I-3 - Taxation Act

Section 580.1 Disposition versions

2021-06-02

580.1. For the purposes of this section and sections 580.2 and 580.3,

“aggregate participating percentage”, of a taxpayer in respect of a foreign affiliate of the taxpayer for a taxation year of the foreign affiliate, means the aggregate of all amounts, each of which is the participating percentage, in respect of the foreign affiliate, of a share of the capital stock of a corporation that is owned by the taxpayer at the end of the taxation year;

“connected partnership”, in respect of a particular taxpayer, means a partnership if, at or immediately after the particular time at which section 580.3 applies in respect of a foreign affiliate of the particular taxpayer,

(a)  the particular taxpayer or a connected person in respect of the particular taxpayer is, directly or indirectly through one or more other partnerships, a member of the partnership; or

(b)  where paragraph a does not apply,

i.  the foreign affiliate is a foreign affiliate of the partnership at the particular time, and

ii.  the aggregate participating percentage of the partnership in respect of the foreign affiliate for the foreign affiliate’s ordinary taxation year may reasonably be considered to have increased as a result of the triggering event that gave rise to the application of section 580.3;

“connected person”, in respect of a particular taxpayer, means a person that—at or immediately after the particular time at which section 580.3 applies in respect of a foreign affiliate of the particular taxpayer—is resident in Canada and

(a)  does not deal at arm’s length with the particular taxpayer; or

(b)  deals at arm’s length with the particular taxpayer, if

i.  the foreign affiliate is a foreign affiliate of the person at the particular time, and

ii.  the aggregate participating percentage of the person in respect of the foreign affiliate for the foreign affiliate’s ordinary taxation year may reasonably be considered to have increased as a result of the triggering event that gave rise to the application of section 580.3;

“excluded acquisition or disposition”, in respect of a taxation year of a foreign affiliate of a taxpayer, means an acquisition or disposition of an equity interest in a corporation, partnership or trust that can reasonably be considered to result in a change in the aggregate participating percentage of the taxpayer in respect of the foreign affiliate for the taxation year of the foreign affiliate, where

(a)  the change in the aggregate participating percentage of the taxpayer is less than 1%; and

(b)  it cannot reasonably be considered that one of the main reasons the acquisition or disposition occurs as a separate acquisition or disposition from one or more other acquisitions or dispositions is to avoid the application of section 580.3;

“triggering event” means

(a)  an acquisition or disposition of an equity interest in a corporation, partnership or trust;

(b)  a change in the terms or conditions of a share of the capital stock of a corporation or a right as a member of a partnership or as a beneficiary under a trust; or

(c)  a disposition or change of a right referred to in paragraph a of section 598.

2021, c. 14, s. 47.