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

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act
  ,timb] ,res\rce ,prop]ty & ,timb]
  ,limits
,numb]3 ,,it-#dha 7,3solidat$7
,date3 ,see ,bullet9 ,revi.ns sec;n
,ref];e3 ,! def9i;n ( 8timb] res\rce
  prop]ty0 9 subsec;n #ac7#ba7 (! ,9come
  ,tax ,act 7! 8,act072 & subsec;n
  #aaja7#c71 p>agraph #aajj7#a77e71
  ,class #cc ( ,s*$ule ,,ii & ,s*$ule
  ,,vi (! ,9come ,tax ,regul,ns 7!
  8,regul,ns07 7al ! def9i;n (
  8undepreciat$ capital co/0 9 subsec;n
  #ac7#ba71 p>agraph #bj7#a77a7 &
  p>agraph #ci7#a77a7 (! ,act2 &
  subsec;n #aajb7#ad7 & subp>agraph
  #aajj7#a77a77;xxiv7 (! ,regul,ns7

,late/ ,revi.ns--,ref];e sec;n &
  p>agraphs #b1 #g & #h               #a
         ,,it-#dha 73solidat$7       a#a
  ,at ! ,canada ,cu/oms & ,rev5ue ,ag5cy
7,,ccra71 we issue 9come tax 9t]pret,n
bullet9s 7,,it's7 9 ord] 6provide
te*nical 9t]pret,ns & posi;ns reg>d+
c]ta9 provi.ns 3ta9$ 9 9come tax law4
,due 6_! te*nical nature1 ,,it's >e 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        #b
         ,,it-#dha 73solidat$7       b#a
o!rwise specifi$4 ,if "! is a subsequ5t
*ange 9 t 9t]pret,n or posi;n &! *ange
is b5eficial 6taxpay]s1 x is usu,y
e6ective = future assess;ts &
reassess;ts4 ,if1 on ! o!r h&1 ! *ange
is n fav\ra# 6taxpay]s1 x w norm,y 2
e6ective =! curr5t & subsequ5t tax,n
ye>s or = transac;ns 5t]$ 96af ! date on
: ! *ange is publi%$4
  ,mo/ ( \r public,ns >e availa# on \r
,web site at3 _+www.ccra.gc.ca_:
  ,if y h any -;ts reg>d+ matt]s 4cuss$
9 an ,,it1 pl1se s5d !m to3

  ,9come ,tax ,rul+s ,directorate
  ,policy & ,legisl,n ,bran*
  ,canada ,cu/oms & ,rev5ue ,ag5cy
  ,ottawa ,,on ,k#a;,a #j;,l#e
  
or 0email at ! foll[+ a4ress3
_+bulletins@ccra.gc.ca_:


                                      #c
         ,,it-#dha 73solidat$7       c#a
  ,? v].n is only availa# electronic,y4

                 ,3t5ts
    
,applic,n
,summ>y
,4cus.n & ,9t]pret,n
  ,timb] ,res\rce ,prop]ty 7p>agraphs
    #a-b7
  ,timb] ,limits & ,cutt+ ,"rs
    7p>agraphs #c-f7
  ,g5]al 7p>agraphs #g-h7
,bullet9 ,revi.ns

               ,applic,n
    
  ,? bullet9 is a 3solid,n (! foll[+3
    --,9t]pret,n ,bullet9 ,,it-#dha dat$
      ,novemb] #bg1 #aiha2 &
    --subsequ5t am5d;ts "!to4
  ,= fur!r "picul>s1 see ! 8,bullet9
,revi.ns0 sec;n ne> ! 5d ( ? bullet94
  ,un.s o!rwise not$1 all /atutory
ref];es "?\t ! bullet9 >e 6! ,act4    #d
                ,summ>y              d#a
    
