty 7p>agraph
    #cj7
  ,=feit$ ,deposits 7p>agraph #ca7
  ,non-,competi;n ,pay;t 7p>agraph #cb7
  ,o!r ,bullet9s 7p>agraph #cc7
,explan,n ( ,*anges

               ,applic,n
    
  ,? bullet9 c.els & replaces
,,it-#adc;,r#b dat$ ,augu/ #aj1 #aihc1 z
revis$ 0,special ,rel1se dat$ ,octob]
#cj1 #aiib4

                ,summ>y
    
  ,an eligi# capital exp5diture 9
respect (a busi;s is1 9 ! simple/ t]ms1
a capital exp5diture 7i4e41 an
exp5diture t results 9 an 5dur+ b5efit7
t does n -e )9 any (! capital co/ all[.e
classes b r goes 96an eligi# capital
prop]ty pool4 ,a p]c5tage (! bal.e    #e
             ,,it-#adc;,r#c           #b
(! pool at ! 5d (! ye> may 2 claim$ z a
deduc;n =! ye>4
  ,an 8eligi# capital exp5diture0 is a
def9$ t]m 9 ! ,9come ,tax ,act4 ,! major
"p (! def9i;n li/s exclu.ns1 i4e41
exp5ditures t d n qualify z an eligi#
capital exp5diture4 ,"o (! mo/ funda;tal
( ^! exclu.ns is ! co/ ( any tangi#
prop]ty4 ,h["e1 n e 9tangi# prop]ty
qualifies z an eligi# capital
exp5diture4
  ,? bullet9 cov]s ! details (! def9i;n
( an 8eligi# capital exp5diture0 & !n
4cusses a numb] ( specific types (
exp5ditures = purposes ( det]m9+ :e!r or
n !y fall )9 t def9i;n4 ,=! mo/ "p1 ?
4cus.n 3ta9s g5]al posi;ns ) respect 6?
"q1 & does n d1l ) excep;nal cases4





                                      #f
          ,4cus.n & ,9t]pret,n       a#b
    
               ,9troduc;n
    
#a4 ,_m exp5ditures -monly call$
  8no?+s01 ( : ! co/ ( gdwill is ! mo/
  nota#1 7 n deducti# f 9come "u !
  provi.ns (! pre-#aigb ,act ei z an
  exp5se or 0way ( capital co/ all[.es4
  ,c]ta9 8no?+s0 >e giv5 special tr1t;t
  9 ! curr5t ,act z 8eligi# capital
  exp5ditures04 ,a 4cus.n ( ? special
  tr1t;t is 3ta9$ 9 ! curr5t v].n (
  ,,it-#abc1 ,transac;ns ,9volv+ ,eligi#
  ,capital ,prop]ty4
#b4 ,an 8eligi# capital exp5diture01 :
  is def9$ 9 subsec;n #ad7#e71 may 2
  broadly describ$ z an \tlay or exp5se
  made or 9curr$ 0a taxpay]3
  7a7 9 respect (a busi;s2
  7b7 z a result (a transac;n o3urr+ af
    #aiga2
  7c7 on a3.t ( capital2 &
  7d7 =! purpose ( ga9+ or produc+ 9come
    f ! busi;s 7:e!r or n 9come f !   #g
             ,,it-#adc;,r#c          b#b
    busi;s 0 actu,y produc$ 0s* \tlay or
    exp5se74
  ,": a taxpay] c>ries on m ?an "o
  busi;s1 ! eligi# capital exp5diture
  >is+ f an \tlay or exp5se w =m "p (!
  8cumulative eligi# capital01 z def9$ 9
  subsec;n #ad7#e71 only ( t busi;s 6: x
  relates4 ,an \tlay or exp5se made or
  9curr$ ) respect 69come f prop]ty
  7e4g4 non-busi;s r5tal or 9ve/;t
  9come7 or ) respect 6a capital ga9 or
  a capital loss1 w n 2 an eligi#
  capital exp5diture s9ce x does n meet
  ! purpose /at$ 9 7d7 abv4 ,_m
  exp5ditures1 h["e1 c meet ^! broad
  require;ts b / w fall )9 ! specific
  exclu.ns f.d 9 p>agraphs 7a7 to 7f7 (!
  def9i;n ( 8eligi# capital exp5diture01
  : >e d1lt ) 9 p>agraph #c4

