I-3 - Taxation Act

Section 592.6 Disposition versions

2017-02-08

592.6. For the purposes of Division XIII of Chapter IV of Title IV, section 540 and Chapter V of Title IX, the following rules apply:

(a)  subject to subparagraph b, where at any time a taxpayer resident in Canada or a foreign affiliate of the taxpayer (in this section referred to as the “vendor”) disposes of capital property that is shares of the capital stock of a foreign affiliate of the taxpayer, or a debt obligation owing to the taxpayer by the affiliate, to—or exchanges the shares or debt for shares of the capital stock of—a non-resident corporation without share capital, that is immediately after that time a foreign affiliate of the taxpayer, in a manner that increases the fair market value of a class of shares of the capital stock of the non-resident corporation, the non-resident corporation is deemed to have issued, and the vendor is deemed to have received, new shares of the class as consideration in respect of the disposition or exchange; and

(b)  if the taxpayer makes a valid election under paragraph b of subsection 3 of section 93.2 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), subparagraph a does not apply in relation to the disposition or exchange.

Chapter V.2 of Title II of Book I applies in relation to an election made under paragraph b of subsection 3 of section 93.2 of the Income Tax Act.

2017, c. 1, s. 146.