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I-3 - Taxation Act
Section 1049.14.4
Disposition versions
1049.14.4. If a corporation issues, at a particular time, a share of its capital stock with the stipulation that it can be included in a stock savings plan II or issues a share in replacement of a share issued at a particular time with such a stipulation or issued in replacement of a share issued in substitution for such a share and purchases or redeems in any manner whatever, directly or indirectly, in the year including the particular time but after that time or in the two years following that year, a share of a class of its capital stock other than a share described in section 965.106 or other than a share that has been the subject of a particular transaction referred to in section 965.113 in respect of which the corporation is not bound to meet the requirement set out in the second paragraph of section 965.105, it incurs a penalty equal to the amount determined under the second paragraph.
The amount of the penalty prescribed in the first paragraph in respect of a purchase or redemption is equal to the lesser of
(a) 25% of the amount obtained by multiplying the amount of the purchase or redemption by the proportion that the adjusted cost of the aggregate of the shares of the capital stock of the corporation that were issued, in the year of the purchase or redemption but before the time of the purchase or redemption or in the two years preceding that year, with the stipulation that they could be included in a stock savings plan II, and distributed in Québec and of the shares of the capital stock of the corporation issued in replacement of shares issued with such a stipulation, that were issued in the year of the purchase or redemption but before the time of the purchase or redemption or in the two years preceding that year and distributed in Québec or in replacement of shares issued in substitution for such shares, is of the paid-up capital at the time of the issue in respect of the aggregate of such shares of the corporation; and
(b) 25% of the adjusted cost of the aggregate of
i. the shares of the capital stock of the corporation that were issued, in the year of the purchase or redemption but before the time of the purchase or redemption or in the two years preceding that year, with the stipulation that they could be included in a stock savings plan II, and distributed in Québec to an individual or to a qualified mutual fund,
ii. the shares of the capital stock of the corporation issued in replacement of shares that are not described in subparagraph i, that were issued, in the year of the purchase or redemption but before the time of the purchase or redemption or in the two years preceding that year, with the stipulation that they could be included in a stock savings plan II, and distributed in Québec to an individual or to a qualified mutual fund, and
iii. the shares of the capital stock of the corporation issued in replacement of shares, other than shares described in subparagraph ii, issued in substitution for shares, other than shares described in subparagraph i, that were issued, in the year of the purchase or redemption or in the two years preceding that year, with the stipulation that they could be included in a stock savings plan II, and distributed in Québec to an individual or to a qualified mutual fund.
1049.14.4. If a corporation issues, at a particular time, a share of its capital stock with the stipulation that it can be included in an SME growth stock plan or issues a share in replacement of a share issued at a particular time with such a stipulation or issued in replacement of a share issued in substitution for such a share and purchases or redeems in any manner whatever, directly or indirectly, in the year including the particular time but after that time or in the three years following that year, a share of a class of its capital stock other than a share described in section 965.106 or other than a share that has been the subject of a particular transaction referred to in section 965.113 in respect of which the corporation is not bound to meet the requirement set out in the second paragraph of section 965.105, it incurs a penalty equal to the amount determined under the second paragraph.
The amount of the penalty prescribed in the first paragraph in respect of a purchase or redemption is equal to the lesser of
(a) 25% of the amount obtained by multiplying the amount of the purchase or redemption by the proportion that the adjusted cost of the aggregate of the shares of the capital stock of the corporation that were issued, in the year of the purchase or redemption but before the time of the purchase or redemption or in the three years preceding that year, with the stipulation that they could be included in an SME growth stock plan, and distributed in Québec and of the shares of the capital stock of the corporation issued in replacement of shares issued with such a stipulation, that were issued in the year of the purchase or redemption but before the time of the purchase or redemption or in the three years preceding that year and distributed in Québec or in replacement of shares issued in substitution for such shares, is of the paid-up capital at the time of the issue in respect of the aggregate of such shares of the corporation; and
(b) 25% of the adjusted cost of the aggregate of
i. the shares of the capital stock of the corporation that were issued, in the year of the purchase or redemption but before the time of the purchase or redemption or in the three years preceding that year, with the stipulation that they could be included in an SME growth stock plan, and distributed in Québec to an individual or to a qualified mutual fund,
ii. the shares of the capital stock of the corporation issued in replacement of shares that are not described in subparagraph i, that were issued, in the year of the purchase or redemption but before the time of the purchase or redemption or in the three years preceding that year, with the stipulation that they could be included in an SME growth stock plan, and distributed in Québec to an individual or to a qualified mutual fund, and
iii. the shares of the capital stock of the corporation issued in replacement of shares, other than shares described in subparagraph ii, issued in substitution for shares, other than shares described in subparagraph i, that were issued, in the year of the purchase or redemption or in the three years preceding that year, with the stipulation that they could be included in an SME growth stock plan, and distributed in Québec to an individual or to a qualified mutual fund.