  ,? bullet9 4cusses ! di6];es 2t ! tax
tr1t;t ( 8timb] res\rce prop]ties0 7z
def9$ 9 subsec;n #ac7#ba77 & 8timb]
limits0 7ref]r$ 6in p>agraph
#aajj7#a77e7 (! ,regul,ns74 ,! co/ (
acquisi;n (! =m] is 9clud$ 9 ,class #cc
7: has a #ae@3p rate ( capital co/
all[.e 78,,cca0771 &a 4posi;n ( s*
prop]ty g5],y results 9 an 9come 9clu.n
r ?an a capital ga94 ,a deduc;n 9
respect (! capital co/ ((a timb] limit
or a "r 6cut timb] f a limit o!r ?an a
timb] res\rce prop]ty is calculat$ 9
a3ord.e ) ,s*$ule ,,vi (! ,regul,ns &!
4posi;n ( s* prop]ty may result 9 a
capital ga94






                                      #e
          ,4cus.n & ,9t]pret,n        #b
    
        ,timb] ,res\rce ,prop]ty
            7p>agraphs #a-b7
    
#a4 ,a timb] res\rce prop]ty is def9$ z
  a "r or lic5se 6cut or remove timb] f
  a limit or >ea 9 ,canada 7an 8orig9al
  "r07 if t orig9al "r 0 acquir$ 0!
  taxpay] af ,may #f1 #aigd &1 at ! "t (
  acquisi;n (! orig9al "r1 ! taxpay] may
  2 r1sonably reg>d$ z hav+ acquir$1
  directly or 9directly1 ! "r to
  7a7 ext5d or renew t orig9al "r1 or
  7b7 acquire ano!r s* "r or lic5se 9
    sub/itu;n "!=1
  
  or ! taxpay] may r1sonably expect1 at
  ! "t ( acquisi;n (! orig9al "r1 6be a#
  6ext5d or renew t "r or 6acquire ano!r
  "r or lic5se 9 sub/itu;n "!= 9 !
  normal c\rse ( ev5ts4 ,any "r or
  lic5se acquir$ af ,may #f1 #aigd z an
  ext5.n1 renewal or sub/itu;n1 or z "o
  (a s]ies ( ext5.ns1 renewals or     #f
         ,,it-#dha 73solidat$7       a#b
  sub/itu;ns1 =! orig9al "r1 is al timb]
  res\rce prop]ty ev5 if ! orig9al "r or
  lic5se 0 acquir$ 2f ,may #g1 #aigd4 ,9
  det]m9+ :e!r a "picul> "r is a timb]
  res\rce prop]ty1 x w "!=e 2 nec
  6det]m9e :e!r ! "r is ext5da#1 renewa#
  or c 2 sub/itut$ =4 ,6d s may 9volve
  exam9+ ! issu+ docu;ts or applica#
  prov9cial legisl,n or ev5 det]m9+
  prov9cial practice ": ! docu;ts &
  legisl,n >e sil5t4
#b4 ,a timb] res\rce prop]ty is
  deprecia# capital prop]ty & is 9clud$
  9 class #cc ( ,s*$ule ,,ii (!
  ,regul,ns4 ,x is 4t+ui%a# f o!r
  capital prop]ty 9 t xs 4posi;n =
  proce$s 9 excess ( xs capital co/ does
  n result 9 a capital ga9 0virtue (!
  exclu.n provid$ 0subp>agraph
  #ci7#a77a77;iv74 ,any excess ( proce$s
  ( 4posi;n1 net ( co/s ( 4posi;n ov] !
  undepreciat$ capital co/ ( all (!
  timb] res\rce prop]ties 9 class #cc1
  is 9clud$ 9 9come 0virtue ( v>ia#   #g
         ,,it-#dha 73solidat$7       b#b
  ;,g 9 ! def9i;n ( 8undepreciat$
  capital co/0 9 subsec;n #ac7#ba7 &
  subsec;n #ac7#a74 ,"! is no require;t
  t timb] res\rce prop]ties 2 9clud$ 9
  sep>ate classes4

