I-3 - Taxation Act

Section 158.16 Disposition versions

2017-02-08

158.16. In this division,

“entity” has the meaning assigned by the first paragraph of section 1129.70;

“equity value” has the meaning assigned by the first paragraph of section 1129.70;

“real estate investment trust” has the meaning assigned by the first paragraph of section 1129.70;

“security”, of an entity, means

(a)  a liability of the entity;

(b)  if the entity is a corporation,

i.  a share of the capital stock of the corporation, and

ii.  a right to control in any manner whatever the voting rights of a share of the capital stock of the corporation if it can reasonably be concluded that one of the reasons that a person or partnership holds the right to control is to avoid the application of the second paragraph of section 92.31 or section 158.18;

(c)  if the entity is a trust, a capital or income interest in the trust; and

(d)  if the entity is a partnership, an interest as a member of the partnership;

“stapled security”, of a particular entity at a particular time, means a particular security of the particular entity if at that time

(a)  another security (in this division referred to as the “reference security”)

i.  is or may be required to be transferred together or concurrently with the particular security as a term or condition of the particular security, the reference security, or an agreement or arrangement to which the particular entity (or if the reference security is a security of another entity, the other entity) is a party, or

ii.  is listed or traded with the particular security on a stock exchange or other public market under a single trading symbol;

(b)  the particular security or the reference security is listed or traded on a stock exchange or other public market; and

(c)  any of the following subparagraphs applies:

i.  the particular security and the reference security are securities of the particular entity and the particular entity is a corporation, SIFT partnership or SIFT trust,

ii.  the reference security is a security of another entity, one of the particular entity or the other entity is a subsidiary of the other, and the particular entity or the other entity is a corporation, SIFT partnership or SIFT trust, or

iii.  the reference security is a security of another entity and the particular entity or the other entity is a real estate investment trust or a subsidiary of a real estate investment trust;

“subsidiary”, of a particular entity at a particular time, means

(a)  any entity in which the particular entity holds at the particular time securities that have a total fair market value greater than the amount that is 10% of the equity value of the entity; or

(b)  an entity that at that time is a subsidiary of an entity that is a subsidiary of the particular entity;

“transition period”, in relation to an entity, means

(a)  if one or more securities of the entity would have been stapled securities of the entity on 31 October 2006 and 19 July 2011 had the definition of “stapled security” had effect from 31 October 2006, the period that begins on 20 July 2011 and ends on the earliest of

i.  1 January 2016,

ii.  the first day after 20 July 2011 on which any of those securities is materially altered, and

iii.  the day described in the second paragraph;

(b)  if paragraph a does not apply in respect of the entity and one or more securities of the entity would have been stapled securities on 19 July 2011 had the definition of “stapled security” had effect from that date, the period that begins on 20 July 2011 and ends on the earliest of

i.  20 July 2012,

ii.  the first day after 20 July 2011 on which any of those securities is materially altered, and

iii.  the day described in the second paragraph; and

(c)  in any other case, if the entity is a subsidiary of another entity on 20 July 2011 and the other entity has a transition period, the period that begins on 20 July 2011 and ends on the earliest of

i.  the day on which the other entity’s transition period ends,

ii.  the first day after 20 July 2011 on which the entity ceases to be a subsidiary of the other entity, and

iii.  the day described in the second paragraph.

The day to which subparagraph iii of paragraphs a to c of the definition of “transition period” in the first paragraph refers is the first day after 20 July 2011 on which a security of the entity becomes a stapled security other than by way of

(a)  a transaction that is completed under the terms of an agreement in writing entered into before 20 July 2011 if no party to the agreement may be excused from completing the transaction as a result of amendments to the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), and that is not the issuance of a security in satisfaction of a right to enforce payment of an amount by the entity; or

(b)  the issuance of the security in satisfaction of a right to enforce payment of an amount that became payable by the entity on another security of the entity before 20 July 2011, if the other security was a stapled security on 20 July 2011 and the issuance was made under a term or condition of the other security in effect on that date.

2017, c. 1, s. 95.