I-3 - Taxation Act

Section 555.0.4 Disposition versions

2020-09-24

555.0.4. If, at a particular time, there is a merger of two or more foreign corporations, one of the foreign corporations (in this section referred to as the “particular corporation”) disposes, because of the merger, of a particular taxable Canadian property that is a share of the capital stock of a corporation, an interest in a partnership or an interest in a trust, the particular property becomes property of the corporation resulting from the merger (in this section referred to as the “new corporation”) and the new corporation and the particular corporation make a valid election under paragraph e of subsection 8.4 of section 87 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) in respect of the merger, the following rules apply:

(a)  if the particular property is an interest in a partnership,

i.  the particular corporation is deemed not to have disposed of the particular property, and

ii.  the new corporation is deemed

(1)  to have acquired the particular property at a cost equal to the cost of the particular property to the particular corporation, and

(2)  to be the same corporation as, and a continuation of, the particular corporation in respect of the particular property; and

(b)  if the particular property is a share of the capital stock of a corporation or an interest in a trust,

i.  the particular property is deemed to have been disposed of at the particular time by the particular corporation to the new corporation for proceeds of disposition equal to the adjusted cost base of the property to the particular corporation immediately before that time, and

ii.  the cost of the particular property to the new corporation is deemed to be equal to the amount that is deemed to be the proceeds of disposition of the property under subparagraph i.

Chapter V.2 of Title II of Book I applies in relation to an election made under paragraph e of subsection 8.4 of section 87 of the Income Tax Act.

2020, c. 16, s. 79.