Only if two separate conditions are both met: the depreciable-property class has to be empty, and the buyer can't be affiliated with you.
Short answer
Only if two separate conditions are both met. A terminal loss under section 20(16) requires that you no longer own any property left in that depreciable-property class — selling only part of a group of assets and keeping some back defeats it on its own. Separately, section 13(21.2) denies — in substance, defers — the loss if you sell to a person affiliated with you, such as a corporation controlled by your spouse, regardless of whether the class is otherwise empty.
A terminal loss needs an empty class. Section 20(16)(b) requires that at the end of the year “the taxpayer no longer owns any property of that class” — sell most of a group of assets in one class and keep even one item back, and there is no terminal loss to claim on any of it that year, regardless of how much value was actually lost on the units sold.
Selling to someone affiliated with you is a second, independent problem. Section 13(21.2) does not simply deny a loss on such a sale; it defers it: “the transferor is deemed to own a property that was acquired before the beginning of the taxation year that includes the particular time at a capital cost equal to the amount of the excess”. The loss stays parked with the seller as phantom undepreciated capital cost until the affiliation genuinely ends, rather than being deducted in the year of sale.
Affiliated persons is a defined, and wider than most sellers expect, category. Section 251.1(1)(a) starts with “an individual and a spouse or common-law partner of the individual”, and extends to a corporation and whoever controls it — so a sale to a company your spouse controls is a sale to an affiliated person even though your spouse’s company is, on paper, a completely separate legal entity from you.
A citation trap worth flagging: section 20(16.1), which sounds like the affiliated-buyer exception, is not that provision — its carve-outs are expensive passenger vehicles, certain former properties re-owned under paragraph 13(4.3)(a) or (b), and Class 14.1 property where the business continues. The rule that turns on who the buyer is lives in section 13(21.2), not 20(16.1). The deferral under 13(21.2) ends, and the loss becomes deductible, once neither party remains affiliated and the property has left the group for 30 days.
In the Case Files library, a fleet sold to a company the vendor was affiliated with is the direct example: a fleet the buyer would not take, sold instead to a company the vendor’s spouse controlled, with three vehicles kept back — failing the empty-class test and the affiliated-buyer test on one disposal, for two different reasons. inventory taxed as income on the way out the door shows a different asset-sale trap on the same kind of deal — a line item that does not get the tax treatment a seller assumes, for a different statutory reason.
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