      ,timb] ,limits & ,cutt+ ,"rs
            7p>agraphs #c-f7
    
#c4 ,p>agraph #bj7#a77a7 & p>agraph
  #aajj7#a77e7 (! ,regul,ns provide =a
  deduc;n 9 respect (! capital co/ (a
  timb] limit or "r 6cut timb] f a
  limit1 o!r ?an a timb] res\rce
  prop]ty4 ,! am.t claim$ may n exce$ !
  am.t calculat$ 9 a3ord.e ) ,s*$ule
  ,,vi (! ,regul,ns4 ,ea* prop]ty t is a
  timb] limit is prescrib$ 0subsec;n
  #aaja7#c7 (! ,regul,ns 6be a sep>ate
  class ( prop]ty4 ,p>agraph
  #aajj7#a77e71 subsec;n #aaja7#c7 &
  ,s*$ule ,,vi (! ,regul,ns specific,y
  exclude timb] res\rce prop]ties f _!
  applic,n4 ,r ?an deduct an am.t     #h
         ,,it-#dha 73solidat$7       c#b
  calculat$ pursuant 6sec;n #a & sec;n
  #b or sec;n #c ( ,s*$ule ,,vi (!
  ,regul,ns1 a taxpay] may elect 6deduct
  ! less] ( 4#ajj &! am.t ( 8 timb]
  sales 9 ! ye> 9 a3ord.e ) sec;n #d (
  ,s*$ule ,,vi (! ,regul,ns4
#d4 ,a timb] limit or cutt+ "r may 2
  acquir$ ) or )\t title 6! l& on : !
  timb] /&s4 ,unlike l& on : is locat$ a
  prop]ty : qualifies = 9clu.n 9 "o (!
  classes 9 ,s*$ule ,,ii (! ,regul,ns1
  l& : is acquir$ z a "p (a timb] limit
  is deprecia# "u ,s*$ule ,,vi (!
  ,regul,ns & does n exi/ z a sep>ate
  prop]ty = purposes (! ,act4 ,acly1 any
  proce$s rcvd f ! sale ( s* l& 7up 6!
  co/ (! :ole prop]ty7 m/ 2 cr$it$ 6!
  class & w result 9 a recapture (
  capital co/ all[.e if ! cr$it exce$s !
  undepreciat$ capital co/ (! timb]
  limit prior 6! sale4
#e4 ,! sale (a timb] limit or cutt+ "r1
  unlike ! sale (a timb] res\rce
  prop]ty1 may1 dep5d+ on all (!      #i
         ,,it-#dha 73solidat$7       d#b
  facts1 result 9 a capital ga9 ": !
  proce$s ( 4posi;n exce$ ! capital co/4
  ,p>agraph #ci7#a77a7 does n exclude
  timb] limits f capital ga9s tr1t;t z x
  does timb] res\rce prop]ties4 ,a
  capital ga9 w n result1 ( c\rse1 if !
  facts 9dicate t ! sale transac;n is (
  an 9come nature4
#f4 ,al? p>agraph #fe7#a77a7 provides =!
  deduc;n ( an am.t z an all[.e 9
  respect (a timb] limit z may 2 all[$
  0regul,n1 ? provi.n does n h any
  e6ect1 2c ,"p ,,xii (! ,regul,ns1 !
  prescrib$ regul,n1 does n provide =
  any all[.e 9 respect (a timb] limit4

