Election for restrictive covenants
Since we have not published a prescribed form for the elections contained in section 56.4 of the Income Tax Act, the seller (grantor) and buyer (payor) have to file a jointly-signed letter to make the election.
This letter must include the following information concerning the grantor:
- Full name
- Social insurance number or business number
- Address, and mailing address if applicable
- Tax year of the grantor in which they sold the restrictive covenant
This letter must include the following information concerning the payor:
- Full name
- Social insurance number or business number
- Address, and mailing address if applicable
- Tax year of the payor in which they bought the restrictive covenant
This letter must include the following information concerning the covenant:
- A description of the covenant
- The full name of the taxpayer granting the covenant
- The full name of the taxpayer receiving the consideration for the covenant
- An indication that these parties deal at arm's length
- Under which provision of section 56.4 the election is being made by the parties