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I-3 - Taxation Act
Section 725.2
Disposition versions
725.2. An individual may deduct an amount equal to 25% of the amount of the benefit the individual is deemed to have received in a taxation year under section 49 or any of sections 50 to 52.1, in respect of a security, other than a non-qualified security, that a particular qualifying person has agreed to sell or issue under an agreement referred to in section 48, in respect of the transfer or any other disposition of rights under the agreement, or as a consequence of the individual’s death and of the individual’s having, immediately before death, owned a right to acquire the security under the agreement, if
(a) where rights under the agreement were not acquired by the individual as a result of the disposition of rights to which section 49.4 applied,
i. the amount payable by the individual to acquire the security under the agreement is not less than the amount by which the fair market value of the security at the time the agreement was made exceeds the amount paid by the individual to acquire the right to acquire the security, and
ii. immediately after the agreement was made, the individual was dealing at arm’s length with the following persons:
(1) the particular qualifying person,
(2) each other qualifying person that, immediately after the agreement was made, was an employer of the individual and was not dealing at arm’s length with the particular qualifying person, and
(3) the qualifying person of which the individual had, under the agreement, a right to acquire a security;
(b) where rights under the agreement were acquired by the individual as a result of one or more dispositions to which section 49.4 applied,
i. the amount payable by the individual to acquire the security under the agreement is not less than the amount that was included, in respect of the security, in the amount determined under the second paragraph of section 49.4 in respect of the most recent of those dispositions,
ii. immediately after the agreement the rights under which were the subject of the first of those dispositions, in this subparagraph referred to as the “original agreement”, was made the individual was dealing at arm’s length with
(1) the qualifying person that made the original agreement,
(2) each other qualifying person that, immediately after the agreement was made, was an employer of the individual and was not dealing at arm’s length with the qualifying person that made the original agreement, and
(3) the qualifying person of which the individual had, under the original agreement, a right to acquire a security,
iii. the amount that was included, in respect of each particular security that the individual had a right to acquire under the original agreement, in the amount determined under the third paragraph of section 49.4 in respect of the first of those dispositions was not less than the amount by which the fair market value of the particular security at the time the original agreement was made exceeded the amount paid by the individual to acquire the right to acquire the security, and
iv. for the purpose of determining if the condition in subparagraph b of the first paragraph of section 49.4 was satisfied in respect of each of the particular dispositions following the first of those dispositions, the amount that was included, in respect of each particular security that could be acquired under the agreement the rights under which were the subject of the particular disposition, in the amount determined under the third paragraph of section 49.4 in respect of the particular disposition, was not less than the amount that was included, in respect of the particular security, in the amount determined under the second paragraph of that section in respect of the last of those dispositions preceding the particular disposition;
(b.1) the security was acquired under the agreement by the individual or a person not dealing at arm’s length with the individual in circumstances described in section 51 or, in the case of a benefit deemed to have been received by the individual under section 52.1, was acquired under the agreement, within the first taxation year of the individual’s succession that is a graduated rate estate, by that succession or by
i. a person who is a beneficiary, within the meaning of the second paragraph of section 646, under the individual’s succession that is a graduated rate estate, or
ii. a person in whom the rights of the individual under the agreement have vested as a consequence of the death; and
(c) the security
i. is described in clause A or B of subparagraph i.1 of paragraph d of subsection 1 of section 110 of the Income Tax Act (R.S.C. 1985, c. 1, 5th (Suppl.)),
i.1. in the case of a benefit deemed to have been received by the individual under section 52.1, would have been referred to in clause A of subparagraph i.1 of paragraph d of subsection 1 of section 110 of the Income Tax Act if it had been issued or sold to the individual immediately before the death of the individual,
ii. would have been a unit of a mutual fund trust at the time of its sale or issue if those units issued by the trust that were not identical to the security had not been issued,
iii. would have been a unit of a mutual fund trust if it were issued or sold to the individual at the time the individual disposed of rights under the agreement, and those units issued by the trust that were not identical to the security had not been issued, or
iv. in the case of a benefit deemed to have been received by the individual under section 52.1, would have been a unit of a mutual fund trust if it had been issued or sold to the individual immediately before the death of the individual and if those units issued by the trust that were not identical to the security had not been issued.