          ,specific ,exclu.ns
    
#c4 ,! foll[+ >e n eligi# capital
  exp5ditures3                        #h
             ,,it-#adc;,r#c          c#b
  7a7 am.ts :1 9 ! -put,n ( 9come >e3
    7;i7 n deducti# 9 ! curr5t p]iod 2c
      ( "s quantum re/ric;n 7e4g41 !
      por;n1 if any1 ( cumulative
      ,canadian explor,n exp5se n
      deducti# 9 ! ye> "u p>agraph
      #ff.a7#b77a7 2c (! limit,n 3ta9$ 9
      p>agraph #ff.a7#b77b771
    7;ii7 n deducti# 0virtue (a specific
      provi.n 9 ! ,act1 o!r ?an p>agraph
      #ah7#a77b71 7e4g4 a p]sonal or
      liv+ exp5se z 3templat$ 0p>agraph
      #ah7#a77h771 or
    7;iii7 specific,y deducti# f 9come
      0virtue ( any provi.n (! ,act
      7e4g4 exp5ditures = : a deduc;n is
      p]mitt$ 0virtue ( sec;n #bj72
  7b7 all or any "p (! co/ (3
    7;i7 tangi# prop]ty1 9clud+ all
      tangi# deprecia# prop]ty 7e4g4
      build+s7 & non-deprecia# tangi#
      capital prop]ty 7e4g4 l&71
    7;ii7 9tangi# prop]ty t is deprecia#
      prop]ty 7= examples ( s*        #i
             ,,it-#adc;,r#c          d#b
      prop]ty1 see p>agraphs #aa &
      p>agraph #bi1 or see 9tangi#
      prop]ty 6: p>agraph #ac7#g.e77c7
      applies71
    7;iii7 any o!r 9tangi# b non-
      deprecia# prop]ty : is deducti#1
      or wd 2 deducti#1 if ! relat$
      9come 7 su6ici5tly l>ge 7e4g4 a "r
      [n$ 0a m9+ -pany t is a ,canadian
      res\rce prop]ty t is deducti# "u
      subsec;n #ff.b7#b771 &
    7;iv7 an 9t]e/ in1 or a "r 6acquire1
      any prop]ty 9clud$ 9 7b77;i71
      7;ii7 & 7;iii7 abv2
  7c7 an am.t pd or paya# 6any cr$itor
    on any debt or on ! redemp;n1
    c.ell,n or pur*ase ( any bond or
    deb5ture 7e4g4 pay;ts made 9 3nec;n
    )! redemp;n ( bonds or deb5tures 2f
    matur;y & al any excess ( redemp;n
    price ov] issue price ": ! bonds 7
    issu$ at a 4c.t & redeem$ at p>
    value or issu$ at p> value & redeem$
    at a premium74 ,a bonus or       #aj
             ,,it-#adc;,r#c          e#b
    premium pd 0a mortgagor 6a mortgagee
    9 3sid],n =! mortgagee's 3s5t 6an
    e>ly redemp;n (! mortgage is 3sid]$
    63/itute an am.t pd 6a cr$itor on
    a3.t or 9 lieu ( pay;t ( any debt &
    3sequ5tly ? premium or bonus _c
    qualify z an 8eligi# capital
    exp5diture02
  7d7 am.ts pd or paya# 0a corpor,n 6a
    p]son 9 8 or h] capac;y z a
    %>ehold]4 ,! am.ts ref]r$ 60?
    exclu.n >e limit$ 6divid5d pay;ts1
    4tribu;ns on ! reduc;n1 9 any mann]
    :at"e1 ( %>e capital & any pay;t or
    appropri,n ( prop]ty ref]r$ 6in
    subsec;n #ae7#a72
--------------------------------------#c
  7e7 ! co/ (1 or any "p (! co/ (1 an
    9t]e/ 9 ei a tru/ or "pn]%ip1 a %>e1
    bond1 deb5ture1 mortgage1 hypo!c>y
    claim1 note1 bill or o!r simil>
    prop]ty or an 9t]e/ in1 or "r
    6acquire1 any s* prop]ty2 &
                                     #aa
             ,,it-#adc;,r#c          a#c
  7f7 exp5ditures made 6produce 8exempt
    9come0 z def9$ 9 subsec;n #bdh7#a74
#d4 ,an exp5diture m/ meet ! 3di;ns (
  p>agraph #b & n 2 exclud$ 0p>agraph #c
  2f x qualifies z an eligi# capital
  exp5diture4 ,! applic,n ( ^! te/s
  6specific exp5ditures is \tl9$ 9 !
  foll[+ p>agraphs4

