I-3 - Taxation Act

Section 832.14 Disposition versions

2019-06-19

832.14. Where a particular insurance corporation demutualizes, the following rules apply:

(a)  each of the income, loss, capital gain and capital loss of a taxpayer, from the disposition, alteration or dilution of the taxpayer’s ownership rights in the particular corporation as a result of the demutualization, is deemed to be nil;

(b)  no amount paid or payable to a stakeholder in connection with the disposition, alteration or dilution of the stakeholder’s ownership rights in the particular corporation may be included in Class 14.1 of Schedule B to the Regulation respecting the Taxation Act (chapter I-3, r. 1);

(c)  (paragraph repealed);

(d)  where the consideration given by a person for a share of the capital stock of the particular corporation or a holding corporation in connection with the demutualization, or for particular ownership rights in a mutual holding corporation in respect of the particular corporation, includes the transfer, surrender, alteration or dilution of ownership rights in the particular corporation, the cost of the share, or the particular ownership rights, to the person is deemed to be nil;

(e)  where a holding corporation in connection with the demutualization acquires, in connection with the demutualization, a share of the capital stock of the particular corporation from the particular corporation and issues a share of its own capital stock to a stakeholder as consideration for the share of the capital stock of the particular corporation, the cost to the holding corporation of the share of the capital stock of the particular corporation is deemed to be nil;

(f)  where at any time a stakeholder receives a taxable conversion benefit and section 832.21 does not apply to the benefit,

i.  the corporation that conferred the benefit is deemed to have paid a dividend at that time on shares of its capital stock equal to the value of the benefit, and

ii.  subject to section 832.23, the benefit received by the stakeholder is deemed to be a dividend received by the stakeholder at that time;

(g)  for the purposes of this Part, where a dividend is deemed by paragraph f or by subparagraph c of the second paragraph of section 832.23 to have been paid by a corporation not resident in Canada, that corporation is deemed in respect of the payment of the dividend to be a corporation resident in Canada that is a taxable Canadian corporation unless any amount is deducted under section 126 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement);

(h)  for the purposes of sections 436, 440, 444, 450, 450.6 and 653 and Chapter I of Title I.1, the fair market value of rights to benefits that are to be received in connection with the demutualization is, before the time of the receipt, deemed to be nil; and

(i)  where a person acquires an annuity contract in respect of which, because of the application of paragraph f of section 832.12, no benefit is considered to have been received for the purposes of sections 832.11 to 832.25, the cost of the annuity contract to the person is deemed to be nil and sections 92.11 to 92.19 do not apply to the annuity contract.

2001, c. 53, s. 167; 2003, c. 9, s. 122; 2004, c. 8, s. 163; 2005, c. 1, s. 196; 2019, c. 14, s. 275.

2006-03-01

832.14. Where a particular insurance corporation demutualizes, the following rules apply:

(a)  each of the income, loss, capital gain and capital loss of a taxpayer, from the disposition, alteration or dilution of the taxpayer’s ownership rights in the particular corporation as a result of the demutualization, is deemed to be nil;

(b)  no amount paid or payable to a stakeholder in connection with the disposition, alteration or dilution of the stakeholder’s ownership rights in the particular corporation is an incorporeal capital amount;

(c)  (paragraph repealed);

(d)  where the consideration given by a person for a share of the capital stock of the particular corporation or a holding corporation in connection with the demutualization, or for particular ownership rights in a mutual holding corporation in respect of the particular corporation, includes the transfer, surrender, alteration or dilution of ownership rights in the particular corporation, the cost of the share, or the particular ownership rights, to the person is deemed to be nil;

(e)  where a holding corporation in connection with the demutualization acquires, in connection with the demutualization, a share of the capital stock of the particular corporation from the particular corporation and issues a share of its own capital stock to a stakeholder as consideration for the share of the capital stock of the particular corporation, the cost to the holding corporation of the share of the capital stock of the particular corporation is deemed to be nil;

(f)  where at any time a stakeholder receives a taxable conversion benefit and section 832.21 does not apply to the benefit,

i.  the corporation that conferred the benefit is deemed to have paid a dividend at that time on shares of its capital stock equal to the value of the benefit, and

ii.  subject to section 832.23, the benefit received by the stakeholder is deemed to be a dividend received by the stakeholder at that time;

(g)  for the purposes of this Part, where a dividend is deemed by paragraph f or by subparagraph c of the second paragraph of section 832.23 to have been paid by a corporation not resident in Canada, that corporation is deemed in respect of the payment of the dividend to be a corporation resident in Canada that is a taxable Canadian corporation unless any amount is deducted under section 126 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement);

(h)  for the purposes of sections 436, 440, 444, 450, 450.6 and 653 and Chapter I of Title I.1, the fair market value of rights to benefits that are to be received in connection with the demutualization is, before the time of the receipt, deemed to be nil; and

(i)  where a person acquires an annuity contract in respect of which, because of the application of paragraph f of section 832.12, no benefit is considered to have been received for the purposes of sections 832.11 to 832.25, the cost of the annuity contract to the person is deemed to be nil and sections 92.11 to 92.19 do not apply to the annuity contract.

2001, c. 53, s. 167; 2003, c. 9, s. 122; 2004, c. 8, s. 163; 2005, c. 1, s. 196.