Disposition of Incorporeal Capital Property

As of 2017, incorporeal capital property, including goodwill, is considered to be depreciable property. If, during the fiscal period that ended in 2017, you disposed of incorporeal capital property, its tax treatment will depend on the date on which you acquired it.

Disposition of incorporeal capital property acquired before January 1, 2017

If, during the fiscal period that ended in 2017, you disposed of incorporeal capital property that you held before January 1, 2017, you must add to the undepreciated capital cost (UCC) of the class of property (prescribed by the Regulation respecting the Taxation Act) 25% of the lesser of the following amounts:

  • the proceeds of disposition of the property; or
  • the property's capital cost.

You must then subtract from the UCC of the property in the class the lesser of the following amounts:

  • the proceeds of disposition of the property minus the expenses incurred to dispose of it; or
  • the property's capital cost.

If the proceeds of disposition are greater than the capital cost, the capital gains rules apply.

Disposition of incorporeal capital property (depreciable property) acquired on or after January 1, 2017

If you disposed of incorporeal capital property that you acquired on or after January 1, 2017, you must treat the disposition as a disposition of depreciable property. For more information, see Capital Gains and Losses (IN-120-V).

If you disposed of property that is qualified farm or fishing property, you can claim the capital gains deduction for the property. For more information, see IN-120-V.

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