I-3 - Taxation Act

Section 560.1.1 Disposition versions

2015-10-26

560.1.1. For the purposes of this section and subparagraph d of the third paragraph of section 559,

(a)  “specified person”, at a particular time, means

i.  the parent,

ii.  each person who would be related to the parent at that time if

(1)  paragraph b of section 20 were not taken into account, and

(2)  each person who is the child of a deceased individual were related to each brother or sister of the individual and to each child of a deceased brother or sister of the individual, and

iii.  if the particular time is before the incorporation of the parent, each person who is described in subparagraph ii throughout the period that begins at the time the parent is incorporated and ends at the time that is immediately before the beginning of the winding-up;

(a.1)  a person described in subparagraph ii or iii of paragraph a is deemed not to be a specified person if it can reasonably be considered that one of the main purposes of one or more transactions or events is to cause the person to become a specified person so as to prevent a property that is distributed to the parent on the winding-up from being, for the purposes of section 559, a property described in the third paragraph of that section;

(b)  where at a particular time a property is owned or acquired by a partnership or a trust,

i.  the partnership or the trust, as the case may be, is deemed to be a corporation having one class of issued shares, which shares have full voting rights under all circumstances,

ii.  each member of the partnership or beneficiary under the trust, as the case may be, is deemed to own at that time the proportion of the number of issued shares of the capital stock of the corporation that the fair market value at that time of that member’s interest in the partnership or that beneficiary’s interest in the trust, as the case may be, is of the fair market value at that time of all the members’ interests in the partnership or beneficiaries’ interests in the trust, as the case may be, and

iii.  the property is deemed to have been owned or acquired at that time by the corporation;

(c)  in determining whether a person is a specified shareholder of a corporation,

i.  the reference in section 21.17 to “the issued shares of any class of the capital stock of the corporation or of any other corporation that is related to the corporation” shall be read as a reference to “the issued shares of any class, other than a specified class, of the capital stock of the corporation or of any other corporation that is related to the corporation and that has a significant direct or indirect interest in any issued shares of the capital stock of the corporation”,

i.1.  a corporation controlled by another corporation is, at a particular time, deemed not to own any shares of the capital stock of the other corporation if, at that time, the corporation does not have a direct or an indirect interest in any of the shares of the capital stock of the other corporation,

i.2.  section 21.18 is to be read without reference to its paragraph a in respect of any share of the capital stock of the subsidiary that the person would, but for this subparagraph, be deemed to own solely because the person has a right described in paragraph b of section 20 to acquire shares of the capital stock of a corporation that

(1)  is controlled by the subsidiary, and

(2)  does not have a direct or an indirect interest in any of the shares of the capital stock of the subsidiary, and

ii.  a corporation is deemed not to be a specified shareholder of itself; and

(d)  property that is distributed to the parent on the winding-up is deemed not to be acquired by a person if the person acquired the property before the acquisition of control referred to in subparagraph i of subparagraph d of the third paragraph of section 559 and the property is not owned by the person at any time after that acquisition of control.

1996, c. 39, s. 158; 1997, c. 3, s. 71; 2000, c. 5, s. 127; 2004, c. 8, s. 113; 2015, c. 24, s. 85.

2006-03-01

560.1.1. For the purposes of this section and subparagraph d of the third paragraph of section 559,

(a)  “specified person” at a particular time means the parent and each person that would, but for paragraph b of section 20, be related to the parent at that time and, for this purpose, a person is deemed not to be related to the parent where it can reasonably be considered that one of the main purposes of one or more transactions or events was to cause the person to be related to the parent so as to prevent a property that was distributed to the parent on the winding-up from being, for the purposes of section 559, a property described in the third paragraph of that section;

(b)  where at a particular time a property is owned or acquired by a partnership or a trust,

i.  the partnership or the trust, as the case may be, is deemed to be a corporation having one class of issued shares, which shares have full voting rights under all circumstances,

ii.  each member of the partnership or beneficiary under the trust, as the case may be, is deemed to own at that time the proportion of the number of issued shares of the capital stock of the corporation that the fair market value at that time of that member’s interest in the partnership or that beneficiary’s interest in the trust, as the case may be, is of the fair market value at that time of all the members’ interests in the partnership or beneficiaries’ interests in the trust, as the case may be, and

iii.  the property is deemed to have been owned or acquired at that time by the corporation; and

(c)  in determining whether a person is a specified shareholder of a corporation,

i.  the reference in section 21.17 to “the issued shares of any class of the capital stock of the corporation or of any other corporation that is related to the corporation” shall be read as a reference to “the issued shares of any class, other than a specified class, of the capital stock of the corporation or of any other corporation that is related to the corporation and that has a significant direct or indirect interest in any issued shares of the capital stock of the corporation”, and

ii.  a corporation is deemed not to be a specified shareholder of itself.

1996, c. 39, s. 158; 1997, c. 3, s. 71; 2000, c. 5, s. 127; 2004, c. 8, s. 113.