Section 46 — Income Tax Act: Personal-use property

Where a taxpayer has disposed of a personal-use property (other than an excluded property disposed of in circumstances to which subsection 110.1(1), or the definition total charitable gifts , total cultural gifts or total ecological gifts in subsection 118.1(1), applies) of the taxpayer, for the purposes of this Subdivision the adjusted cost base to the taxpayer of the property immediately before the disposition shall be deemed to be the greater of $1,000 and the amount otherwise determined to be its adjusted cost base to the taxpayer at that time; and the taxpayer’s proceeds of disposition of the property shall be deemed to be the greater of $1,000 and the taxpayer’s proceeds of disposition of the property otherwise determined. Where a taxpayer has disposed of part of a personal-use property (other than a part of an excluded property disposed of in circumstances to which subsection 110.1(1), or the definition total charitable gifts , total cultural gifts or total ecological gifts in subsection 118.1(1), applies) owned by the taxpayer and has retained another part of the property, for the purposes of this Subdivision the adjusted cost base to the taxpayer, immediately before the disposition, of the part so disposed of shall be deemed to be the greater of the adjusted cost base to the taxpayer at that time of that part otherwise determined, and that proportion of $1,000 that the amount determined under subparagraph 46(2)(a)(i) is of the adjusted cost base to the taxpayer at that time of the whole property; and the proceeds of disposition of the part so disposed of shall be deemed to be the greater of the proceeds of disposition of that part otherwise determined, and the amount determined under subparagraph 46(2)(a)(ii). For the purposes of this Subdivision, where a number of personal-use personal-use properties of a taxpayer that would, if the properties were disposed of, ordinarily be disposed of in one disposition as a set, have been disposed of by more than one disposition so that all of the properties have been acquired by one person or by a group of persons not dealing with each other at arm’s length, and had, immediately before the first disposition referred to in paragraph 46(3)(a), a total fair market value greater than $1,000, the properties shall be deemed to be a single personal-use property and each such disposition shall be deemed to be a disposition of a part of that property. Where it may reasonably be regarded that, by reason of a decrease in the fair market value of any personal-use property of a corporation, partnership or trust, a taxpayer’s gain, if any, from the disposition of a share of the capital stock of a corporation, an interest in a trust or an interest in a partnership has become a loss, or is less than it would have been if the decrease had not occurred, or a taxpayer’s loss, if any, from the disposition of a share or interest described in paragraph 46(4)(a) is greater than it would have been if the decrease had not occurred, the amount of the gain or loss, as the case may be, shall be deemed to be the amount that it would have been but for the decrease. For the purpose of this section, excluded property of a taxpayer means property acquired by the taxpayer, or by a person with whom the taxpayer does not deal at arm’s length, in circumstances in which it is reasonable to conclude that the acquisition of the property relates to an arrangement, plan or scheme that is promoted by another person or partnership and under which it is reasonable to conclude that the property will be the subject of a gift to which subsection 110.1(1), or the definition total charitable gifts , total cultural gifts or total ecological gifts in subsection 118.1(1), applies.