,canada ,co/ums                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act
  ,premiums & ,o!r ,am.ts ,) ,respect
  6,l1ses
,numb]3 ,,it-#cei;,r#b
,date3 ,decemb] #bj1 #aihc
,ref];e3 ,subsec;n #i7#a7 7al sec;n #dc1
  subsec;n #ci7#a71 & p>agraphs
  #ah7#a77q71 #bj7#a77z7 & z4#a77

  ,? bullet9 replaces & c.els ,9t]pret,n
,bullet9 ,,it-#cei;,r dat$ ,july #cj1
#aihb4 ,curr5t revi.ns >e designat$
0v]tical l9es4

              ,am.ts ,rcvd
    
     ,l&"l or ,t5ant 7p>agraph #a7
    
#a4 ,a premium or o!r am.t rcvd 0a l&"l
  or t5ant1 z ! case may be1 z        #a
             ,,it-#cei;,r#b          a#a
  3sid],n = grant+ or ext5d+ a l1se or
  subl1se1 p]mitt+ a subl1se1 or c.ell+
  a l1se or subl1se is busi;s 9come 6!
  recipi5t if r5t+ prop]ty =ms "p or all
  (a busi;s 2+ c>ri$ on4

         ,l&"l 7p>agraphs #b-f7
    
#b4 ,": a l&"l1 n 9 ! busi;s ( r5t+
  prop]ty1 rcvs a premium = grant+ or
  ext5d+ a l1se &! r5t *>g$ is less ?an
  fair m>ket value1 ! premium is 9clud$
  9 9come 6! ext5t t x c r1sonably 2
  reg>d$ z 2+ 9 ! nature ( r5t 7e4g41
  8key m"oy074
#c4 ,o3a.n,y1 a l1se may provide =!
  pay;t (a 8premium0 b xs t]ms 9dicate t
  :at is call$ a premium is re,y a
  prepay;t ( r5t4 ,s* an am.t is1 9
  fact1 a4i;nal r5t & is 9come (!
  recipi5t4 ,= -;ts on ! tax tr1t;t ( s*
  am.ts &( am.ts describ$ 9 #b abv1 see
  ,,it-#bfa;,r1 8,prepay;ts ( ,r5ts04
                                      #b
             ,,it-#cei;,r#b          b#a
#d4 ,am.ts a l&"l rcvs f a t5ant =
  c.ell+ a l1se or subl1se alw 3/itute
  9come 6! l&"l4
#e4 ,9 cases ": #a 6#c abv d n apply1 a
  premium or o!r am.t rcvd 0a l&"l z
  3sid],n =
  7a7 grant+ or ext5d+ a l1se1 or
  7b7 p]mitt+ a subl1se
  
  repres5ts proce$s ( 4posi;n ( "rs : >e
  capital prop]ty4 ,usu,y s* a premium
  is rcvd 9 a
--------------------------------------#b
  lump sum b ! abv -;t is al applica# ":
  x is n s rcvd4 ,! ,de"p;t w norm,y
  agree 6! applic,n ( sec;n #dc & w
  a3ept an am.t equal 6! proce$s f s*
  4posi;n z 2+ ! r1sona# por;n (! adju/$
  co/ base (! :ole prop]ty attributa# 6!
  "p 4pos$ ( 9 ? situ,n4 ,"!=e1 ? wd
  norm,y result 9 ! adju/$ co/ base (!
  prop]ty 6! l&"l 2+ reduc$ 0! am.t ( s*
  proce$s4 ,no capital loss may 2 claim$
  on ! grant+ or ext5d+ (a l1se or    #c
             ,,it-#cei;,r#b          a#b
  ! p]mitt+ (a subl1se4 ,if no am.t is
  rcvd 0! l&"l 9 s* a situ,n1 ! am.t (!
  adju/$ co/ base 3sid]$ 6be ! r1sona#
  por;n attributa# 6! "p 4posi;n is nil4
#f4 ,": a l&"l rcvs an am.t f a t5ant or
  prospective t5ant t[>ds ! co/ (
  9cr1s+1 alt]+1 improv+1 etc4 ! l&"l's
  prop]ty1 ! 3tribu;n does n reduce !
  capital co/ (! prop]ty 6! l&"l4 ,": a
  3tribu;n is made 0a t5ant 6a l&"l
  6defray ! co/ ( alt],ns1 improve;ts1
  etc4 : >e curr5t exp5ses (! l&"l or :
  result 9 ! acquisi;n ( prop]ty 0!
  t5ant1 ! am.ts rcvd 0! l&"l w reduce !
  exp5ditures made 0! l&"l4

