16 July 2020 Internal T.I. 2019-0817271I7 F - Indemnités reçues à la suite de la négociation -- summary under Paragraph 12(1)(f)

A governmental authority will acquire a number of residential, commercial, forestry, agricultural and undeveloped properties for a construction project pursuant to privately-negotiated terms including a sales price and further sums agreed to be paid to the owners to compensate them for various losses suffered. In the course of a general discussion, CRA indicated that although compensation for damage to property that, within a reasonable time after the damage occurred, has been expended to repair the damage is excluded from “proceeds of disposition” pursuant to para. (f) of the definitions in ss. 54 and 13(21), such compensation could be included in income pursuant to s. 12(1)(f), and expenses made or incurred to repair damage to depreciable property (e.g., to fences) would be deducted in computing income.