In December 2016, a corporation with an April 30, 2017 year end and which had previously incurred eligible capital expenditures, such as incorporation costs, in respect of a business, sells the internally-generated goodwill of that business to an arm’s length purchaser. Would the s. 13(38)(d)(iii) election be available? CRA responded:
One of the conditions, set out in the preamble of subsection 13(38), states that the subsection will only apply if a taxpayer has incurred an eligible capital expenditure in respect of a business before January 1, 2017.
In our view, a taxpayer who has incurred any eligible capital expenditure in respect of the business prior to 2017 has met the condition set out in the preamble of subsection 13(38) of the Act. Therefore, paragraphs (a) to (d) of subsection 13(38) apply and the taxpayer may, provided that all other conditions are met, file the election under subparagraph 13(38)(d)(iii).
Therefore, our response...can be distinguished from... Q13 since in that situation the taxpayer in question had never incurred any eligible capital expenditure in respect of the business prior to 2017.