                ,gdwill
    
#e4 ,! ,c\rts h ref]r$ 6s"eal def9i;ns (
  gdwill1 two ( : >e3
  7a7 8,gdwill is ! :ole advantage1
    :at"e x may be1 (! reput,n & 3nec;n
    (! firm : may h be5 built up 0ye>s (
    h"o/ "w or ga9$ 0lavi% exp5ditures (
    m"oy04
  7b7 ,x is 8! privilege1 grant$ 0!
    sell] (a busi;s 6! pur*as]1 ( trad+
    z 8 recogniz$ su3essor2 ! posses.n
    (a r1dy-=m$ 83nec;n0 ( cu/om]s1
    3sid]$ z an ele;t 9 ! salea# value
    (a busi;s1 a4i;nal 6! value (!   #ab
             ,,it-#adc;,r#c          b#c
    plant1 /ock-in-trade1 book debts1
    etc404
#f4 ,gdwill _c 2 divorc$ f ! busi;s xf4
  ,x foll[s ! busi;s & may 2 sold )!
  busi;s1 b x _c 2 sold sep>ately4
  ,g5],y1 gdwill >ises z a recogniza#
  asset only :5 a busi;s is acquir$ at a
  price 9 excess (! value1 z a go+ 3c]n1
  ( xs net assets4
#g4 ,": gdwill1 z a recogniza# asset1 is
  acquir$ 0! pur*as] (a busi;s 9 !
  circum/.es describ$ 9 p>agraph #f1 !
  3sid],n giv5 =! gdwill1 z well z any
  legal & a3.t+ fees t c 2 directly
  associat$ )! pur*ase (! gdwill1 w
  qualify z an eligi# capital
  exp5diture4 ,if ! por;n (! total
  3sid],n =! busi;s t is allocat$ 6!
  gdwill is unr1sona#1 or if ! gdwill
  has a value : ! v5dor & pur*as] h n
  specifi$1 ! ,canada ,cu/oms & ,rev5ue
  ,ag5cy 7,,ccra7 c apply ! provi.ns (
  sec;n #fh 6deem :at may r1sonably 2
  reg>d$ z ! am.t =! gdwill4 ,?      #ac
             ,,it-#adc;,r#c          c#c
  am.t wd !n 2 appli$ uni=mly 6bo? !
  v5dor &! pur*as]4 ,if sec;n #fh is
  appli$ = ? purpose1 ! ,,ccra w take
  96a3.t all ! relevant facts &
  circum/.es (! "picul> case 7see !
  f9d+s (! ,f$]al ,c\rt ( ,app1l 9
  ,george ,gold5 v4 ,! ,que51 #hc ,,dtc
  #each1 7#aihc7 ,c4,t4,c4 #aab1 : 7
  upheld 0! ,supreme ,c\rt ( ,canada--
  #hf ,,dtc #fach1 7#aihf7 #a ,c4,t4,c4
  #bgd74 ,s* relevant facts & circum/.es
  9clude ! relative posi;ns (! v5dor &!
  pur*as] &! relative fair m>ket values
  ( all ! assets (! busi;s t >e acquir$4
  ,": ! v5dor & pur*as] >e d1l+ at >m's
  l5g?1 _! agree;t z 6! alloc,n (! total
  price =! busi;s am;g/ xs v>i\s assets
  is giv5 3sid]a# wei<t z evid;e (!
  r1sona#;s (! am.t s allocat$ 6!
  gdwill4 ,! r1sona#;s (! alloc,n is
  fur!r support$ ": "! is evid;e t x has
  result$ f h>d b>ga9+ 2t ! "pies4 ,9 a
  non->m's l5g? transac;n1 sec;n #fh cd
  apply ": ! total pur*ase price     #ad
             ,,it-#adc;,r#c          d#c
  (! assets (! busi;s equals ! total (
  _! fair m>ket values b ! alloc,n ( t
  total pur*ase price am;g/ ^? assets1
  9clud+ ! gdwill1 is n 3sid]$ 6be
  r1sona#4 ,h["e1 ": ! total pur*ase
  price (! busi;s assets 9 a non->m's
  l5g? transac;n does n equal ! total (
  _! fair m>ket values1 ! provi.ns (
  sec;n #fi w apply4

      ,cu/om] ,li/s & ,l$g] ,a3.ts
    
#h4 ,": a taxpay] acquires li/s or l$g]
  a3.ts ( cli5ts1 cu/om]s or subscrib]s1
  x is nec 6det]m9e :e!r ! co/ (
  acquisi;n is a capital exp5diture or
  an exp5se (! ye>4 ,! curr5t v].n (
  ,,it-#ahg1 ,cu/om] ,li/s & ,l$g]
  ,a3.ts1 describes ! g5]al guidel9es
  applica# 6? det]m9,n4 ,g5],y1 ! co/ (a
  li/ br++ an 5dur+ b5efit 6! busi;s (!
  pur*as] is a capital \tlay & is an
  eligi# capital exp5diture4
                                     #ae
          ,tradem>ks1 ,pat5ts1       e#c
         ,fran*ises & ,lic;es 9
                ,mortma9
    
#i4 ,! co/s ( obta9+ a tradem>k regi/r,n
  6protect a trade "n1 design or product
  >e all[a# z deduc;ns 9 -put+ 9come4 ,?
  9cludes ! design+1 legal & regi/r,n
  co/s1 & al any pay;t made 6"s o!r
  p]son 6refra9 f 3te/+ ! regi/r,n4
#aj4 ,":1 on ! o!r h&1 a taxpay] buys a
  tradem>k f ano!r p]son :o has develop$
  a tradem>k ( 5dur+ value1 ! am.t pd =
  x is a capital exp5diture n subject
  6capital co/ all[.e4 ,h["e1 x is an
  8eligi# capital exp5diture01 assum+ x
  meets all ! o!r require;ts ( t def9i;n
  9 subsec;n #ad7#e74
#aa4 ,an \tlay or exp5se made or 9curr$
  6acquire1 or 9 an attempt 6acquire1 a
  pat5t1 fran*ise1 3ces.n or lic;e = use
  9 a busi;s qualifies z an eligi#
  capital exp5diture provid$ t ! \tlay
  or exp5se did n result 9 ! acquisi;n
  (a deprecia# prop]ty ( class #ad   #af
             ,,it-#adc;,r#c          f#c
  ( ,s*$ule ,,ii (! ,9come ,tax
  ,regul,ns or a prop]ty t is describ$ z
  an excep;n 9 p>agraphs 7a71 7b71 7c71
  7d7 or 7e7 ( class #ad4 ,see ! curr5t
  v].n ( ,,it-#dgg1 ,capital ,co/
  ,all[.e--,pat5ts1 ,fran*ises1 ,3ces.ns
  & ,lic;es1 = -;ts reg>d+ prop]ties t
  qualify z class #ad4 ,an am.t pd 0a
  taxpay]1 ei sep>ately or z "p (!
  pur*ase price pd =! acquisi;n (!
  assets or busi;s ( ano!r p]son1 =! "r
  6/& 9 ! place ( t o!r p]son 9 mak+ an
  applic,n =a pat5t1 fran*ise1 3ces.n or
  lic;e or a renewal "!(1 may al qualify
  z an eligi# capital exp5diture4
--------------------------------------#d
#ab4 ,am.ts exp5d$ 0corpor,ns 6acquire
  or renew lic;es 9 mortma9 >e n reg>d$
  z \tlays = ga9+ 9come & >e n eligi#
  capital exp5ditures4



