I-3 - Taxation Act

Section 540.6 Disposition versions

2011-06-06

540.6. The rules to which section 540.5 refers, in relation to a disposition by a taxpayer of a particular unit of a SIFT wind-up entity to a corporation for consideration that is an exchange share, are as follows:

(a)  the taxpayer’s proceeds of disposition of the particular unit, and cost of the exchange share, are deemed to be equal to the cost amount to the taxpayer of the particular unit immediately before the disposition;

(b)  if the particular unit was immediately before the disposition taxable Québec property or taxable Canadian property of the taxpayer, the exchange share is deemed to be, at any time that is within 60 months after the disposition, taxable Québec property or taxable Canadian property of the taxpayer, as the case may be;

(c)  if the exchange share’s fair market value immediately after the disposition exceeds the particular unit’s fair market value at the time of the disposition, the excess is deemed to be an amount that Division IV of Chapter II of Title III requires to be included in computing the taxpayer’s income for the taxpayer’s taxation year in which the disposition occurs;

(d)  if the particular unit’s fair market value at the time of the disposition exceeds the exchange share’s fair market value immediately after the disposition, and it is reasonable to regard any part of the excess as a benefit that the taxpayer desired to have conferred on a person, or partnership, with whom the taxpayer does not deal at arm’s length, the excess is deemed to be an amount that Division IV of Chapter II of Title III requires to be included in computing the taxpayer’s income for the taxpayer’s taxation year in which the disposition occurs; and

(e)  the cost to the corporation of the particular unit is deemed to be the lesser of

i.  the fair market value of the particular unit immediately before the disposition, and

ii.  the amount determined for B in the formula in paragraph f of subsection 8 of section 85.1 of the Income Tax Act (R.S.C. 1985, c. 1, (5th Suppl.)), in respect of the particular unit.

2010, c. 25, s. 39; 2011, c. 6, s. 136.

2010-10-27

540.6. The rules to which section 540.5 refers, in relation to a disposition by a taxpayer of a particular unit of a SIFT wind-up entity to a corporation for consideration that is an exchange share, are as follows:

(a)  the taxpayer’s proceeds of disposition of the particular unit, and cost of the exchange share, are deemed to be equal to the cost amount to the taxpayer of the particular unit immediately before the disposition;

(b)  if the particular unit was immediately before the disposition taxable Québec property or taxable Canadian property of the taxpayer, the exchange share is deemed to be taxable Québec property or taxable Canadian property of the taxpayer, as the case may be;

(c)  if the exchange share’s fair market value immediately after the disposition exceeds the particular unit’s fair market value at the time of the disposition, the excess is deemed to be an amount that Division IV of Chapter II of Title III requires to be included in computing the taxpayer’s income for the taxpayer’s taxation year in which the disposition occurs;

(d)  if the particular unit’s fair market value at the time of the disposition exceeds the exchange share’s fair market value immediately after the disposition, and it is reasonable to regard any part of the excess as a benefit that the taxpayer desired to have conferred on a person, or partnership, with whom the taxpayer does not deal at arm’s length, the excess is deemed to be an amount that Division IV of Chapter II of Title III requires to be included in computing the taxpayer’s income for the taxpayer’s taxation year in which the disposition occurs; and

(e)  the cost to the corporation of the particular unit is deemed to be the lesser of

i.  the fair market value of the particular unit immediately before the disposition, and

ii.  the amount determined for B in the formula in paragraph f of subsection 8 of section 85.1 of the Income Tax Act (R.S.C. 1985, c. 1, (5th Suppl.)), in respect of the particular unit

2010, c. 25, s. 39.