I-3 - Taxation Act

Section 301 Disposition versions

2015-12-04

301. Where a share of the capital stock of a corporation is acquired by a taxpayer from the corporation in exchange for a capital property of the taxpayer that is another share of the corporation or a capital property of the taxpayer that is a bond, debenture or note of the corporation the terms of which confer on the holder the right to make the exchange and no consideration other than that share is received by the taxpayer, the following rules apply:

(a)  except for the purposes of sections 157.6, 280.10 and 280.11 and paragraph o of section 594, the exchange is deemed not to be a disposition of property;

(b)  the cost to the taxpayer of all the shares of a particular class acquired by him on the exchange is deemed to be that proportion of the adjusted cost basis to him of the exchanged capital property immediately before the exchange that the fair market value, of all the shares of the particular class acquired by him on the exchange is of that of all the shares acquired by him on the exchange;

(b.1)  the taxpayer shall deduct, after the exchange, in computing the adjusted cost base to the taxpayer of a share acquired by the taxpayer on the exchange, the amount determined by the formula

A × B / C;

(b.2)  the taxpayer shall add, after the exchange, in computing the adjusted cost base to the taxpayer of a share, the amount determined under paragraph b.1 in respect of the share;

(c)  for the purposes of sections 462.11 to 462.24, the exchange is deemed to be a transfer of the exchanged capital property by the taxpayer to the corporation;

(d)  where the exchanged capital property is taxable Canadian property of the taxpayer, the share acquired by the taxpayer on the exchange is also deemed to be, at any time that is within 60 months after the exchange, taxable Canadian property of the taxpayer.

For the purposes of the formula in subparagraph b.1 of the first paragraph,

(a)  A is the aggregate of all amounts deducted under paragraph b.1 of section 257 in computing, immediately before the exchange, the adjusted cost base to the taxpayer of the exchanged capital property;

(b)  B is the fair market value, immediately after the exchange, of the share referred to in subparagraph b.1 of the first paragraph; and

(c)  C is the fair market value, immediately after the exchange, of all the shares acquired by the taxpayer on the exchange.

1972, c. 23, s. 277; 1973, c. 17, s. 29; 1975, c. 22, s. 55; 1986, c. 19, s. 55; 1987, c. 67, s. 73; 1995, c. 49, s. 70; 1996, c. 39, s. 93; 1997, c. 3, s. 71; 2001, c. 7, s. 40; 2011, c. 6, s. 125; 2015, c. 36, s. 17.

2011-06-06

301. Where a share of the capital stock of a corporation is acquired by a taxpayer from the corporation in exchange for a capital property of the taxpayer that is another share of the corporation or a capital property of the taxpayer that is a bond, debenture or note of the corporation the terms of which confer on the holder the right to make the exchange and no consideration other than that share is received by the taxpayer, the following rules apply:

(a)  except for the purposes of section 157.6, the exchange is deemed not to be a disposition of property;

(b)  the cost to the taxpayer of all the shares of a particular class acquired by him on the exchange is deemed to be that proportion of the adjusted cost basis to him of the exchanged capital property immediately before the exchange that the fair market value, of all the shares of the particular class acquired by him on the exchange is of that of all the shares acquired by him on the exchange;

(b.1)  the taxpayer shall deduct, after the exchange, in computing the adjusted cost base to the taxpayer of a share acquired by the taxpayer on the exchange, the amount determined by the formula

A × B / C;

(b.2)  the taxpayer shall add, after the exchange, in computing the adjusted cost base to the taxpayer of a share, the amount determined under paragraph b.1 in respect of the share;

(c)  for the purposes of sections 462.11 to 462.24, the exchange is deemed to be a transfer of the exchanged capital property by the taxpayer to the corporation;

(d)  where the exchanged capital property is taxable Canadian property of the taxpayer, the share acquired by the taxpayer on the exchange is also deemed to be, at any time that is within 60 months after the exchange, taxable Canadian property of the taxpayer.

For the purposes of the formula in subparagraph b.1 of the first paragraph,

(a)  A is the aggregate of all amounts deducted under paragraph b.1 of section 257 in computing, immediately before the exchange, the adjusted cost base to the taxpayer of the exchanged capital property;

(b)  B is the fair market value, immediately after the exchange, of the share referred to in subparagraph b.1 of the first paragraph; and

(c)  C is the fair market value, immediately after the exchange, of all the shares acquired by the taxpayer on the exchange.

1972, c. 23, s. 277; 1973, c. 17, s. 29; 1975, c. 22, s. 55; 1986, c. 19, s. 55; 1987, c. 67, s. 73; 1995, c. 49, s. 70; 1996, c. 39, s. 93; 1997, c. 3, s. 71; 2001, c. 7, s. 40; 2011, c. 6, s. 125.

2006-03-01

301. Where a share of the capital stock of a corporation is acquired by a taxpayer from the corporation in exchange for a capital property of the taxpayer that is another share of the corporation or a capital property of the taxpayer that is a bond, debenture or note of the corporation the terms of which confer on the holder the right to make the exchange and no consideration other than that share is received by the taxpayer, the following rules apply :

(a)  except for the purposes of section 157.6, the exchange is deemed not to be a disposition of property;

(b)  the cost to the taxpayer of all the shares of a particular class acquired by him on the exchange is deemed to be that proportion of the adjusted cost basis to him of the exchanged capital property immediately before the exchange that the fair market value, of all the shares of the particular class acquired by him on the exchange is of that of all the shares acquired by him on the exchange;

(b.1)  the taxpayer shall deduct, after the exchange, in computing the adjusted cost base to the taxpayer of a share acquired by the taxpayer on the exchange, the amount determined by the formula

A × B / C;

(b.2)  the taxpayer shall add, after the exchange, in computing the adjusted cost base to the taxpayer of a share, the amount determined under paragraph b.1 in respect of the share;

(c)  for the purposes of sections 462.11 to 462.24, the exchange is deemed to be a transfer of the exchanged capital property by the taxpayer to the corporation;

(d)  where the exchanged capital property is taxable Canadian property of the taxpayer, the share acquired by the taxpayer on the exchange is also deemed to be taxable Canadian property of the taxpayer.

For the purposes of the formula in subparagraph b.1 of the first paragraph,

(a)  A is the aggregate of all amounts deducted under paragraph b.1 of section 257 in computing, immediately before the exchange, the adjusted cost base to the taxpayer of the exchanged capital property;

(b)  B is the fair market value, immediately after the exchange, of the share referred to in subparagraph b.1 of the first paragraph; and

(c)  C is the fair market value, immediately after the exchange, of all the shares acquired by the taxpayer on the exchange.

1972, c. 23, s. 277; 1973, c. 17, s. 29; 1975, c. 22, s. 55; 1986, c. 19, s. 55; 1987, c. 67, s. 73; 1995, c. 49, s. 70; 1996, c. 39, s. 93; 1997, c. 3, s. 71; 2001, c. 7, s. 40.