                                     #ag
         ,exp5ses ( ,9corpor,n1      a#d
       ,reorganiz,n or ,amalgam,n
    
#ac4 ,9corpor,n exp5ses 9clude all !
  exp5ses necess>ily 9curr$ 0!
  9corporators 6br+ a corpor,n 96exi/;e1
  9clud+3
  7a7 fees requir$ 0! appropriate
    gov]n;t ag5cy 7f$]al or prov9cial72
  7b7 co/ ( a6idavits2
  7c7 adv]tis+ exp5ses 9 ^? jurisdic;ns
    ": applicants >e requir$ 6give
    notice ( _! 9t5;n 6apply =a *>t]2
  7d7 legal fees2
  7e7 co/s ( prep>,n ( >ticles (
    9corpor,n &( bylaws2
  7f7 exp5ses 9curr$ 0applicants 9
    att5d+ prelim9>y meet+s2 &
  7g7 a3.tant's fees associat$ )!
    9corpor,n4
#ad4 ,! ,,ccra 3sid]s t 9corpor,n
  exp5ses & simil> exp5ses 9curr$ 9 !
  sett+ up (a new corpor,n or 9 3nec;n )
  an amalgam,n ( two or m corpor,ns1 z
  well z exp5ses 9curr$ 9 3nec;n     #ah
             ,,it-#adc;,r#c          b#d
  )! reorganiz,n (! a6airs (a corpor,n
  79clud+ ! co/s ( supple;t>y lrs
  pat5t71 >e 8eligi# capital
  exp5ditures0 if !y meet ! require;ts (
  t def9i;n 9 subsec;n #ad7#e7 z expla9$
  9 p>agraph #b4

       ,f9es1 ,p5alties & ,legal
                ,damages
    
#ae4 ,if a f9e or p5alty 0 pd or 9curr$
  9 3nec;n )! acquisi;n ( an eligi#
  capital prop]ty1 ! co/ (! f9e or
  p5alty wd 2 a4$ 6! eligi# capital
  exp5diture p]ta9+ 6t prop]ty4 ,= m
  9=m,n1 see ! curr5t v].n ( ,,it-#ajd1
  ,deductibil;y ( ,f9es or ,p5alties4
#af4 ,if damages 7 pd or 9curr$ 9 3nec;n
  )! acquisi;n ( an eligi# capital
  prop]ty1 ! co/ (! damages wd 2 a4$ 6!
  eligi# capital exp5diture p]ta9+ 6t
  prop]ty4 ,= m 9=m,n1 see ! curr5t v].n
  ( ,,it-#dfg1 ,damages1 ,settle;ts &
  ,simil> ,pay;ts4                   #ai
         ,political ,3tribu;ns       c#d
    
#ag4 ,3tribu;ns 0a taxpay] 6a political
  "py or o!r political organiz,ns or 6!
  campaign funds (a c&idate = public
  (fice1 :e!r or n all[$ z a deduc;n "u
  subsec;n #abg7#c71 >e n eligi# capital
  exp5ditures4

       ,exp5ses ( ,issu+ ,%>es or
             ,borr[+ ,m"oy
    
#ah4 ,p>agraph #bj7#a77e7 provides =!
  deduc;n 7subject 6! limit,ns 9dicat$
  "!97 ( an exp5se1 9clud+ a -mis.n1 fee
  or o!r am.t1 pd or paya# af ,novemb]
  #af1 #aigh 0a taxpay] = or on a3.t (
  s]vices r5d]$ 0a p]son z a salesp]son1
  ag5t or d1l] 9 securities1 9curr$ 9 !
  c\rse ( issu+ or sell+ %>es (! taxpay]
  or 9 ! c\rse ( borr[+ m"oy4 ,see !
  curr5t v].n ( ,,it-#cda1 ,exp5ses (
  ,issu+ or ,sell+ ,%>es1 ,units 9 a
  ,tru/1 ,9t]e/s 9 a ,"pn]%ip or
  ,syndicate & ,exp5ses ( ,borr[+    #bj
             ,,it-#adc;,r#c          d#d
  ,m"oy1 = m 9=m,n on ! applic,n (
  p>agraph #bj7#a77e74 ,prior 6,novemb]
  #ag1 #aigh ^! exp5ses 7 n deducti# f
  9come "u p>agraph #bj7#a77e7 b
  qualifi$ z 8eligi# capital
  exp5ditures0 provid$ !y met !
  require;ts ( t def9i;n 9 subsec;n
  #ad7#e74

