Tax wiki
s. 24
PART I — Income Tax · DIVISION B — Computation of Income · SUBDIVISION B — Income or Loss from a Business or Property · Ceasing to carry on business
Not yet annotated · Text current to 2026-06-21 · section last amended 2017-01-01
Current text
[Repealed, 2016, c. 12, s. 8]
Business carried on by spouse or common-law partner or controlled corporation
(2)If, at any time, an individual ceases to carry on a business and the individual’s spouse or common-law partner, or a corporation controlled directly or indirectly in any manner whatever by the individual, carries on the business and acquires all of the property included in Class 14.1 of Schedule II to the Income Tax Regulations in respect of the business owned by the individual immediately before that time and that had value at that time, the following rules apply:
the individual is deemed to have, immediately before that time, disposed of the property and received proceeds of disposition equal to the lesser of the capital cost and the cost amount to the individual of the property immediately before the disposition;
the spouse, common-law partner or corporation, as the case may be, is deemed to have acquired the property at a cost equal to those proceeds; and
if the amount that was the capital cost to the individual of the property exceeds the amount determined under paragraph 70(5)(b) to be the cost to the person that acquired the property, for the purposes of sections 13 and 20 and any regulations made for the purpose of paragraph 20(1)(a),
the capital cost to the person of the property is deemed to be the amount that was the capital cost to the individual of the property, and
the excess is deemed to have been allowed to the person in respect of the property under regulations made for the purposes of paragraph 20(1)(a) in computing income for taxation years that ended before the person acquired the property.
[Repealed, 2016, c. 12, s. 8]
Source: Justice Laws Website. Not an official version.
Historic text
Immediately preceding version, in force from 2004-08-31 to 2016-12-31:
Show the text in force 2004-08-31 to 2016-12-31
Ceasing to carry on business
24 (1) Notwithstanding paragraph 18(1)(b), where at any time after a taxpayer ceases to carry on a business the taxpayer no longer owns any property that was eligible capital property in respect of the business and that has value, in computing the taxpayer’s income for taxation years ending after that time,
(a) there shall be deducted, for the first such taxation year, the amount of the taxpayer’s cumulative eligible capital in respect of the business at that time;
(b) no amount may be deducted under paragraph 20(1)(b) in respect of the business;
(c) for the purposes of determining the value of P in the definition cumulative eligible capital in subsection 14(5), the amount deducted by the taxpayer under paragraph 24(1)(a) shall be deemed to be an amount deducted under paragraph 20(1)(b) in computing the taxpayer’s income from the business for the taxation year that included that time; and
(d) for the purposes of subsection 14(1), section 14 shall be read without reference to subsection 14(4).
Business carried on by spouse or common-law partner or controlled corporation
(2) Notwithstanding subsection 24(1), where at any time an individual ceases to carry on a business and thereafter the individual’s spouse or common-law partner, or a corporation controlled directly or indirectly in any manner whatever by the individual, carries on the business and acquires all of the property that was eligible capital property in respect of the business owned by the individual before that time and that had value at that time,
(a) in computing the individual’s income for the individual’s first taxation year ending after that time, subsection 24(1) shall be read without reference to paragraph 24(1)(a) and the reference in paragraph 24(1)(c) to “the amount deducted by the taxpayer under paragraph (a)” shall be read as a reference to “an amount equal to the taxpayer’s cumulative eligible capital in respect of the business immediately before that time”;
(b) in computing the cumulative eligible capital of the spouse or common-law partner or the corporation, as the case may be, in respect of the business, the spouse or common-law partner or corporation shall be deemed to have acquired an eligible capital property and to have made an eligible capital expenditure at that time at a cost equal to 4/3 of the total of
(i) the cumulative eligible capital of the taxpayer in respect of the business immediately before that time, and
(ii) the amount, if any, determined for F in the definition cumulative eligible capital in subsection 14(5) in respect of the business of the individual at that time;
(c) for the purposes of determining the cumulative eligible capital in respect of the business of the spouse or common-law partner or corporation after that time, an amount equal to the amount determined under subparagraph 24(2)(b)(ii) shall be added to the amount otherwise determined in respect thereof for P in the definition cumulative eligible capital in subsection 14(5); and
(d) for the purpose of determining after that time the amount required to be included under paragraph 14(1)(b) in computing the income of the spouse, the common-law partner or the corporation in respect of any subsequent disposition of property of the business, there shall be added to the amount otherwise determined for Q in the definition cumulative eligible capital in subsection 14(5) the amount, if any, determined for Q in that definition in respect of the business of the individual immediately before the individual ceased to carry on business.
Where partnership has ceased to exist
(3) Notwithstanding subsection 24(1), where at any time a partnership ceases to exist in circumstances to which neither subsection 98(3) nor subsection 98(5) applies, there may be deducted, in computing the income for the first taxation year beginning after that time of a taxpayer who was a member of the partnership immediately before that time, an amount determined by the formula
A × B/C
where
Ais the amount that would, had the partnership continued to exist, have been deductible under subsection 24(1) in computing its income;Bis the fair market value of the taxpayer’s interest in the partnership immediately before that time; andCis the fair market value of all interests in the partnership immediately before that time.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- R.S., 1985, c. 1 (5th Supp.), s. 24
- 1994, c. 7, Sch. II, s. 17, Sch. VIII, s. 10
- 1995, c. 3, s. 8
- 2000, c. 12, s. 142
- 2001, c. 17, s. 16
Earlier versions: Justice Laws point-in-time versions of the Act (from 31 August 2004), and CanLII (under “Versions”). On Justice Laws, each version of section 24 links to the one before it.
Enacting and amending legislation
- R.S., 1985, c. 1 (5th Supp.), s. 24; 1994, c. 7, Sch. II, s. 17, Sch. VIII, s. 10; 1995, c. 3, s. 8; 2000, c. 12, s. 142; 2001, c. 17, s. 16; 2016, c. 12, s. 8
Text before 2004 is found in the annual Statutes of Canada cited above. Application and coming-into-force provisions are not part of the consolidation; see the amending Acts.
Cross-references
Citation
Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 24.