Section 80.6 — Income Tax Act: Synthetic disposition

If a synthetic disposition arrangement is entered into in respect of a property owned by a taxpayer and the synthetic disposition period of the arrangement is one year or more, the taxpayer is deemed to have disposed of the property immediately before the beginning of the synthetic disposition period for proceeds equal to its fair market value at the beginning of the synthetic disposition period;

and to have reacquired the property at the beginning of the synthetic disposition period at a cost equal to that fair market value. Subsection (1) does not apply in respect of a property owned by a taxpayer if the disposition referred to in subsection (1) would not result in the realization of a capital gain or income; the property is a mark-to-market property (as defined in subsection 142.2(1)) of the taxpayer; the synthetic disposition arrangement referred to in subsection (1) is a lease of tangible property or, for civil law, corporeal property; the arrangement is an exchange of property to which subsection 51(1) applies; or the property is disposed of as part of the arrangement, within one year after the day on which the synthetic disposition period of the arrangement begins.