     ,brok]age ,fees on ,pur*ase (
        ,%>es1 ,deb5tures1 etc4
    
#ai4 ,brok]age fees 9curr$ on !
  acquisi;n (a %>e1 bond1 deb5ture1
  mortgage1 hypo!c>y claim1 note1 bill
  or o!r simil> prop]ty >e g5],y 3sid]$
  6=m "p (! co/ ( s* prop]ty1 & d n "!=e
  qualify z 8eligi# capital exp5ditures0
  0virtue ( subp>agraph 7f77;iii7 ( t
  def9i;n 9 subsec;n #ad7#e74



                                     #ba
            ,appraisal ,co/s         e#d
    
#bj4 ,a taxpay]'s r1sona# co/s1 9curr$
  af #aihd1 ( survey+ or valu+
  7apprais+7 a capital prop]ty =!
  purpose ( xs acquisi;n or 4posi;n >e1
  0virtue ( p>agraph #ec7#a77n71 a4$ 6!
  adju/$ co/ base ( t prop]ty 6! ext5t t
  s* co/s >e n deduct$ 0! taxpay] 9
  -put+ 9come = any tax,n ye> or
  attributa# 6any o!r prop]ty4

  ,h["e1 ": a taxpay] 9curs ! co/ (
  survey+ or valu+ 7apprais+7 a capital
  prop]ty 7e4g41 a build+7 9 anticip,n (
  xs pur*ase = use 9 e>n+ 9come f a
  busi;s b ! pur*ase does n actu,y o3ur
  7e4g41 ! pur*ase is abort$71 s* co/ wd
  qualify z an eligi# capital
  exp5diture4 ,an excep;n 6? result wd
  o3ur if ! survey+ or appraisal co/ 0
  9curr$ af ,m>* #f1 #aiif &! abort$
  pur*ase 0 9 respect (a prop]ty
  describ$ 9 subsec;n #aajb7#ad.c7 (!
  ,9come ,tax ,regul,ns 7e4g41 a     #bb
             ,,it-#adc;,r#c          f#d
  p>k+ >ea71 s9ce ! survey+ or appraisal
  co/ wd !n 2come ! co/ ( deprecia#
  prop]ty 7typic,y ,class #a7 0virtue (
  p>agraphs #ac7#g.e77b71 7c7 & 7d7 (!
  ,act4

  ,! co/ ( valu+ a prop]ty1 : is xf an
  eligi# capital prop]ty 7e4g41 a
  gov]n;t "r7 held 0& us$ 9 ! busi;s (a
  taxpay]1 qualifies z an eligi# capital
  prop]ty = t busi;s4
--------------------------------------#e
#ba4 ,an \tlay or exp5se made or 9curr$
  0a taxpay] 6obta9 an appraisal =a
  purpose o!r ?an ga9+ or produc+ 9come
  f a busi;s does n qualify z an eligi#
  capital exp5diture4 ,examples ( \tlays
  or exp5ses ( ? k9d >e3
  7a7 ! co/ ( an appraisal ( prop]ty
    held on ,decemb] #ca1 #aiga =!
    purpose ( e/abli%+ xs ,valu,n ,"d
    value2
  7b7 ! co/ ( an appraisal ( capital
    prop]ty [n$ 0! taxpay]2          #bc
             ,,it-#adc;,r#c          a#e
  7c7 ! co/ ( an appraisal (a r5tal
    prop]ty [n$ 0! taxpay] ": ! r5tal
    "!( is n "p (a busi;s ( t taxpay]2 &
  7d7 ! co/ ( an appraisal : 3/itutes ei
    "p or all (! co/ ( acquisi;n1 or an
    exp5se ( 4posi;n1 (a prop]ty
    describ$ 9 p>agraph #c7b74
#bb4 ,! co/ ( an appraisal 9curr$ =!
  purpose ( ga9+ or produc+ 9come f a
  busi;s & n on a3.t ( capital is
  deducti# 9 -put+ a taxpay]'s 9come =!
  tax,n ye> 9 : x is 9curr$4 ,= example1
  ! co/ ( an appraisal (a prop]ty =
  9sur.e purposes1 ! co/ ( an appraisal
  ( assets (a public util;y nec 6support
  an applic,n =a rate 9cr1se &! co/ ( an
  appraisal ( assets t >e ! 9v5tory (a
  busi;s wd 2 deducti# f 9come 6! ext5t
  t ea* is r1sona# 9 ! circum/.es4

