Untitled Flashcards Set

What is included in the consideration received on the disposal of an asset?

The market value of any consideration in kind, usually cash.

What constitutes a depreciable asset?

Any tangible movable property or an industrial building used wholly or partly in the production of income subject to tax.

Why does an office building not qualify as a depreciable asset?

Because it is immovable property.

Define disposal in relation to an asset.

Disposal involves a change in ownership where one person loses title and another gains it.

What are examples of assets disposed of under the definition of disposal?

Sale, exchange, gift, or distribution of an asset in specie.

Does a disposal occur if no person acquires the asset?

Yes, through scenarios like redemption or destruction of the asset.

What is an example of a partial disposal of an asset?

Selling a portion of a subdivided block of land.

Are leases, easements, or profits considered disposals of an asset?

No, they create a lesser interest but any amount received is treated as property income.

Does death of a taxpayer lead to a disposal of their assets?

No, the transfer to a personal representative or beneficiary does not constitute a disposal.

When does a disposal occur regarding the personal representative or beneficiary of a deceased tax payer?

When they dispose of the asset to a third party.

How is the cost base of an asset determined for a personal representative or beneficiary?

It is the adjusted cost base in the hands of the deceased at the date of death.

What rule is created around non-cash consideration in asset disposal?

The fair market value rule.

What is a broad definition of disposal according to general principles?

It includes sale, exchange, gift, or any distribution of an asset.

How is a disposal of an asset by a trustee defined in relation to beneficiaries?

As a distribution in specie, despite no change in beneficial ownership.

Is there a disposal when shares in a company are redeemed?

Yes, redemption constitutes a disposal even without a new owner.