I-3 - Taxation Act

Section 557 Disposition versions

2006-03-01

557. Any property, other than an interest in a partnership, that was distributed to the parent by a subsidiary on the winding-up is deemed to have been disposed of by the subsidiary for proceeds equal to the cost amount to the subsidiary of the property immediately before the winding-up.

However,

(a)  in the case of a Canadian resource property, a foreign resource property or a right to receive production, as defined in section 158.1, to which a matchable expenditure, as defined in section 158.1, relates, the proceeds are deemed to be equal to zero; and

(b)  in the case of a specified debt obligation, within the meaning assigned by section 851.22.1, other than a mark-to-market property, within the meaning assigned by that section, the property is deemed, except for the purposes of section 427.4, not to have been disposed of where the subsidiary was a financial institution, within the meaning assigned by section 851.22.1, in its taxation year in which its property was distributed to the parent on the winding-up and the parent was such a financial institution in its taxation year in which it received the property of the subsidiary on the winding-up.

Each interest of the subsidiary in a partnership that was distributed to the parent on the winding-up is deemed, except for the purposes of section 632, not to have been disposed of by the subsidiary.

1972, c. 23, s. 435; 1975, c. 22, s. 138; 1986, c. 19, s. 120; 1989, c. 77, s. 62; 1993, c. 16, s. 219; 1994, c. 22, s. 203; 1996, c. 39, s. 156; 1997, c. 3, s. 71; 2001, c. 7, s. 58.