5 January 2012 External T.I. 2011-0412581E5 - Right to use a patent - eligible property -- summary under Patents and Know-How

respecting a licensing by a Canadian corporation of the use of its patent for specified purposes for a limited period to another taxable Canadian corportion in consideration for the issuance of shares, CRA was asked whether such right to use the patent would qualify as eligible property under s. 85(1.1). CRA responded that to be an eligible property the property must be a capital property; and the question as to whether a dispostion of the patent right would be on income account was a question of fact which could only be determined after a detailed review.