I-3 - Taxation Act

Section 742.1 Disposition versions

2012-05-09

742.1. Notwithstanding section 742, where a trust has at any time acquired a share of the capital stock of a corporation because of section 653, the trust shall subtract from the amount of any loss, determined without reference to section 742 or this section, resulting from a disposition after that time, the aggregate of

(a)  the amount by which the lesser of the following amounts exceeds the amount determined under the second paragraph:

i.  the aggregate of all amounts each of which is a dividend received after that time by the trust on the share in respect of which an election was made under section 502 where section 502.0.1 does not deem the dividend to be a taxable dividend,

ii.  the amount of the loss determined without reference to section 742 or this section, reduced by the aggregate determined in the third paragraph; and

(b)  the aggregate of all amounts each of which is a taxable dividend received on the share after that time and designated under section 666 by the trust in respect of a beneficiary that was a corporation, partnership or trust.

The amount to which subparagraph a of the first paragraph refers in respect of a trust referred to in that paragraph is 1/2 of the lesser of

(a)  the amount of the loss, determined without reference to section 742 or this section, resulting from the disposition of the share referred to in the first paragraph;

(b)  the trust’s capital gain from the disposition immediately before the time referred to in the first paragraph of the share referred to in that paragraph because of section 653.

The aggregate to which subparagraph ii of subparagraph a of the first paragraph refers in respect of the trust referred to in the said paragraph corresponds to the aggregate of all amounts each of which is the amount of a taxable dividend

(a)  received by the trust on the share referred to in the first paragraph after the time of acquisition;

(b)  received on the share referred to in the first paragraph after the time of acquisition and designated under section 666 by the trust in respect of a beneficiary who is an individual, other than a trust; or

(c)  received on the share referred to in the first paragraph after the time of acquisition and designated under section 666 by the trust in respect of a beneficiary that was a corporation, a partnership or another trust, provided the dividend is a qualified dividend and the trust establishes that

i.  it owned the share throughout the 365-day period that ended immediately before the disposition of the share, and

ii.  the dividend was received when the trust, the beneficiary and persons not dealing at arm’s length with the beneficiary owned in total less than 5% of the issued shares of any class of the capital stock of the corporation from which the dividend was received.

2001, c. 7, s. 92; 2003, c. 2, s. 210; 2012, c. 8, s. 103.

2006-03-01

742.1. Notwithstanding section 742, where a trust has at any time acquired a share of the capital stock of a corporation because of section 653, the trust shall subtract from the amount of any loss, determined without reference to section 742 or this section, resulting from a disposition after that time, the aggregate of

(a)  the amount by which the lesser of the following amounts exceeds the amount determined under the second paragraph:

i.  the aggregate of all amounts each of which is a dividend received after that time by the trust on the share in respect of which an election was made under section 502 where section 502.0.1 does not deem the dividend to be a taxable dividend,

ii.  the amount of the loss determined without reference to section 742 or this section, reduced by the aggregate determined in the third paragraph; and

(b)  the aggregate of all amounts each of which is a taxable dividend received on the share after that time and designated under section 666 by the trust in respect of a beneficiary that was a corporation, partnership or trust.

The amount to which subparagraph a of the first paragraph refers in respect of a trust referred to in that paragraph is 1/2 of the lesser of

(a)  the amount of the loss, determined without reference to section 742 or this section, resulting from the disposition of the share referred to in the first paragraph;

(b)  the trust’s capital gain from the disposition immediately before the time referred to in the first paragraph of the share referred to in that paragraph because of section 653.

The aggregate to which subparagraph ii of subparagraph a of the first paragraph refers in respect of the trust referred to in the said paragraph corresponds to the aggregate of all amounts each of which is the amount of a taxable dividend

(a)  received by the trust on the share referred to in the first paragraph after the time of acquisition;

(b)  received on the share referred to in the first paragraph after the time of acquisition and designated under section 666 by the trust in respect of a beneficiary who is an individual, other than a trust; or

(c)  received on the share referred to in the first paragraph after the time of acquisition and designated under section 666 by the trust in respect of a beneficiary that was a corporation, partnership or another trust, where the trust establishes that

i.  it owned the share throughout the 365-day period that ended immediately before the disposition of the share, and

ii.  the dividend was received when the trust, the beneficiary and persons not dealing at arm’s length with the beneficiary owned in total less than 5% of the issued shares of any class of the capital stock of the corporation from which the dividend was received.

2001, c. 7, s. 92; 2003, c. 2, s. 210.