I-3 - Taxation Act

Section 308.2 Disposition versions

2019-06-19

308.2. A taxable dividend to which section 308.1 refers is such a dividend received by a corporation as part of a transaction or event or a series of transactions or events if

(a)  it can reasonably be considered that

i.  one of the purposes of the payment or receipt of the dividend, or, in the case of a dividend referred to in section 506, one of its results, is to effect a significant reduction in the portion of the capital gain that, but for the dividend, would have been realized on a disposition at fair market value of any share of the capital stock of a corporation, if the disposition had occurred immediately before the dividend was paid, or

ii.  the dividend (other than a dividend that is received on a redemption, acquisition or cancellation of a share, by the corporation that issued the share, under section 508 to the extent that it refers to a dividend deemed paid under section 505 or 506) was received on a share that is held as capital property by the dividend recipient and one of the purposes of the payment or receipt of the dividend is to effect

(1)  a significant reduction in the fair market value of any share, or

(2)  a significant increase in the cost of property, such that the amount that is the aggregate of the cost amounts of all properties of the dividend recipient immediately after the dividend was paid is significantly greater than the amount that is the aggregate of the cost amounts of all properties of the dividend recipient immediately before the dividend was paid; and

(b)  the amount of the dividend exceeds the amount of the income earned or realized by any corporation after 31 December 1971 and before the safe-income determination time, in relation to the transaction or event or series of transactions or events, that can reasonably be considered to contribute to the capital gain that would have been realized on a disposition at fair market value of the share on which the dividend was received, if the disposition had occurred immediately before the dividend was paid.

1982, c. 5, s. 66; 1984, c. 15, s. 69; 1996, c. 39, s. 97; 1997, c. 3, s. 71; 2000, c. 5, s. 75; 2019, c. 14, s. 108.

2006-03-01

308.2. Section 308.1 applies only where a taxable dividend is received by a corporation as part of a transaction or event or a series of transactions or events one of the purposes of which, or, in the case of a dividend referred to in section 506, one of the results of which, was to effect a significant reduction in the portion of the capital gain that, but for the dividend, would have been realized on a disposition at fair market value of any share of the capital stock of a corporation immediately before the dividend was paid and that could reasonably be attributed to anything other than income earned or realized by any corporation after 1971 and before the safe-income determination time, in relation to the transaction or event or series of transactions or events.

1982, c. 5, s. 66; 1984, c. 15, s. 69; 1996, c. 39, s. 97; 1997, c. 3, s. 71; 2000, c. 5, s. 75.