I-3 - Taxation Act

Section 726.4.17.13 Disposition versions

2006-03-01

726.4.17.13. Where a partnership makes a public issue of securities that are interests in the partnership, where the receipt for the final prospectus or the exemption from filing a prospectus of the security issue was granted after 2 May 1991, and where the partnership uses the proceeds of the security issue to acquire flow-through shares issued by a corporation, it may renounce, in respect of the security issue, an amount not exceeding the amount determined, in respect of the security issue, by the formula

(A × B) / C.

For the purposes of the formula set forth in the first paragraph,

(a)  A is the lesser of

i.  the aggregate of the expenses incurred by the partnership, in the course of the issue of securities and out of the proceeds thereof, at or before the time the renunciation is made and, where such is the case, the reasonable additional expenses the partnership expects to incur after that time, in the course of that security issue and out of the proceeds thereof, and

ii.  15% of the aggregate of the proceeds of the security issue at or before the time the renunciation is made and, where such is the case, the additional proceeds the partnership expects to receive for the additional partnership interests it intends to issue after that time as part of the security issue;

(b)  B is the aggregate of all amounts each of which is

i.  an expense referred to in subparagraph i of paragraph a of section 726.4.10 in respect of an individual and incurred, at or before the time the renunciation is made, out of such portion of the proceeds of the flow-through share issue as is subscribed by the partnership at or before that time out of the proceeds of the security issue, or

ii.  any amount that may reasonably be expected to be an expense referred to in subparagraph i of paragraph a of section 726.4.10 in respect of an individual and incurred, after the time the renunciation is made, out of that portion of the proceeds of the flow-through share issue that the partnership subscribed at or before that time, or intends to subscribe after that time, out of the proceeds of the security issue;

(c)  C is the amount by which the aggregate of the proceeds of the security issue at or before the time the renunciation is made and, where such is the case, the additional proceeds the partnership expects to receive for the additional partnership interests it intends to issue after that time as part of the security issue, exceeds the amount used for A.

Any renunciation made by a partnership under the first paragraph in respect of a security issue is valid only if it is made, in prescribed form, on 31 December in the calendar year in which the security issue commenced or within 60 days thereafter.

The first paragraph does not apply in respect of a public issue of securities in respect of which the application for a receipt for the preliminary prospectus or the application for an exemption from filing a prospectus, as the case may be, is made after 12 June 2003 and the proceeds of which were used by the partnership to acquire flow-through shares before 31 March 2004.

1992, c. 1, s. 41; 1993, c. 19, s. 36; 1997, c. 3, s. 71; 2000, c. 5, s. 293; 2004, c. 21, s. 116; 2005, c. 23, s. 73.