I-3 - Taxation Act

Section 517.4.4 Disposition versions

2006-03-01

517.4.4. For the purposes of paragraph b of section 517.4.2, where a taxpayer or an individual with whom the taxpayer does not deal at arm’s length, in this section referred to as the “transferor”, disposes of a share in a taxation year and deducts an amount under subparagraph b of the first paragraph of section 234 in computing the gain for the year from the disposition, in this section referred to as the “particular disposition”, the amount in respect of which an amount was deducted under Title VI.5 of Book IV in respect of the transferor’s gain from the particular disposition is deemed to be equal to the lesser of

(a)  the aggregate of

i.  the amount deducted by the transferor for the year under subparagraph b of the first paragraph of section 234 in respect of the particular disposition, and

ii.  subject to the third paragraph, twice the amount deducted under Title VI.5 of Book IV in computing the taxable income of the transferor for the year in respect of the taxable capital gain from the particular disposition, and

(b)  subject to the third paragraph, twice the maximum amount that could have been deducted under Title VI.5 of Book IV in computing the taxable income of the transferor for the year in respect of the taxable capital gain from the particular disposition, if

i.  no amount had been deducted by the transferor under subparagraph b of the first paragraph of section 234 in computing the gain for the year from the particular disposition, and

ii.  all amounts deducted under Title VI.5 of Book IV in computing the taxable income of the transferor for the year in respect of the taxable capital gain from the disposition of property to which this section does not apply, were deducted before determining the maximum amount that could have been deducted under the said Title in respect of the taxable capital gain from the particular disposition.

For the purposes of subparagraph ii of subparagraph b of the first paragraph, and subject to the third paragraph, 1/2 of the aggregate of all amounts determined under this section for the year in respect of other property disposed of before the particular disposition are deemed to have been deducted under Title VI.5 of Book IV in computing the taxable income of the transferor for the year in respect of taxable capital gains from the disposition of property to which this section does not apply.

Where the taxation year of the transferor includes 28 February 2000 or 17 October 2000, or begins after 28 February 2000 and ends before 17 October 2000, the following rules apply:

(a)  the reference to the word “twice” in subparagraph ii of subparagraph a of the first paragraph and the portion of subparagraph b of that paragraph before subparagraph i shall be read, with the necessary modifications, as a reference to the fraction that is the reciprocal of the fraction in paragraphs a to d of section 231.0.1 that applies to the transferor for the year; and

(b)  the reference to the fraction “1/2” in the second paragraph shall be read as a reference to the fraction in paragraphs a to d of section 231.0.1 that applies to the transferor for the year.

1993, c. 16, s. 205; 2003, c. 2, s. 134.