I-3 - Taxation Act

Section 1082.4 Disposition versions

2021-12-10

1082.4. The rule set out in the second paragraph applies where a taxpayer or a partnership and a person not resident in Canada with whom the taxpayer or the partnership, or a member of the partnership, does not deal at arm’s length, or a partnership of which the person not resident in Canada is a member, are participants in a transaction or a series of transactions and

(a)  the terms and conditions made or imposed, in respect of the transaction or series of transactions, between any of the participants in the transaction or series of transactions differ from those that would have been made between persons dealing at arm’s length; or

(b)  the transaction or series of transactions would not have been entered into between persons dealing at arm’s length and can reasonably be considered not to have been entered into primarily for bona fide purposes other than to obtain a tax benefit.

Where the conditions set out in the first paragraph are met, any amounts (in section 1082.4.1 referred to as the “initial amounts”) that would be determined for the purposes of this Act (if this Act were read without reference to this Title and sections 1079.9 to 1079.16) in respect of the taxpayer or the partnership for a taxation year or fiscal period, as the case may be, are to be adjusted to the quantum or nature of the amounts (in section 1082.4.1 referred to as the “adjusted amounts”) that would have been determined if,

(a)  where only subparagraph a of the first paragraph applies, the terms and conditions made or imposed, in respect of the transaction or series of transactions, between the participants in the transaction or series of transactions had been those that would have been made between persons dealing at arm’s length; or

(b)  where subparagraph b of the first paragraph applies, the transaction or series of transactions entered into between the participants had been the transaction or series of transactions that would have been entered into between persons dealing at arm’s length, under terms and conditions that would have been made between persons dealing at arm’s length.

2001, c. 7, s. 154; 2021, c. 36, s. 145.

2006-03-01

1082.4. The rule set out in the second paragraph applies where a taxpayer or a partnership and a person not resident in Canada with whom the taxpayer or the partnership, or a member of the partnership, does not deal at arm’s length, or a partnership of which the person not resident in Canada is a member, are participants in a transaction or a series of transactions and

(a)  the terms and conditions made or imposed, in respect of the transaction or series of transactions, between any of the participants in the transaction or series of transactions differ from those that would have been made between persons dealing at arm’s length; or

(b)  the transaction or series of transactions would not have been entered into between persons dealing at arm’s length and can reasonably be considered not to have been entered into primarily for bona fide purposes other than to obtain a tax benefit.

Where the conditions set out in the first paragraph are met, any amounts that, but for this Title and sections 1079.9 to 1079.16, would be determined for the purposes of this Act in respect of the taxpayer or the partnership for a taxation year or fiscal period, as the case may be, shall be adjusted to the quantum or nature of the amounts that would have been determined if,

(a)  where only subparagraph a of the first paragraph applies, the terms and conditions made or imposed, in respect of the transaction or series of transactions, between the participants in the transaction or series of transactions had been those that would have been made between persons dealing at arm’s length; or

(b)  where subparagraph b of the first paragraph applies, the transaction or series of transactions entered into between the participants had been the transaction or series of transactions that would have been entered into between persons dealing at arm’s length, under terms and conditions that would have been made between persons dealing at arm’s length.

2001, c. 7, s. 154.