I-3 - Taxation Act

Section 280.16 Disposition versions

2005-05-15

280.16. The permitted deferral of an individual in respect of a qualifying disposition of shares issued by a corporation, in this section referred to as “new shares”, is deemed to be nil where

(a)  the new shares, or shares for which the new shares are substituted property, were issued to the individual or a person related to the individual as part of a transaction or event or a series of transactions or events in which

i.  shares of the capital stock of a corporation, in this section referred to as the “old shares”, were disposed of by the individual or a person related to the individual, or

ii.  the paid-up capital of old shares or the adjusted cost base to the individual or to a person related to the individual of the old shares was reduced;

(b)  the new shares, or shares for which the new shares are substituted property, were issued

i.  by the corporation that issued the old shares,

ii.  by a corporation that, at or immediately after the time of issue of the new shares, was a corporation that was not dealing at arm’s length with the corporation that issued the old shares or with the individual, or

iii.  by a corporation that acquired the old shares, or by another corporation related to that corporation, as part of the transaction or event or series of transactions or events that included that acquisition of the old shares; and

(c)  it is reasonable to conclude that one of the main reasons for the series of transactions or events or a transaction in the series was to permit the individual, a person related to the individual, or the individual and such a person to become eligible to deduct under section 280.6 permitted deferrals in respect of qualifying dispositions of new shares, or shares substituted for the new shares, the aggregate of which would exceed the aggregate of all amounts that those persons would have been eligible to deduct under section 280.6 in respect of permitted deferrals in respect of qualifying dispositions of old shares.

2003, c. 2, s. 99; 2009, c. 5, s. 102.