I-3 - Taxation Act

Section 21.28 Disposition versions

2021-06-04

21.28. In this chapter,

“dealer compensation payment” means an amount received by a taxpayer as compensation for an underlying payment from a registered securities dealer resident in Canada who paid the amount in the ordinary course of a business of trading in securities, or for an underlying payment in the ordinary course of such a business of the taxpayer, where the taxpayer is such a dealer resident in Canada;

“qualified security” means

(a)  a share of a class of the capital stock of a corporation that is listed on a stock exchange or of a class of the capital stock of a corporation that is a public corporation by reason of the designation of the class for the purposes of subparagraph i or ii of paragraph b of the definition of “public corporation” in subsection 1 of section 89 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement),

(b)  a bond, debenture, note or similar obligation issued by a corporation described in paragraph a or by a corporation that is controlled by such a corporation,

(c)  a bond, debenture, note or similar obligation issued or guaranteed by the government of any country, province, state, municipality or other political subdivision, or by a corporation, commission, agency or association controlled by such a government,

(d)  a warrant, right, option or similar instrument with respect to a share described in paragraph a, or

(e)  a qualified trust unit;

“qualified trust unit” means an interest, as a beneficiary under a trust, that is listed on a stock exchange;

“securities lending arrangement” means an arrangement, other than an arrangement one of the main purposes of which may reasonably be considered to be to avoid or defer the inclusion in income of any profit or gain with respect to a qualified security, under which

(a)  a person (in this chapter referred to as the “lender”) transfers or lends at any particular time a qualified security to another person (in this chapter referred to as the “borrower”),

(b)  it may reasonably be expected, at the particular time, that the borrower will, at a later time, transfer or return to the lender a security, in this chapter referred to as an “identical security”, that is identical to the security transferred or lent by the lender to the borrower at the particular time,

(c)  the borrower is obligated to pay to the lender, as compensation for each particular amount paid on the security that would have been received by the borrower if the borrower had held the security throughout the period beginning after the particular time and ending at the time an identical security is transferred or returned to the lender, an amount equal to the particular amount,

(d)  the lender’s opportunity for gain or profit or risk of loss with respect to the security is not changed in any material respect, and

(e)  if the lender and the borrower do not deal with each other at arm’s length, it is intended that neither the arrangement nor any series of securities lending arrangements, loans or other transactions of which the arrangement is a part be in effect for more than 270 days;

“security distribution” means

(a)  an underlying payment; or

(b)  an SLA compensation payment, or a dealer compensation payment, that is deemed under section 21.32 to be an amount received as an amount described in any of subparagraphs a to c of the first paragraph of that section;

“SLA compensation payment”, being a securities lending arrangement compensation payment, means an amount paid pursuant to

(a)  a securities lending arrangement as compensation for an underlying payment; or

(b)  a specified securities lending arrangement as compensation for an underlying payment, including, if the property transferred or lent is described in subparagraph ii of paragraph a of the definition of “specified securities lending arrangement”, as compensation for a taxable dividend paid on a share described in subparagraph i of paragraph a of that definition;

“specified securities lending arrangement” means an arrangement, other than a securities lending arrangement, under which

(a)  a particular person (in this definition referred to as a “transferor”) transfers or lends at a particular time a property to another person (in this definition referred to as a “transferee”) and the property is

i.  a share described in paragraph a of the definition of “qualified security”, or

ii.  a property in respect of which the following conditions are met:

(1)  the property is an interest in a partnership or an interest as a beneficiary under a trust, and

(2)  all or part of its fair market value, immediately before the particular time, is derived, directly or indirectly, from a share described in subparagraph i;

(b)  at the particular time, it may reasonably be expected that the transferee—or a person that does not deal at arm’s length with, or is affiliated with, the transferee—will, after that time, transfer or return to the transferor—or a person that does not deal at arm’s length with, or is affiliated with, the transferor (in this definition referred to as a “substitute transferor”)—a property that is identical or substantially identical to the property transferred or lent by the transferor at the particular time; and

(c)  the transferor’s (together with any substitute transferor’s) opportunity for gain or profit or risk of loss with respect to the property is not changed in any material respect;

“underlying payment” means an amount paid on a qualified security by the issuer of the security.

1991, c. 25, s. 5; 1993, c. 16, s. 17; 1995, c. 49, s. 16; 1997, c. 3, s. 71; 1998, c. 16, s. 22; 2001, c. 7, s. 169; 2010, c. 5, s. 16; 2015, c. 24, s. 17; 2021, c. 18, s. 16.

2015-10-26

21.28. In this chapter,

“dealer compensation payment” means an amount received by a taxpayer as compensation for an underlying payment from a registered securities dealer resident in Canada who paid the amount in the ordinary course of a business of trading in securities, or for an underlying payment in the ordinary course of such a business of the taxpayer, where the taxpayer is such a dealer resident in Canada;

“qualified security” means

(a)  a share of a class of the capital stock of a corporation that is listed on a stock exchange or of a class of the capital stock of a corporation that is a public corporation by reason of the designation of the class for the purposes of subparagraph i or ii of paragraph b of the definition of “public corporation” in subsection 1 of section 89 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement),

(b)  a bond, debenture, note or similar obligation issued by a corporation described in paragraph a or by a corporation that is controlled by such a corporation,

(c)  a bond, debenture, note or similar obligation issued or guaranteed by the government of any country, province, state, municipality or other political subdivision, or by a corporation, commission, agency or association controlled by such a government,

(d)  a warrant, right, option or similar instrument with respect to a share described in paragraph a, or

(e)  a qualified trust unit;

“qualified trust unit” means an interest, as a beneficiary under a trust, that is listed on a stock exchange;