        ,t5ant 7p>agraphs #g-i7
    
#g4 ,subject 6#a abv1 a premium or o!r
  am.t rcvd 0a t5ant z 3sid],n =
  7a7 assign+ a l1se1
  7b7 grant+ or ext5d+ a subl1se1 or
  7c7 9 ! case ( an am.t rcvd f a l&"l1
    p]mitt+ ! c.ell,n (a l1se         #d
             ,,it-#cei;,r#b          b#b
  is a capital r ?an an 9come receipt 6!
  recipi5t4 ,! t5ant is 3sid]$ 6h
  rel9qui%$ a "r or "rs 9 respect (a
  l1sehold 9t]e/1 & ?us s* an am.t
  repres5ts proce$s ( 4posi;n ( "p or
  all (! l1sehold 9t]e/4 ,s* 4posi;ns >e
  tr1t$ 9 ! usual mann]1 : dep5ds on
  :e!r ! l1sehold 9t]e/ is
  7d7 a deprecia# prop]ty 7i4e41 "o : 0
    us$ = ga9+ or produc+ 9come & : has
    a capital co/71 or
  7e7 a capital prop]ty1 o!r ?an a
    deprecia# prop]ty
    7;i7 t 0 us$ = ga9+ or produc+ 9come
      b : has no capital co/1 or
    7;ii7 t 0 us$ prim>ily = p]sonal use
      or 5joy;t 7in : case1 x wd 2 a
      p]sonal-use prop]ty & may al 2 a
      pr9cipal resid;e74
  ,! -;ts 9 ? p>agraph d n apply 6an
  am.t rcvd on grant+ or ext5d+ a
  subl1se t is 9 lieu ( r5t or is a
  prepay;t ( r5t f ! subt5ant 7see -;ts
  9 #b & #c abv74 ,s* am.t is tr1t$   #e
             ,,it-#cei;,r#b          c#b
  z r5t rcvd 6! ext5t t x c r1sonably 2
  reg>d$ z s*4
--------------------------------------#c
#h4 ,all am.ts rcvd 0a t5ant z 3sid],n
  =! 4posi;n ( "p or all (a l1sehold
  9t]e/ >e 3sid]$ 6be proce$s (! 4posi;n
  ev5 ": s* am.ts >e calculat$ ) ref];e
  6factors s* z busi;s losses result+ f
  reloc,n1 mov+ co/s1 etc4 ,( c\rse1 ":
  o!r assets1 s* z 9v5tory or gdwill1 >e
  4pos$ ( 9 a4i;n 6! l1sehold 9t]e/1
  am.ts rcvd = s* assets >e proce$s (
  4posi;n ( ^? assets4
#i4 ,a pay;t rcvd 0a t5ant f a l&"l z an
  9duce;t 65t] 96a l1se w 2 3sid]$ 9 !
  h&s (! t5ant z
  7a7 a non-taxa# capital receipt ": !
    pay;t is a reimburse;t ( "p or all
    (! t5ant's capital co/ ( l1sehold
    improve;ts )9 ! m1n+ ( ,regul,n
    #aajb7#d72
  7b7 a reduc;n ( ^? exp5ses ": ! pay;t
    is a reimburse;t ( o!r exp5ses
    9curr$ 0! t5ant2                  #f
             ,,it-#cei;,r#b          a#c
  7c7 9come ": ! negoti,n ( l1ses is a
    regul> "p (! t5ant's busi;s op],ns
    7e4g4 a *a9 /ore72
  7d7 a reduc;n ( :at wd o!rwise 2 !
    r5tal exp5se (! t5ant ": ! pay;t is
    a rebate ( r5t =a p]iod (! l1se2
  7e7 a non-taxa# capital receipt 9 o!r
    cases4
  
               ,am.ts ,pd
    
        ,l&"l 7p>agraphs #aj-ad7
    
#aj4 ,an am.t pd or paya# 0an [n] (
  prop]ty 6a t5ant 6obta9 c.ell,n (a
  l1se 2f ,decemb] #b1 #aihb or 9
  respect (a c.ell,n (a l1se pursuant
  6an agree;t 9 writ+ 5t]$ 962f ,decemb]
  #b1 #aihb 0 3sid]$ deducti# "u !
  ord9>y rules ( -put+ 9come f a busi;s
  or prop]ty provid$ t x 0 pd =! purpose
  ( produc+ ! 9come1 except ":

