I-3 - Taxation Act

Section 726.4.17.11 Disposition versions

2006-03-01

726.4.17.11. For the purposes of this Title, the issue base relating to certain issue expenses of an individual, at any time, means an amount equal to the amount by which the aggregate of the following amounts exceeds the aggregate of the amounts deducted by the individual under section 726.4.17.10 in computing his taxable income for a taxation year ending before that time:

(a)  the aggregate of all amounts each of which is equal to such proportion of the amount that is renounced under section 726.4.17.12 by a corporation in respect of a share issue as is represented by the ratio between, on the one hand, the aggregate determined under subparagraph i of paragraph a of section 726.4.10 in respect of the individual, for a taxation year ending at or before that time, relating to Canadian exploration expenses incurred out of the proceeds of the share issue and, on the other hand, the aggregate described in subparagraph b of the second paragraph of section 726.4.17.12 in respect of the share issue; and

(b)  the aggregate of all amounts each of which is equal to such proportion of the amount that is renounced under section 726.4.17.13 by a partnership in respect of a security issue the proceeds of which have been used to acquire flow-through shares issued by a corporation as is represented by the ratio between, on the one hand, the aggregate determined under subparagraph i of paragraph a of section 726.4.10 in respect of the individual, for a taxation year ending at or before that time, relating to Canadian exploration expenses incurred out of the portion, subscribed by the partnership, of the proceeds of the issue of the flow-through shares and, on the other hand, the aggregate described in subparagraph b of the second paragraph of section 726.4.17.13 in respect of the security issue.

However, subject to the third paragraph, the amount that an individual may include for a taxation year, under subparagraph a of the first paragraph, in his issue base relating to certain issue expenses in relation to a share issue, shall in no case be greater than the amount by which

(a)  the aggregate of

i.  the amount of the consideration paid by the individual to acquire shares at the time of the share issue; and

ii.  where the amount, or part of the amount, is an amount included in the issue base by reason of the individual’s being a member of a particular partnership, the amount that may reasonably be considered to be the individual’s share in the consideration that the particular partnership, or, as the case may be, another partnership, paid to acquire shares at the time of the share issue; exceeds

(b)  the aggregate of

i.  the amounts renounced by a corporation at or before the end of the year to the individual in respect of the shares contemplated in subparagraph i of subparagraph a under section 359.2 or 359.4, or that may reasonably be expected to be renounced by the corporation after the end of the year to the individual in respect of the said shares under the said sections;

ii.  the individual’s share and, where applicable, the share of any other person having possessed or able to acquire the individual’s interest in the particular partnership contemplated in subparagraph ii of subparagraph a, in the aggregate of the amounts renounced by a corporation at or before the end of the year to a partnership in respect of the shares contemplated in subparagraph ii of subparagraph a under section 359.2 or 359.4, or that may reasonably be expected to be renounced by the corporation after the end of the year to a partnership in respect of the said shares under the said sections; and

iii.  the amounts previously included under this section in the individual’s issue base in relation to the said share issue.

Notwithstanding the foregoing, where at any time in a taxation year an individual is a limited partner, within the meaning of section 613.6, of a partnership, the following rules apply:

(a)  the aggregate of all amounts each of which is an amount determined under subparagraph a or b of the first paragraph by reference to the portion, which is referred to in subparagraph i of paragraph a of section 726.4.10 for the year in respect of the individual, of his share of the Canadian exploration expenses incurred by the partnership in a fiscal period thereof ending in the year shall in no case be greater than the amount by which the amount determined for the individual under the second paragraph of section 613.1, in respect of the partnership at the end of that fiscal period, exceeds the aggregate of

i.  any amount that may reasonably be expected to be an amount referred to in subparagraph c of the second paragraph of the said section 613.1 for the individual, or for another person having acquired the individual’s partnership interest, in respect of the partnership at the end of a subsequent fiscal period thereof; and

ii.  all amounts each of which is the individual’s share of any loss of the partnership for the fiscal period from a business, other than a farming business, or from property, that may be deducted by the individual in computing his income for the year or included in computing his non-capital loss for the year;

(b)  the amount of the reduction, by reason of subparagraph a, of the aggregate described firstly in that subparagraph in respect of the individual for the year is deemed to be a loss of the individual as a limited partner in respect of the partnership for the year.

1992, c. 1, s. 41; 1993, c. 64, s. 59; 1995, c. 1, s. 58; 1997, c. 3, s. 71; 1997, c. 14, s. 103; 1998, c. 16, s. 181; 2000, c. 5, s. 293; 2001, c. 7, s. 85.