I-3 - Taxation Act

Section 112 Disposition versions

2015-10-21

112. Section 111 does not apply in respect of a benefit conferred by a corporation to the extent that the amount or value of the benefit is deemed to be a dividend under Chapter III of Title IX or if it arises out of,

(a)  where the corporation is resident in Canada at the time referred to in section 111:

i.  the reduction of the paid-up capital of the corporation,

ii.  the acquisition, cancellation or redemption by the corporation of shares of its capital stock,

iii.  the winding-up, discontinuance or reorganization of the corporation’s business, or

iv.  a transaction to which Chapter VII or VIII of Title IX applies,

(a.1)  where the corporation is not resident in Canada at the time referred to in section 111:

i.  a distribution to which section 578.4 applies,

ii.  a reduction of the paid-up capital of the corporation to which subparagraph 2 of subparagraph i of paragraph j of section 257 would apply if that subparagraph 2 were read without reference to “after 31 December 1971 and before 20 August 2011, or” or to which subparagraph ii of that paragraph j applies,

iii.  the acquisition, cancellation or redemption by the corporation of shares of its capital stock, or

iv.  the winding-up, or liquidation and dissolution, of the corporation,

(b)  the payment of a dividend or a stock dividend;

(c)  the conferring, on all owners of common shares of the capital stock of the corporation at the time referred to in section 111, of a right in respect of each common share, that is identical to every other right conferred at that time in respect of each other such share, to acquire additional shares of the capital stock of the corporation; or

(d)  a transaction described in any of paragraphs d to f of subsection 2 of section 504.

For the purposes of subparagraph c of the first paragraph,

(a)  where the voting rights attached to a particular class of common shares of the capital stock of a corporation differ from the voting rights attached to another class of common shares of the capital stock of the corporation and there are no other differences between the terms and conditions of the classes of shares that could cause the fair market value of a share of the particular class to differ materially from the fair market value of a share of the other class, the common shares of the particular class are deemed to be identical to those of the other class; and

(b)  rights are not considered identical if the cost of acquiring the rights differs.

1972, c. 23, s. 101; 1974, c. 18, s. 7; 1978, c. 26, s. 27; 1979, c. 18, s. 9; 1982, c. 5, s. 34; 1990, c. 59, s. 66; 1993, c. 16, s. 68; 1994, c. 22, s. 77; 1995, c. 49, s. 39; 1997, c. 3, s. 71; 2015, c. 21, s. 117.

2006-03-01

112. Section 111 does not apply if the amount or value mentioned therein is deemed to be a dividend under Chapter III of Title IX or if it arises out of

(a)  the reduction of the paid-up capital of a corporation, the acquisition, cancellation or redemption by it of shares of its capital stock or the winding-up, discontinuance or reorganization of its business or a transaction to which sections 556 to 569 apply;

(b)  the payment of a dividend or a stock dividend;

(c)  the conferring, on all owners of common shares of the capital stock of the corporation at the time referred to in section 111, of a right in respect of each common share, that is identical to every other right conferred at that time in respect of each other such share, to acquire additional shares of the capital stock of the corporation; or

(d)  a transaction described in any of paragraphs d to f of subsection 2 of section 504.

For the purposes of subparagraph c of the first paragraph,

(a)  where the voting rights attached to a particular class of common shares of the capital stock of a corporation differ from the voting rights attached to another class of common shares of the capital stock of the corporation and there are no other differences between the terms and conditions of the classes of shares that could cause the fair market value of a share of the particular class to differ materially from the fair market value of a share of the other class, the common shares of the particular class are deemed to be identical to those of the other class; and

(b)  rights are not considered identical if the cost of acquiring the rights differs.

1972, c. 23, s. 101; 1974, c. 18, s. 7; 1978, c. 26, s. 27; 1979, c. 18, s. 9; 1982, c. 5, s. 34; 1990, c. 59, s. 66; 1993, c. 16, s. 68; 1994, c. 22, s. 77; 1995, c. 49, s. 39; 1997, c. 3, s. 71.