                                      #g
             ,,it-#cei;,r#b          b#c
  7a7 ! [n] wi%$ 6obta9 vacant posses.n
    s t ! prop]ty cd 2 sold or us$ =a
    purpose t does n e>n 9come1 &
  7b7 ! pr(it or loss on 4posi;n or
    deem$ 4posi;n (! prop]ty wd prop]ly
    2 on capital a3.t4
#aa4 ,a pay;t ) respect 6a l1se c.ell,n
  o3urr+ 2f ,novemb] #ac1 #aiha or
  pursuant 6an agree;t 9 writ+ 5t]$ 962f
  t date1 t 0 n deducti# "u ! ord9>y
  rules ( -put+ 9come1 ei 2c bo? 3di;ns
  9 #aj7a7 & 7b7 abv appli$1 or 2c x 0 n
  made =! purpose ( produc+ 9come1 0
  deducti# "u p>agraph #bj7#a77z71
  provid$ t ! [n] &! t5ant 7 d1l+ at
  >m's l5g?4 ,": ! [n] & t5ant 7 n d1l+
  at >m's l5g?1 s* a pay;t made 9 3nec;n
  )a 4posi;n1 or a deem$ 4posi;n
--------------------------------------#d
  "u subsec;n #de7#a71 (! prop]ty 0
  3sid]$ 6be an \tlay or exp5se made or
  9curr$ =! purpose ( mak+ ! 4posi;n or
  deem$ 4posi;n & 5t]$ 96! calcul,n (!
  capital ga9 or loss "u subsec;n     #h
             ,,it-#cei;,r#b          a#d
  #dj7#a71 provid$ ! pay;t 0 r1sona# 9 !
  circum/.es4
#ab4 ,": a l1se is c.ell$ af ,decemb]
  #a1 #aihb &! c.ell,n 0 n pursuant 6an
  agree;t 9 writ+ 5t]$ 962f ,decemb] #b1
  #aihb1 a pay;t 0a l&"l 6a t5ant =!
  c.ell,n (! l1se is deducti# only 9 !
  foll[+ mann]3
  7a7 ,if at ! 5d (a "picul> tax,n ye> !
    prop]ty rema9s 9 ! [n]%ip (! l&"l :o
    agre$ 6make ! pay;t or 0 [n$ 0a
    p]son ) :om ! l&"l did n d1l at >m's
    l5g?1 a deduc;n is p]mitt$ = t
    "picul> ye>1 "u p>agraph #bj7#a77z71
    (! pro rata por;n (! am.t pd or
    paya# 9 respect (! c.ell,n1 amortiz$
    ov] ! numb] ( "ds t rema9$ 9 ! t]m
    (! l1se 79clud+ all renewal p]iods71
    n exce$+ #dj ye>s1 immly 2f xs
    c.ell,n4
  7b7 ,:5 ! prop]ty is 4pos$ ( 9 a tax,n
    ye> s t nei ! l&"l :o agre$ 6make !
    pay;t nor a p]son ) :om ! l&"l did n
    d1l at >m's l5g? [n$ x at ! 5d    #i
             ,,it-#cei;,r#b          b#d
    (! ye>1 a deduc;n is p]mitt$ "u
    p>agraph #bj7#a77z4#a7 =! am.t pd or
    paya# 2f ! 5d ( t ye> 6! ext5t (!
    am.t "!( 7or 9 ! case ( capital
    prop]ty1 "o-half (! am.t "!(7 t 0 n
    deducti# 0! l&"l "u 7a7 abv 9 -put+
    9come = any prec$+ ye>4
  7c7 ,if an am.t pd or paya# = c.ell,n
    (a l1se qualifi$ =a deduc;n 9
    a3ord.e ) 7b7 abv1 no fur!r deduc;n
    may 2 claim$ 9 respect ( t c.ell,n
    "u ei 7a7 or 7b7 abv 9 any subsequ5t
    ye>4
  ,^! rules al apply ": a l1se is c.ell$
  af ,novemb] #ab1 #aiha &! c.ell,n 0 n
  pursuant 6an agree;t 9 writ+ 5t]$ 962f
  ,novemb] #ac1 #aiha &! pay;t 0 n
  deducti# "u #aj abv74
#ac4 ,! ^ws 8l1s$ 0hm0 9 p>agraphs
  #bj7#a77z7 & 7z4#a7 d n limit !
  applic,n ( ^! p>agraphs 6a lessor :o 0
  a "py 6! orig9al l1se (! prop]ty4 ,!
  ,de"p;t 3sid]s t ^! ^ws al apply 6a
  subsequ5t [n] 7l&"l7 :o takes      #aj
             ,,it-#cei;,r#b          c#d
  assign;t (a l1se & rema9d] 9t]e/ ^u
  pur*ase (! l1s$ prop]ty4
#ad4 ,! grant+ (a rebate ( r5t =a p]iod
  (! l1se w repres5t a reduc;n 9 :at wd
  o!rwise h be5 ! r5tal 9come (! l&"l4
  ,an am.t pd 0a l&"l 6a t5ant 69duce !
  t5ant 65t] 96a l1se agree;t is usu,y
  3sid]$ 6be a capital exp5diture4 ,? is
  s :e!r ! am.t is a 3tribu;n
--------------------------------------#e
  t[>ds exp5ditures 0! t5ant = or 9
  respect ( l1sehold improve;ts or !
  am.t may 2 us$ at ! t5ant's 4cre;n4
  ,if ! r5tal (! prop]ty is 9cid5tal 6or
  3/itutes a busi;s op],n c>ri$ on 0!
  l&"l1 ! am.t wd 2 an eligi# capital
  exp5diture 7see ,,it-#adc;,r#b1 ,m1n+
  ( ,eligi# ,capital ,exp5diture7 = : an
  all[.e is p]mitt$ 0virtue ( p>agraph
  #bj7#a77b74 ,h["e1 an am.t may 2 pd 6!
  t5ant z a fund+ or reimburse;t (
  pay;ts made 0! t5ant :ile act+ z a
  sup]visor or ag5t (! l&"l4 ,": ! l&"l
  is responsi# = exp5ditures = or    #aa
             ,,it-#cei;,r#b          a#e
  9 respect (! co/ ( repairs1 alt],ns or
  improve;ts 6! l1s$ prop]ty1 !
  exp5ditures pd "? ! t5ant may qualify
  ei z an exp5se (! l&"l or z an am.t
  6be a4$ 6! capital co/ (! prop]ty (!
  l&"l4 ,s* exp5ditures (! l&"l may n al
  2 classifi$ z exp5ses or prop]ty (a
  prescrib$ class (! t5ant4