        ,g5]al 7p>agraphs #g-h7
    
#g4 ,a timb] res\rce prop]ty is def9$ 9
  subsec;n #ac7#ba71 :ile a timb] limit
  is n def9$ 9 ! ,act4 ,a prop]ty t wd 2
  a timb] res\rce prop]ty except =! fact
  t x 0 acquir$ 2f ,may #g1 #aigd is a
  timb] limit4 ,": a taxpay]         #aj
         ,,it-#dha 73solidat$7       e#b
  pur*ases a "r 6cut timb] f a limit f a
  prov9ce1 :e!r t "r is a timb] res\rce
  prop]ty or a timb] limit dep5ds on all
  (! "*i/ics (! >range;t )! prov9ce4 ,if
  a taxpay] acquires l& on : "! is /&+
  timb] 7= example1 freehold timb]l&s71
  s* prop]ty is a timb] limit4
#h4 ,timb] limits t >e [n$ 0a corpor,n &
  acquir$ 0a taxpay] 9 ! c\rse (a
  reorganiz,n or f a non->m's l5g? "py
  describ$ 9 p>agraphs #aajb7#ad77a7 &
  7d7 (! ,regul,ns1 respectively1 >e al
  timb] limits 6! taxpay] acquir+ !
  prop]ty4 ,? is s despite ! fact t1 at
  ! "t (! reorganiz,n or transf] f a
  non->m's l5g? "py1 ! prop]ty may
  o!rwise qualify z a timb] res\rce
  prop]ty4 ,x %d 2 not$ t1 9 det]m9+
  :e!r ! "pies >e n d1l+ at >m's l5g? =
  ? purpose1 ! anti-avoid.e rule 9
  subsec;n #aajb7#bj7 (! ,regul,ns %d 2
  3sult$4 ,=a 4cus.n (! m1n+ ( 8>m's
  l5g?01 see ! curr5t v].n ( ,,it-#dai1
  ,m1n+ ( ,>m's ,l5g?4               #aa
           ,bullet9 ,revi.ns          #c
    
  ,s9ce ! issu.e ( ,,it-#dha on ,novemb]
#bg1 #aiha1 "! h be5 no significant
revi.ns 6p>agraphs #a & #c 6#f 7=m]ly
p>agraphs #b & #d 6#g74 ,7,janu>y #ac1
#bjjd7'
  ,9 ! ,ref];e sec;n1 c]ta9 provi.ns (!
,act & ,regul,ns h be5 mov$ f 2+ a
second>y ref];e 6a prim>y ref];e & c]ta9
m9or ref];es h be5 delet$4 ,7,janu>y
#ac1 #bjjd7'
  ,! ,ref];e sec;n & p>agraphs #b 7=m]
p>agraph #c7 & #g 7=m] p>agraph #h7 h
be5 updat$ 6reflect ! =matt+ *anges (
c]ta9 def9i;ns 3ta9$ 9 subsec;n #ac7#ba7
foll[+ ! adop;n ( *apt] #a ( ,r4,s4,c4
#aihe 7fif? ,supple;t74 ,7,janu>y #ac1
#bjjd7'
  8,3t5t01 8,applic,n0 & 8,summ>y0
sec;ns h be5 a4$ 6! bullet94 ,7,janu>y
#ac1 #bjjd7'
  ,p>agraph #a ( ,,it-#dha is n[ 3ta9$ 9
! ,summ>y (! 3solidat$ bullet94
,3sequ5tly1 p>agraphs #b 6#i (       #ab
         ,,it-#dha 73solidat$7       a#c
,,it-#dha h be5 renumb]$ z p>agraphs #a
6#h1 respectively4 ,7,janu>y #ac1
#bjjd7'
  ,9 p>agraph #g1 ! f/ & "p (! second
s5t;e ( =m] p>agraph #h h be5 delet$ 9
ord] 6elim9ate sup]flu\s ^w+4 ,7,janu>y
#ac1 #bjjd7'
  ,p>agraph #h 7=m] p>agraph #i7 has be5
revis$ 6reflect ! rep1l ( p>agraphs 7b7
& 7c7 ( subsec;n #aajb7#ad7 (! ,regul,ns
& n[ ref]s 6p>agraphs 7a7 & 7d7 (!
,regul,ns t apply 6prop]ty acquir$ 9 !
c\rse (a reorganiz,n or f a non->m's
l5g? "py1 respectively4 ,7,janu>y #ac1
#bjjd7'
  ,"?\t ! bullet91 we h made m9or *anges
= cl>ific,n or r1dabil;y purposes4
,7,janu>y #ac1 #bjjd7'





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