I-3 - Taxation Act

Section 540.1 Disposition versions

2015-10-21

540.1. Section 540 does not apply in respect of a disposition at any time by a taxpayer of a share of the capital stock of a particular foreign affiliate of the taxpayer to another foreign affiliate of the taxpayer if

(a)  the following conditions are met:

i.  all or substantially all of the property of the particular affiliate was, immediately before that time, excluded property, within the meaning of section 576.1, of the particular affiliate, and

ii.  the disposition is part of a transaction or event or a series of transactions or events for the purpose of disposing of the share to a person or partnership that, immediately after the transaction, event or series, was a person or partnership with whom the taxpayer is dealing at arm’s length, other than a foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest, within the meaning of paragraph m of subsection 2 of section 95 of the Income Tax Act (R.S.C. 1985, c. 1, (5th Suppl.)), at the time of the transaction or event or throughout the series, as the case may be; or

(b)  the adjusted cost base to the taxpayer of the share at that time is greater than the amount that would, in the absence of section 540, be the taxpayer’s proceeds of disposition of the share in respect of the disposition.

1984, c. 15, s. 112; 2015, c. 21, s. 182.

2006-03-01

540.1. Section 540 does not apply in respect of a disposition by a taxpayer of a share of the capital stock of a foreign affiliate of the taxpayer, all or substantially all of the property of which at that time is excluded property within the meaning of section 576.1, to another foreign affiliate of the taxpayer where the disposition is part of a series of transactions or events for the purpose of disposing of the share of a person who, immediately after the series of transactions or events, is a person other than a foreign affiliate of the taxpayer, with whom the taxpayer is dealing at arm’s length.

1984, c. 15, s. 112.