       ,t5ant 7p>agraphs #ae-ah7
    
#ae4 ,an am.t a t5ant pays 6c.el a l1se
  or subl1se is deducti# 0! t5ant 9
  -put+ 9come f a busi;s or prop]ty
  provid$ ! r5t is s deducti#4
#af4 ,": a t5ant pays an am.t 9 lieu (
  r5t 7see #b abv7 or z a prepay;t ( r5t
  7see #c abv71 s* am.t is deducti# 6!
  t5ant 9 -put+ 9come f a busi;s or
  prop]ty provid$ ! r5t is s deducti#4
  ,=! appropriate tax tr1t;t ( prepd r5t
  see ,,it-#bfa;,r4
#ag4 ,subject 6#af abv1 an am.t t a
  t5ant pays 6obta9 or ext5d a       #ab
             ,,it-#cei;,r#b          b#e
  l1se or subl1se or 6p]mit a subl1se is
  a capital exp5diture 6acquire prop]ty
  t is a l1sehold 9t]e/4 ,3sequ5tly1 !
  t5ant may 2 5titl$ 6claim capital co/
  all[.e on ! pay;ts ei "u ,class #ac (
  ,s*$ule ,,ii (! ,regul,ns1 or if
  applica#1 "u ,class #c1 #f1 #ca1 or
  #cb ": ! 3di;ns ( subsec;n #aajb7#e7
  (! ,regul,ns >e met1 provid$ !
  l1sehold 9t]e/ 0 acquir$ =! purpose (
  ga9+ or produc+ 9come4
#ah4 ,": a t5ant or prospective t5ant
  reimburses a l&"l = "s or all am.ts
  sp5t 0! l&"l 69cr1se1 alt]1 improve
  etc4 ! l1s$ premises1 ! reimburse;t
  may qualify z an eligi# capital
  exp5diture un.s [n]%ip (! new prop]ty
  ve/s 9 ! t5ant 9 : case ! reimburse;t
  is ! co/ ( acquir+ a capital prop]ty
  on : capital co/ all[.e may 2 all[a#4



                                     #ac
         ,g5]al 7p>agraph #ai7       c#e
    
#ai4 ,am.ts pd t >e unr1sona# 9 !
  circum/.es >e n deducti# 0virtue (
  sec;n #fg4



















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