         ,legal & ,a3.t+ ,fees
    
#bc4 ,s9ce an \tlay or exp5se is an
  eligi# capital exp5diture only     #bd
             ,,it-#adc;,r#c          b#e
  if x is 9curr$ =! purpose ( ga9+ or
  produc+ 9come f a busi;s1 legal &
  a3.t+ fees 9curr$ 9 an abortive
  attempt 6acquire %>es (a corpor,n wd
  norm,y n qualify4 ,":1 h["e1 ! taxpay]
  c demon/rate t he or %e propos$ 6make
  ! busi;s (! corpor,n "p (a simil>
  busi;s : ! taxpay] alr op]at$1 ! fees
  may qualify z eligi# capital
  exp5ditures4 ,=! ,,ccra's 9t]pret,n (
  8simil> busi;s0 see ! curr5t v].n (
  ,,it-#bei1 ,ex*anges ( ,prop]ty4
  ,legal & a3.t+ fees 9curr$ 0a taxpay]
  9 3nec;n )! pur*ase or sale ( %>es
  held 0! taxpay] z capital prop]ty >e
  9clud$ z a -pon5t (! adju/$ co/ base
  (! %>es or deduct$ f ! sale proce$s z
  4posal co/s1 z applica#4 ,exp5ses
  9curr$ 9 3nec;n )! issue ( %>es (!
  capital /ock (a corpor,n >e 4cuss$ 9
  p>agraph #ah4 ,legal & a3.t+ fees
  9curr$ 6oppose a bid 6take ov] 3trol
  (a corpor,n >e n eligi# capital
  exp5ditures4 ,= m 9=m,n1 see !     #be
             ,,it-#adc;,r#c          c#e
  curr5t v].n ( ,,it-#ii1 ,legal &
  ,a3.t+ ,fees4

     ,milk ,quotas & ,o!r ,gov]n;t
            ,"rs or ,lic;es
    
#bd4 ,milk quotas issu$ 0prov9cial milk
  m>ket+ bo>ds >e g5],y issu$ at no co/
  6! produc]4 ,h["e1 transf]s ( quotas =
  value may g5],y 2 made1 subject 6!
  t]ms & approval (! bo>d4 ,! co/ (a
  milk quota pur*as$ af #aiga is an
  eligi# capital exp5diture4 ,simil>ly1
  a quota ex*ange fee 7e4g41 69cr1se an
  exi/+ quota7 pd 6a milk m>ket+ bo>d is
  an eligi# capital exp5diture4

  ,! co/ ( o!r simil> "rs or lic;es
  issu$ "u gov]n;tal au?or;y is al an
  eligi# capital exp5diture4



                                     #bf
         ,/ock ,ex*ange ,s1ts &      d#e
               ,memb]%ips
    
#be4 ,! co/ (a s1t on a ,canadian /ock
  ex*ange or a /ock ex*ange \tside
  ,canada t c>ries ) x c]ta9 "rs &
  privileges simil> 6^? atta*+ 6a %>e (a
  corpor,n is exclud$ f ! def9i;n ( an
  8eligi# capital exp5diture0
  0subp>agraph 7f77;iii7 ( t def9i;n 9
  subsec;n #ad7#e7 & s* a s1t is 3sid]$
  6be a capital prop]ty4 ,g5],y1 ^! "rs
  & privileges >e \tl9$ 9 ! bylaws (!
  ex*ange & >e z foll[s3
  7a7 ,! numb] ( s1ts on ! ex*ange is
    re/rict$4
  7b7 ,! s1ts may 2 acquir$ 0pur*ase ei
    f ! ex*ange xf or on ! op5 m>ket4
  7c7 ,! am.t rcvd 0! ex*ange on ! sale
    (a s1t is tr1t$ z a receipt (
    capital4
  7d7 ,! ex*ange di6]5tiates 2t ! 8s1t0
    &! 8memb]%ip0 9 ! ex*ange4 ,ev5 if !
    [n]%ip (a s1t 7or ! "r 6use x7 is a
    nec qualific,n = memb]%ip1 x     #bg
             ,,it-#adc;,r#c          e#e
    does n1 9 or 0xf1 5title "o 62come a
    memb]4 ,a prospective memb] m/ /
    obta9 ! approval (! o!r memb]s & pay
    an 5tr.e or 9iti,n fee4
#bf4 ,": ! "rs & privileges 3f]r$ on s1t
  hold]s ( ,canadian or =eign ex*anges
  >e di6]5t ?an ^? set \ 9 p>agraph #be1
  ! ,,ccra w review ^? "rs & privileges
  ^u reque/ 6det]m9e :e!r ! "picul> /ock
  ex*ange s1t 6: ^? "rs & privileges
  atta* is a capital prop]ty4

       ,9iti,n or ,admis.n ,fees
    
#bg4 ,! 5tr.e or 9iti,n fees pd 6a /ock
  ex*ange >e eligi# capital exp5ditures4
#bh4 ,9iti,n or admis.n fees pd 6an
  organiz,n 7e4g4 = call 6! b> or =
  memb]%ip 9 a profes.nal a3.t+ 9/itute7
  >e eligi# capital exp5ditures ": x c 2
  %[n t ! annual memb]%ip fees (!
  organiz,n >e all[a# deduc;ns 9 -put+
  9come (a busi;s4
                                     #bh
                ,ease;ts             f#e
    
