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IT150R2 Acquisition from a non-resident of certain property on death or mortgage foreclosure or by virtue of a deemed disposition

NO: IT-150R2

DATE: January 9, 1985

SUBJECT: INCOME TAX ACT
Acquisition from a non-resident of certain property on death or mortgage foreclosure or by virtue of a deemed disposition

REFERENCE: Section 116 (also paragraph 115(1)(b))

This bulletin cancels and replaces Interpretation Bulletin IT-150R dated October 14, 1975.

1. Section 116 provides procedures for making payments on account of tax relating to the actual or proposed disposition by non-residents of taxable Canadian property, property described in paragraphs 59(2)(a), (c) or (d) and life insurance policies in Canada, other than "excluded property" as described in subsection 116(6).

2. Section 116 does not have application to property that is transferred or distributed on or after death and as a consequence thereof.

3. The Department considers that the liability for tax under subsection 116(5) or (5.3) does not extend to a mortgagee who acquired a property by foreclosure, unless the transactions of mortgage and foreclosure were used as a device to sell that property. It should be noted, however, that even where subsections 116(5) and (5.3) are not applicable to the purchaser, the non-resident vendor may obtain a certificate under subsections 116(2), (4) or (5.2).

4. Notwithstanding the comments in 2 and 3 above concerning section 116, the transfer of any taxable Canadian property, a life insurance policy in Canada or property described in paragraphs 59(2)(a), (c) or (d) by reason of death or mortgage foreclosure is nevertheless a transaction on which the non-resident decedent or mortgagor may be liable for tax by virtue of section 115.

5. The provisions of section 116 may apply to other deemed dispositions provided that there is a deemed amount payable by the person acquiring the property in the case of subsection 116(5.3), a deemed receipt of proceeds of disposition in the case of subsections 116(1), (2), (3), (4) and (5.2), and a deemed cost of acquisition in the case of subsection 116(5). The provisions of subsection 116(5.1) may also intervene to supply or alter these figures in non-arm's length transactions including inter vivos gifts.