Tax wiki
s. 34.1
PART I — Income Tax · DIVISION B — Computation of Income · SUBDIVISION B — Income or Loss from a Business or Property · Special Cases
Additional Business Income
Not yet annotated · Text current to 2026-06-21 · section last amended 2014-12-16
Current text
Where
an individual (other than a graduated rate estate) carries on a business in a taxation year,
a fiscal period of the business begins in the year and ends after the end of the year (in this subsection referred to as the “particular period”), and
the individual has elected under subsection 249.1(4) in respect of the business and the election has not been revoked,
there shall be included in computing the individual’s income for the year from the business, the amount determined by the formula
(A - B) × C/D
where
is the total of the individual’s income from the business for the fiscal periods of the business that end in the year,
is the lesser of
the total of all amounts each of which is an amount included in the value of A in respect of the business and that is deemed to be a taxable capital gain for the purpose of section 110.6, and
the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the year,
is the number of days on which the individual carries on the business that are both in the year and in the particular period, and
is the number of days on which the individual carries on the business that are in fiscal periods of the business that end in the year.
Additional income election
(2)Where
an individual (other than a graduated rate estate) begins carrying on a business in a taxation year and not earlier than the beginning of the first fiscal period of the business that begins in the year and ends after the end of the year (in this subsection referred to as the “particular period”), and
the individual has elected under subsection 249.1(4) in respect of the business and the election has not been revoked,
there shall be included in computing the individual’s income for the year from the business the lesser of
the amount designated in the individual’s return of income for the year, and
the amount determined by the formula
(A - B) × C/D
where
is the individual’s income from the business for the particular period,
is the lesser of
the total of all amounts each of which is an amount included in the value of A in respect of the business and that is deemed to be a taxable capital gain for the purpose of section 110.6, and
the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the taxation year that includes the end of the particular period,
is the number of days on which the individual carries on the business that are both in the year and in the particular period, and
is the number of days on which the individual carries on the business that are in the particular period.
Deduction
(3)There shall be deducted in computing an individual’s income for a taxation year from a business the amount, if any, included under subsection 34.1(1) or 34.1(2) in computing the individual’s income for the preceding taxation year from the business.
[Repealed, 2013, c. 40, s. 15]
No additional income inclusion
(8)Subsections 34.1(1) and 34.1(2) do not apply in computing an individual’s income for a taxation year from a business where
the individual dies or otherwise ceases to carry on the business in the year; or
the individual becomes a bankrupt in the calendar year in which the taxation year ends.
Death of partner or proprietor
(9)Where
an individual carries on a business in a taxation year,
the individual dies in the year and after the end of a fiscal period of the business that ends in the year,
another fiscal period of the business ends because of the individual’s death (in this subsection referred to as the “short period”), and
the individual’s legal representative
elects that this subsection apply in computing the individual’s income for the year, or
files a separate return of income under subsection 150(4) in respect of the individual’s business,
notwithstanding subsection 34.1(8), there shall be included in computing the individual’s income for the year from the business, the amount determined by the formula
(A - B) × C/D
where
is the total of the individual’s income from the business for fiscal periods (other than the short period) of the business that end in the year,
is the lesser of
the total of all amounts, each of which is an amount included in the value of A in respect of the business that is deemed to be a taxable capital gain for the purpose of section 110.6, and
the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the year,
is the number of days in the short period, and
is the total number of days in fiscal periods of the business (other than the short period) that end in the year.
Source: Justice Laws Website. Not an official version.
Historic text
Immediately preceding version, in force from 2013-12-12 to 2014-12-15:
Show the text in force 2013-12-12 to 2014-12-15
Additional Business Income
34.1 (1) Where
(a) an individual (other than a testamentary trust) carries on a business in a taxation year,
(b) a fiscal period of the business begins in the year and ends after the end of the year (in this subsection referred to as the “particular period”), and
(c) the individual has elected under subsection 249.1(4) in respect of the business and the election has not been revoked,
there shall be included in computing the individual’s income for the year from the business, the amount determined by the formula
(A - B) × C/D
where
Ais the total of the individual’s income from the business for the fiscal periods of the business that end in the year,Bis the lesser of(i) the total of all amounts each of which is an amount included in the value of A in respect of the business and that is deemed to be a taxable capital gain for the purpose of section 110.6, and
(ii) the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the year,
Additional income election
(2) Where
(a) an individual (other than a testamentary trust) begins carrying on a business in a taxation year and not earlier than the beginning of the first fiscal period of the business that begins in the year and ends after the end of the year (in this subsection referred to as the “particular period”), and
(b) the individual has elected under subsection 249.1(4) in respect of the business and the election has not been revoked,
there shall be included in computing the individual’s income for the year from the business the lesser of
(c) the amount designated in the individual’s return of income for the year, and
(d) the amount determined by the formula
(A - B) × C/D
where
Ais the individual’s income from the business for the particular period,Bis the lesser of(i) the total of all amounts each of which is an amount included in the value of A in respect of the business and that is deemed to be a taxable capital gain for the purpose of section 110.6, and
(ii) the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the taxation year that includes the end of the particular period,
Deduction
(3) There shall be deducted in computing an individual’s income for a taxation year from a business the amount, if any, included under subsection 34.1(1) or 34.1(2) in computing the individual’s income for the preceding taxation year from the business.
(4) to (7) [Repealed, 2013, c. 40, s. 15]
No additional income inclusion
(8) Subsections 34.1(1) and 34.1(2) do not apply in computing an individual’s income for a taxation year from a business where
(a) the individual dies or otherwise ceases to carry on the business in the year; or
(b) the individual becomes a bankrupt in the calendar year in which the taxation year ends.
Death of partner or proprietor
(9) Where
(a) an individual carries on a business in a taxation year,
(b) the individual dies in the year and after the end of a fiscal period of the business that ends in the year,
(c) another fiscal period of the business ends because of the individual’s death (in this subsection referred to as the “short period”), and
(d) the individual’s legal representative
(i) elects that this subsection apply in computing the individual’s income for the year, or
(ii) files a separate return of income under subsection 150(4) in respect of the individual’s business,
notwithstanding subsection 34.1(8), there shall be included in computing the individual’s income for the year from the business, the amount determined by the formula
(A - B) × C/D
where
Ais the total of the individual’s income from the business for fiscal periods (other than the short period) of the business that end in the year,Bis the lesser of(i) the total of all amounts, each of which is an amount included in the value of A in respect of the business that is deemed to be a taxable capital gain for the purpose of section 110.6, and
(ii) the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the year,
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- 1996, c. 21, s. 8
- 1998, c. 19, s. 84
- 2013, c. 40, s. 15
Earlier versions: Justice Laws point-in-time versions of the Act (from 31 August 2004), and CanLII (under “Versions”). On Justice Laws, each version of section 34.1 links to the one before it.
Enacting and amending legislation
- 1996, c. 21, s. 8; 1998, c. 19, s. 84; 2013, c. 40, s. 15; 2014, c. 39, s. 8
Text before 2004 is found in the annual Statutes of Canada cited above. Application and coming-into-force provisions are not part of the consolidation; see the amending Acts.
Cross-references
Citation
Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 34.1.