I-3 - Taxation Act

Section 261.7 Disposition versions

2006-03-01

261.7. For the purposes of section 261.6, a contribution of capital or an increase in the indebtedness will be considered not to be substantial where

(a)  the amount was raised pursuant to the terms of a written agreement entered into by a partnership before 22 February 1994 to issue an interest in the partnership and was expended on expenditures contemplated by the agreement before 1 January 1995, or before 2 March 1995 in the case of amounts expended to acquire

i.  a film production prescribed for the purposes of subparagraph ii of paragraph b of section 613.3 the principal photography of which or, in the case of such a production that is a television series, one episode of the series, commences before 1 January 1995 and the production is completed before 2 March 1995, or

ii.  an interest in one or more partnerships all or substantially all of the property of which is a film production referred to in subparagraph i;

(b)  the amount was raised pursuant to the terms of a written agreement, other than an agreement referred to in paragraph a, entered into by a partnership before 22 February 1994 and was expended on expenditures contemplated by the agreement before 1 January 1995, or before 2 March 1995 in the case of amounts expended to acquire a property described in subparagraph i or ii of paragraph a;

(c)  the amount was used by the partnership before 1 January 1995, or before 2 March 1995 in the case of amounts expended to acquire a property described in subparagraph i or ii of paragraph a, to make an expenditure required to be made pursuant to the terms of a written agreement entered into by the partnership before 22 February 1994;

(d)  the amount was used to repay a loan, debt or contribution of capital that had been received or incurred in respect of an expenditure referred to in any of paragraphs a to c;

(e)  the amount was

i.  raised before 1 January 1995 pursuant to the terms of a final prospectus, preliminary prospectus, offering memorandum or registration statement filed before 22 February 1994 with a public authority in Canada in accordance with the securities legislation of Canada or of a province and, where required by law, accepted for filing by the public authority, and

ii.  expended before 1 January 1995, or before 2 March 1995 in the case of amounts expended to acquire a film production prescribed for the purposes of subparagraph ii of paragraph b of section 613.3, or an interest in one or more partnerships all or substantially all of the property of which is such a film production, on expenditures contemplated by the document referred to in subparagraph i that was filed before 22 February 1994;

(f)  the amount was raised before 1 January 1995 pursuant to the terms of an offering memorandum distributed as part of an offering of securities where

i.  the memorandum contained a complete or substantially complete description of the securities contemplated in the offering as well as the terms and conditions of the offering,

ii.  the memorandum was distributed before 22 February 1994,

iii.  solicitations in respect of the sale of the securities contemplated by the memorandum were made before 22 February 1994,

iv.  the sale of the securities was substantially in accordance with the memorandum, and

v.  the funds were expended in accordance with the memorandum before 1 January 1995 or, in the case of a partnership all or substantially all of the property of which is property described in subparagraph i or ii of paragraph a, before 2 March 1995; or

(g)  the amount was used for an activity that was carried on by the partnership on 22 February 1994 but not for a significant expansion of the activity nor for the acquisition or production of a film production.

1996, c. 39, s. 78; 1997, c. 3, s. 71; 1999, c. 83, s. 50; 2001, c. 53, s. 49.