I-3 - Taxation Act

Section 175.14 Disposition versions

2020-09-24

175.14. For the purposes of this division,

(a)  if a position of a person or partnership is not a property of the person or partnership, the person or partnership is deemed

i.  to hold the position at any time while it is a position of the person or partnership, and

ii.  to have disposed of the position when the position is settled or extinguished in respect of the person or partnership;

(b)  the disposition of a position is deemed to include the disposition of a portion of the position;

(c)  a first position held by one or more persons or partnerships referred to in paragraph a of the definition of “offsetting position” in section 175.11 is deemed to be an offsetting position in respect of a particular position of a person or partnership if

i.  there is a high degree of negative correlation between changes in value of the first position and that of the particular position, and

ii.  it can reasonably be considered that the principal purpose of the series of transactions or events, or any of the transactions in the series, of which the holding of both the first position and the particular position are part, is to avoid, reduce or defer tax that would otherwise be payable under this Act; and

(d)  one or more positions held by one or more persons or partnerships referred to in paragraph a of the definition of “offsetting position” in section 175.11 are deemed to be a successor position in respect of a particular position of a person or partnership if

i.  a portion of the particular position was disposed of at a particular time,

ii.  the position is, or the positions include, as the case may be, a position that consists of the portion of the particular position that was not disposed of (in this paragraph referred to as the “remaining portion of the particular position”),

iii.  where there is more than one position, any position that does not consist of the remaining portion of the particular position was entered into during the period that begins 30 days before, and ends 30 days after, the particular time referred to in subparagraph i,

iv.  the position is, or the positions taken together would be, as the case may be, an offsetting position in respect of a second position (within the meaning assigned by the definition of “successor position” in section 175.11),

v.  the second position described in subparagraph iv was an offsetting position in respect of the particular position, and

vi.  it can reasonably be considered that the principal purpose of the series of transactions or events, or any of the transactions in the series, of which the disposition of a portion of the particular position and the holding of one or more positions are part, is to avoid, reduce or defer tax that would otherwise be payable under this Act.

2020, c. 16, s. 46.