I-3 - Taxation Act

Section 175.13 Disposition versions

2020-09-24

175.13. Section 175.12 does not apply in respect of a particular position of a transferor if

(a)  the following conditions are met:

i.  either the particular position, or the offsetting position in respect of the particular position, consists of

(1)  commodities that the holder of the position manufactures, produces, grows, extracts or processes, or

(2)  debt that the holder of the position incurs in the course of a business that consists of one or any combination of the activities described in subparagraph 1, and

ii.  it can reasonably be considered that the position not described in subparagraph i—the particular position if the position that is described in subparagraph i is the offsetting position, or the offsetting position if the position that is described in that subparagraph i is the particular position—is held to reduce the risk, with respect to the position described in subparagraph i, from

(1)  in the case of a position described in subparagraph i that consists of commodities described in subparagraph 1 of that subparagraph i, price changes or fluctuations in the value of currency with respect to such commodities, or

(2)  in the case of a position described in subparagraph i that consists of a debt described in subparagraph 2 of that subparagraph i, fluctuations in interest rates or in the value of currency with respect to the debt;

(b)  the transferor or a connected person (in this subparagraph referred to as the “holder”) continues to hold a position—that would be an offsetting position in respect of the particular position if the particular position continued to be held by the transferor—throughout a 30‑day period beginning on the date of disposition of the particular position, and at no time during the period

i.  is the holder’s risk of loss or opportunity for gain or profit with respect to the position reduced in any material respect by another position entered into or disposed of by the holder, or

ii.  would the holder’s risk of loss or opportunity for gain or profit with respect to the position be reduced in any material respect by another position entered into or disposed of by a connected person, if the other position were entered into or disposed of by the holder; or

(c)  it can reasonably be considered that none of the main purposes of the series of transactions or events, or any of the transactions or events in the series, of which the holding of both the particular position and offsetting position are part, is to avoid, reduce or defer tax that would otherwise be payable under this Act.

2020, c. 16, s. 46.