“securities lending arrangement” means an arrangement, other than an arrangement one of the main purposes of which may reasonably be considered to be to avoid or defer the inclusion in income of any profit or gain with respect to a qualified security, under which

(a)  a person (in this chapter referred to as the “lender”) transfers or lends at any particular time a qualified security to another person (in this chapter referred to as the “borrower”),

(b)  it may reasonably be expected, at the particular time, that the borrower will, at a later time, transfer or return to the lender a security, in this chapter referred to as an “identical security”, that is identical to the security transferred or lent by the lender to the borrower at the particular time,

(c)  the borrower is obligated to pay to the lender, as compensation for each particular amount paid on the security that would have been received by the borrower if the borrower had held the security throughout the period beginning after the particular time and ending at the time an identical security is transferred or returned to the lender, an amount equal to the particular amount,

(d)  the lender’s opportunity for gain or profit or risk of loss with respect to the security is not changed in any material respect, and

(e)  if the lender and the borrower do not deal with each other at arm’s length, it is intended that neither the arrangement nor any series of securities lending arrangements, loans or other transactions of which the arrangement is a part be in effect for more than 270 days;

“securities lending arrangement compensation payment” or “SLA compensation payment” means an amount paid pursuant to a securities lending arrangement as compensation for an underlying payment;

“security distribution” means

(a)  an underlying payment; or

(b)  an SLA compensation payment, or a dealer compensation payment, that is deemed under section 21.32 to be an amount received as an amount described in any of subparagraphs a to c of the first paragraph of that section;

“underlying payment” means an amount paid on a qualified security by the issuer of the security.

1991, c. 25, s. 5; 1993, c. 16, s. 17; 1995, c. 49, s. 16; 1997, c. 3, s. 71; 1998, c. 16, s. 22; 2001, c. 7, s. 169; 2010, c. 5, s. 16; 2015, c. 24, s. 17.

2010-04-20

21.28. In this chapter,

“qualified security” means

(a)  a share of a class of the capital stock of a corporation that is listed on a stock exchange or of a class of the capital stock of a corporation that is a public corporation by reason of the designation of the class for the purposes of subparagraph i or ii of paragraph b of the definition of “public corporation” in subsection 1 of section 89 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement),

(b)  a bond, debenture, note or similar obligation issued by a corporation described in paragraph a or by a corporation that is controlled by such a corporation,

(c)  a bond, debenture, note or similar obligation issued or guaranteed by the government of any country, province, state, municipality or other political subdivision, or by a corporation, commission, agency or association controlled by such a government, or

(d)  a warrant, right, option or similar instrument with respect to a share described in paragraph a;

“securities lending arrangement” means an arrangement, other than an arrangement one of the main purposes of which may reasonably be considered to be to avoid or defer the inclusion in income of any profit or gain with respect to a qualified security, under which

(a)  a person, in this chapter referred to as the “lender”, transfers or lends at any particular time a qualified security to another person, in this chapter referred to as the “borrower”, with whom the lender deals at arm’s length,

(b)  it may reasonably be expected, at the particular time, that the borrower will, at a later time, transfer or return to the lender a security, in this chapter referred to as an “identical security”, that is identical to the security transferred or lent by the lender to the borrower at the particular time,

(c)  where the qualified security is a share of the capital stock of a corporation, the borrower is obligated to pay to the lender, as compensation for each dividend paid on the security that would have been received by the borrower if the borrower had held the security throughout the period beginning after the particular time and ending at the time an identical security is transferred or returned to the lender, an amount equal to that dividend, and

(d)  the lender’s opportunity for gain or profit or risk of loss with respect to the security is not changed in any material respect.

1991, c. 25, s. 5; 1993, c. 16, s. 17; 1995, c. 49, s. 16; 1997, c. 3, s. 71; 1998, c. 16, s. 22; 2001, c. 7, s. 169; 2010, c. 5, s. 16.

2006-03-01

21.28. In this chapter,

“qualified security” means

(a)  a share of a class of the capital stock of a corporation that is listed on a Canadian stock exchange or a foreign stock exchange or of a class of the capital stock of a corporation that is a public corporation by reason of the designation of the class for the purposes of subparagraph i or ii of paragraph b of the definition of “public corporation” in subsection 1 of section 89 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement),

(b)  a bond, debenture, note or similar obligation issued by a corporation described in paragraph a or by a corporation that is controlled by such a corporation,

(c)  a bond, debenture, note or similar obligation issued or guaranteed by the government of any country, province, state, municipality or other political subdivision, or by a corporation, commission, agency or association controlled by such a government, or

(d)  a warrant, right, option or similar instrument with respect to a share described in paragraph a;

“securities lending arrangement” means an arrangement, other than an arrangement one of the main purposes of which may reasonably be considered to be to avoid or defer the inclusion in income of any profit or gain with respect to a qualified security, under which

(a)  a person, in this chapter referred to as the “lender”, transfers or lends at any particular time a qualified security to another person, in this chapter referred to as the “borrower”, with whom the lender deals at arm’s length,

(b)  it may reasonably be expected, at the particular time, that the borrower will, at a later time, transfer or return to the lender a security, in this chapter referred to as an “identical security”, that is identical to the security transferred or lent by the lender to the borrower at the particular time,

(c)  where the qualified security is a share of the capital stock of a corporation, the borrower is obligated to pay to the lender, as compensation for each dividend paid on the security that would have been received by the borrower if the borrower had held the security throughout the period beginning after the particular time and ending at the time an identical security is transferred or returned to the lender, an amount equal to that dividend, and

(d)  the lender’s opportunity for gain or profit or risk of loss with respect to the security is not changed in any material respect.

1991, c. 25, s. 5; 1993, c. 16, s. 17; 1995, c. 49, s. 16; 1997, c. 3, s. 71; 1998, c. 16, s. 22; 2001, c. 7, s. 169.