#bi4 ,an am.t pd 0a taxpay] =! "r (
  a3ess 6or ! "r ( way ov]1 ^u or "? l&
  [n$ 0ano!r p]son may qualify z an
  eligi# capital exp5diture4

  ,s* an am.t wd n qualify z an eligi#
  capital exp5diture1 h["e1 if x 0
  9curr$ af ,m>* #f1 #aiif
--------------------------------------#f
  & 0 =! "r 6use1 or 9 respect (1
  prop]ty describ$ 9 subsec;n
  #aajb7#ad.c7 (! ,9come ,tax ,regul,ns
  7e4g41 a road describ$ "!974 ,9 t
  case1 ! co/ 9curr$ wd 2come ! co/ (
  deprecia# prop]ty 7typic,y ,class #a7
  0virtue ( p>agraphs #ac7#g.e77b71 7c7
  & 7d7 (! ,act4





                                     #bi
        ,capital ,exp5ditures 9      a#f
       ,respect ( ,ano!r ,p]son's
                ,prop]ty
    
#cj4 ,an \tlay or exp5se 9curr$ af ,m>*
  #f1 #aiif 0a taxpay]1 =! purpose (
  9cr1s+ ! op],nal e6ici5cy (a busi;s
  0m1ns ( improv+ ! prop]ty [n$ 0"s o!r
  p]son1 wd 2 ! taxpay]'s co/ (
  deprecia# prop]ty 7typic,y ,class #a7
  0virtue ( p>agraphs #ac7#g.e77b71 7c7
  & 7d7 (! ,act1 if ! o!r p]son's
  prop]ty is prop]ty describ$ 9 subsec;n
  #aajb7#ad.c7 (! ,9come ,tax ,regul,ns4
  ,? wd 2 ! case1 = example1 =!
  taxpay]'s co/ ( improve;ts 6c;y-[n$
  /reets1 9t]sec;ns1 sidewalks1 /reet
  li<t+1 etc4 surr.d+ ! taxpay]'s %opp+
  c5tre4

  ,if1 on ! o!r h&1 ! o!r p]son's
  prop]ty 0 n a prop]ty describ$ 9
  ,regul,n #aajb7#ad.c7 or1 9 any ev5t1
  if ! taxpay]'s co/ 0 9curr$ 2f ,m>*
  #g1 #aiif1 s* co/ 6! taxpay] wd    #cj
             ,,it-#adc;,r#c          b#f
  g5],y 2 a non-deducti#1 non-deprecia#
  capital \tlay t qualifies z an eligi#
  capital exp5diture4 ,an excep;nal case
  may o3ur ": ! "picul> facts &
  circum/.es l1d 6! 3clu.n t s* a co/ 0
  a curr5t exp5se1 z 0 f.d 0! ,f$]al
  ,c\rt--,trial ,divi.n 9 ! case ( ,ox=d
  ,%opp+ ,c5tres ,ltd4 v4 ,! ,que51 #gi
  ,,dtc #edeh1 ,7#aihj7' ,c4,t4,c4 #g 7:
  deci.n 0 upheld 0! ,f$]al ,c\rt (
  ,app1l--#ha ,,dtc #ejfe1 7#aiha7
  ,c4,t4,c4 #abh74 ,see ! curr5t v].n (
  ,,it-#dag1 ,prepd ,exp5ses & ,def]r$
  ,*>ges1 =a 4cus.n on runn+ exp5ses4

           ,=feit$ ,deposits
    
#ca4 ,a =feit$ deposit is n an eligi#
  capital exp5diture4 ,see ! curr5t v].n
  ( ,,it-#dfa1 ,=feit$ ,deposits1 =
  9=m,n on ! tr1t;t ( =feit$ deposits4


                                     #ca
         ,non-,competi;n ,pay;t      c#f
    
#cb4 ,an am.t pd 0a taxpay] 6ano!r p]son
  ) :om ! taxpay] d1ls at >m's l5g?1
  6obta9 t o!r p]son's cov5ant n 65gage
  9 any busi;s )9 a designat$
  geographical >ea dur+ a specifi$ p]iod
  ( "t1 t is ! same z or is simil> 6!
  busi;s c>ri$ on 0! taxpay]1 may
  qualify z an eligi# capital
  exp5diture4

