The elected amount then becomes your proceeds for the property transferred, as well as the cost of the property to the corporation or partnership. This amount may be different from the FMV, as long as you meet certain conditions.
This is the value that you will add to the capital cost allowance (CCA) schedule for income tax purposes.įor income tax purposes, when you transfer the property to a Canadian partnership or a Canadian corporation, you can transfer the property for an elected amount. Your business will show a purchase of these assets, with a cost equal to the FMV at the time of the transfer. If this amount is greater than your original purchase price, you must report the difference as a capital gain on your income tax and benefit return.
This means that we consider you to have sold the assets at a price equal to their FMV at that time. The Income Tax Act requires that you transfer these assets to the business at their fair market value (FMV). If you are operating a sole proprietorship, this is a reasonably simple process. You might transfer your personal assets to your business.
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