I-3 - Taxation Act

Section 175.11 Disposition versions

2020-09-24

175.11. For the purposes of this division,

“offsetting position”, in respect of a particular position of a person or partnership (in this definition referred to as the “holder”), means one or more positions that

(a)  are held by

i.  the holder,

ii.  another person or partnership that does not deal at arm’s length with, or is affiliated with, the holder (that other person or partnership being referred to in this section and sections 175.13 and 175.15 as the “connected person”), or

iii.  any combination of the holder and one or more connected persons;

(b)  have the effect, or would have the effect if each of the positions held by a connected person were held by the holder, of eliminating all or substantially all of the holder’s risk of loss and opportunity for gain or profit in respect of the particular position; and

(c)  if held by a connected person, can reasonably be considered to have been held with the purpose of obtaining the effect described in paragraph b;

“position”, of a person or partnership, means one or more properties, obligations or liabilities of the person or partnership, where

(a)  each property, obligation or liability is

i.  a share of the capital stock of a corporation,

ii.  an interest in a partnership,

iii.  an interest in a trust,

iv.  a commodity,

v.  foreign currency,

vi.  a swap agreement, a forward purchase or sale agreement, a forward rate agreement, a futures agreement, an option agreement or a similar agreement,

vii.  a debt owed to or owing by the person or partnership that, at any time,

(1)  is denominated in a foreign currency,

(2)  would be described in subparagraph d of the first paragraph of section 92.5R3 of the Regulation respecting the Taxation Act (chapter I-3, r. 1) if that subparagraph were read without reference to “, other than one described in any of subparagraphs a to c,”, or

(3)  is convertible into or exchangeable for a right in any property that is described in any of subparagraphs i to iv,

viii.  an obligation to transfer or return to another person or partnership a property identical to a particular property described in any of subparagraphs i to vii that was previously transferred or lent to the person or partnership by that other person or partnership, or

ix.  a right in any property that is described in any of subparagraphs i to vii; and

(b)  it is reasonable to conclude that, if there is more than one property, obligation or liability, each of them is held in connection with each other;

“successor position”, in respect of a position (in this definition referred to as the “initial position”), means a particular position if

(a)  the particular position is an offsetting position in respect of a second position;

(b)  the second position was an offsetting position in respect of the initial position that was disposed of at a particular time; and

(c)  the particular position was entered into during the period that begins 30 days before, and ends 30 days after, the particular time;

“unrecognized loss”, in respect of a position of a person or partnership at a particular time in a taxation year, means the loss, if any, that would be deductible in computing the income of the person or partnership for the year with respect to the position if it were disposed of immediately before the particular time for proceeds of disposition equal to its fair market value at the time of disposition;

“unrecognized profit”, in respect of a position of a person or partnership at a particular time in a taxation year, means the profit, if any, that would be included in computing the income of the person or partnership for the year with respect to the position if it were disposed of immediately before the particular time for proceeds of disposition equal to its fair market value at the time of disposition.;

2020, c. 16, s. 46.