             ,o!r ,bullet9s
    
#cc4 ,! curr5t v].n ( ea* ,9t]pret,n
  ,bullet9 li/$ 2l al makes ref];e 6&
  3ta9s limit$ 4cus.n on ! qualific,n (
  c]ta9 exp5ditures z eligi# capital
  exp5ditures3
  ,,it-#abh ,capital ,co/ ,all[.e--
    ,deprecia# ,prop]ty
  ,,it-#baa ,memb]%ip ,dues--,associ,ns
    & ,societies
  ,,it-#ccj ,4posi;ns ( ,capital
    ,prop]ty ,subject 6,w>ranty1     #cb
             ,,it-#adc;,r#c          d#f
    ,cov5ant1 or ,o!r ,3di;nal or ,3t+5t
    ,oblig,ns
  ,,it-#cej ,9ve/ig,n ( ,site
  ,,it-#cei ,premiums & ,o!r ,am.ts ,)
    ,respect 6,l1ses
  ,,it-#cfd ,-m;e;t ( ,busi;s ,op],ns
  ,,it-#chf ,eligi# ,capital ,am.ts
  ,,it-#dbe ,miscellane\s ,f>m ,9come
  ,,it-#dge ,exp5ditures on ,rese>* &=
    ,busi;s ,expan.n
  ,,it-#eja ,capital ,co/ ,all[.e--,lo7+
    ,assets
--------------------------------------#g
          ,explan,n ( ,*anges
    
               ,9troduc;n
    
  ,! purpose (! ,explan,n ( ,*anges is
6give ! r1sons =! revi.ns 6an 9t]pret,n
bullet94 ,x \tl9es revi.ns t we h made z
a result ( *anges 6! law1 z well z
*anges reflect+ new or revis$ 9t]pret,ns
(! ,,ccra4
                                     #cc
           ,r1sons =! ,revi.n        a#g
    
  ,? bullet9 has be5 revis$ 6reflect
*anges 9 ! law4

      ,legislative & ,o!r ,*anges
    
  ,p>agraph #b & subsequ5t p>agraphs h
be5 revis$ 6reflect t ! def9i;n (
8eligi# capital exp5diture0 is no l;g]
3ta9$ 9 p>agraph #ad7#e77b7 b r is f.d 9
alphabetical ord] 9 subsec;n #ad7#e74
  ,p>agraph #b has be5 revis$ 6reflect t
! def9i;n ( 8cumulative eligi# capital0
is no l;g] 3ta9$ 9 p>agraphs #ad7#e77a7
b r is f.d 9 alphabetical ord] 9
subsec;n #ad7#e74
  ,p>agraph #c7a77;i7 & p>agraph
#c7b77;ii7 h be5 revis$ 6reflect m
curr5t examples4
  ,p>agraph #c7b77;ii7 n[ makes ref];e
6a prop]ty 6: p>agraph #ac7#g.e77c7
applies1 z an 9tangi# prop]ty t is
deprecia# prop]ty4 ,subsec;n #ac7#g.e7 0
                                     #cd
             ,,it-#adc;,r#c          b#g
a4$ 6! ,act s9ce ! issu.e (! =m]
bullet94
  ,p>agraph #c7e7 & p>agraph #ai h be5
revis$ 6reflect t ! ^w 8hypo!c0 is no
l;g] 3ta9$ 9 subp>agraph 7f77;iii7 (!
def9i;n ( 8eligi# capital exp5diture0 9
subsec;n #ad7#e71 b t ! ^ws 8hypo!c>y
claim0 7 a4$ 6t subp>agraph z ( ,june
#ad1 #bjja4
  ,p>agraph #aa has be5 revis$ 6reflect
! a4i;n ( p>agraph 7e7 7: ref]s 6class
#dd7 6! excep;ns li/$ "u class #ad (
,s*$ule ,,ii (! ,9come ,tax ,regul,ns4
  ,p>agraph #ae has be5 revis$ 2c (
revi.ns 9 ! curr5t v].n ( ,,it-#ajd1
,deductibil;y ( ,f9es or ,p5alties4
  ,p>agraph #af has be5 revis$ 2c (
revi.ns 9 ! curr5t v].n ( ,,it-#dfg1
,damages1 ,settle;ts & ,simil> ,pay;ts4
  ,p>agraphs #bj1 #bi & #cj h be5 revis$
6reflect ! e6ect ( p>agraphs
#ac7#g.e77b71 7c7 & 7d74 ,subsec;n
#ac7#g.e7 0 a4$ 6! ,act s9ce ! issu.e (!
=m] bullet94                         #ce
             ,,it-#adc;,r#c          c#g
  ,p>agraph #bc n[ 3ta9s a /ate;t1
ess5ti,y ! same z alr 3ta9$ 9 ! curr5t
v].n ( ,,it-#ii1 ,legal & ,a3.t+ ,fees1
) respect 6legal & a3.t+ fees 9curr$
6oppose a bid 6take ov] 3trol (a
corpor,n4
  ,p>agraph #bd n[ 3ta9s a /ate;t t a
quota ex*ange fee 7e4g41 69cr1se an
exi/+ quota7 pd 6a milk m>ket+ bo>d is
an eligi# capital exp5diture4
  ,p>agraph #cb (! =m] bullet9 has be5
4cont9u$1 z x 0 r5d]$ 9a3urate 0! a4i;n
6! ,act ( subsec;n #hj7#g74 ,t provi.n
is \tside ! scope ( ? bullet91 b is
4cuss$ 9 ! curr5t v].n ,,it-#abc1
,transac;ns ,9volv+ ,eligi# ,capital
,prop]ty4
  ,o!r *anges "?\t ! bullet9 h be5 made
only = purposes ( cl>ific,n or
r1dabil;y4



                                     #cf