I-3 - Taxation Act

Section 504.2 Disposition versions

2006-03-01

504.2. For the purposes of subparagraph ii of paragraph f of subsection 2 of section 504, where the property acquired by the corporation consists of shares of any class of the capital stock of another corporation resident in Canada, in this section referred to as the “particular corporation”, and, immediately after the acquisition, the particular corporation is connected, within the meaning of the regulations, with the corporation, the contributed surplus of the corporation that arose on the acquisition is deemed to be the lesser of

(a)  the amount added to the contributed surplus of the corporation on the acquisition, and

(b)  the amount by which the paid-up capital in respect of the shares at the time of the acquisition exceeded the fair market value of any consideration given by the corporation for the shares.

1995, c. 49, s. 138; 1997, c. 3, s. 71.