725.2. An individual may deduct an amount equal to 25% of the amount of the benefit the individual is deemed to have received in a taxation year under section 49 or any of sections 50 to 52.1, in respect of a security that a particular qualifying person has agreed to sell or issue under an agreement referred to in section 48, in respect of the transfer or any other disposition of rights under the agreement, or as a consequence of the individual’s death and of the individual’s having, immediately before death, owned a right to acquire the security under the agreement, if
(a) where rights under the agreement were not acquired by the individual as a result of the disposition of rights to which section 49.4 applied,
i. the amount payable by the individual to acquire the security under the agreement is not less than the amount by which the fair market value of the security at the time the agreement was made exceeds the amount paid by the individual to acquire the right to acquire the security, and
ii. immediately after the agreement was made, the individual was dealing at arm’s length with the following persons:
(1) the particular qualifying person,
(2) each other qualifying person that, immediately after the agreement was made, was an employer of the individual and was not dealing at arm’s length with the particular qualifying person, and
(3) the qualifying person of which the individual had, under the agreement, a right to acquire a security;
(b) where rights under the agreement were acquired by the individual as a result of one or more dispositions to which section 49.4 applied,
i. the amount payable by the individual to acquire the security under the agreement is not less than the amount that was included, in respect of the security, in the amount determined under the second paragraph of section 49.4 in respect of the most recent of those dispositions,
ii. immediately after the agreement the rights under which were the subject of the first of those dispositions, in this subparagraph referred to as the “original agreement”, was made the individual was dealing at arm’s length with
(1) the qualifying person that made the original agreement,
(2) each other qualifying person that, immediately after the agreement was made, was an employer of the individual and was not dealing at arm’s length with the qualifying person that made the original agreement, and
(3) the qualifying person of which the individual had, under the original agreement, a right to acquire a security,
iii. the amount that was included, in respect of each particular security that the individual had a right to acquire under the original agreement, in the amount determined under the third paragraph of section 49.4 in respect of the first of those dispositions was not less than the amount by which the fair market value of the particular security at the time the original agreement was made exceeded the amount paid by the individual to acquire the right to acquire the security, and
iv. for the purpose of determining if the condition in subparagraph b of the first paragraph of section 49.4 was satisfied in respect of each of the particular dispositions following the first of those dispositions, the amount that was included, in respect of each particular security that could be acquired under the agreement the rights under which were the subject of the particular disposition, in the amount determined under the third paragraph of section 49.4 in respect of the particular disposition, was not less than the amount that was included, in respect of the particular security, in the amount determined under the second paragraph of that section in respect of the last of those dispositions preceding the particular disposition;
(b.1) the security was acquired under the agreement by the individual or a person not dealing at arm’s length with the individual in circumstances described in section 51 or, in the case of a benefit deemed to have been received by the individual under section 52.1, was acquired under the agreement, within the first taxation year of the individual’s succession that is a graduated rate estate, by that succession or by
i. a person who is a beneficiary, within the meaning of the second paragraph of section 646, under the individual’s succession that is a graduated rate estate, or
ii. a person in whom the rights of the individual under the agreement have vested as a consequence of the death; and
(c) the security
i. is described in clause A or B of subparagraph i.1 of paragraph d of subsection 1 of section 110 of the Income Tax Act (R.S.C. 1985, c. 1, 5th (Suppl.)),
i.1. in the case of a benefit deemed to have been received by the individual under section 52.1, would have been referred to in clause A of subparagraph i.1 of paragraph d of subsection 1 of section 110 of the Income Tax Act if it had been issued or sold to the individual immediately before the death of the individual,
ii. would have been a unit of a mutual fund trust at the time of its sale or issue if those units issued by the trust that were not identical to the security had not been issued,
iii. would have been a unit of a mutual fund trust if it were issued or sold to the individual at the time the individual disposed of rights under the agreement, and those units issued by the trust that were not identical to the security had not been issued, or
iv. in the case of a benefit deemed to have been received by the individual under section 52.1, would have been a unit of a mutual fund trust if it had been issued or sold to the individual immediately before the death of the individual and if those units issued by the trust that were not identical to the security had not been issued.
725.2. An individual may deduct an amount equal to 25% of the amount of the benefit the individual is deemed to have received in a taxation year under section 49 or any of sections 50 to 52.1, in respect of a security that a particular qualifying person has agreed to sell or issue under an agreement referred to in section 48, or in respect of the transfer or any other disposition of rights under the agreement, if
(a) where rights under the agreement were not acquired by the individual as a result of the disposition of rights to which section 49.4 applied,
i. the amount payable by the individual to acquire the security under the agreement is not less than the amount by which the fair market value of the security at the time the agreement was made exceeds the amount paid by the individual to acquire the right to acquire the security, and
ii. immediately after the agreement was made, the individual was dealing at arm’s length with the following persons:
(1) the particular qualifying person,
(2) each other qualifying person that, immediately after the agreement was made, was an employer of the individual and was not dealing at arm’s length with the particular qualifying person, and
(3) the qualifying person of which the individual had, under the agreement, a right to acquire a security;
(b) where rights under the agreement were acquired by the individual as a result of one or more dispositions to which section 49.4 applied,
i. the amount payable by the individual to acquire the security under the agreement is not less than the amount that was included, in respect of the security, in the amount determined under the second paragraph of section 49.4 in respect of the most recent of those dispositions,
ii. immediately after the agreement the rights under which were the subject of the first of those dispositions, in this subparagraph referred to as the “original agreement”, was made the individual was dealing at arm’s length with
(1) the qualifying person that made the original agreement,
(2) each other qualifying person that, immediately after the agreement was made, was an employer of the individual and was not dealing at arm’s length with the qualifying person that made the original agreement, and
(3) the qualifying person of which the individual had, under the original agreement, a right to acquire a security,
iii. the amount that was included, in respect of each particular security that the individual had a right to acquire under the original agreement, in the amount determined under the third paragraph of section 49.4 in respect of the first of those dispositions was not less than the amount by which the fair market value of the particular security at the time the original agreement was made exceeded the amount paid by the individual to acquire the right to acquire the security, and
iv. for the purpose of determining if the condition in subparagraph b of the first paragraph of section 49.4 was satisfied in respect of each of the particular dispositions following the first of those dispositions, the amount that was included, in respect of each particular security that could be acquired under the agreement the rights under which were the subject of the particular disposition, in the amount determined under the third paragraph of section 49.4 in respect of the particular disposition, was not less than the amount that was included, in respect of the particular security, in the amount determined under the second paragraph of that section in respect of the last of those dispositions preceding the particular disposition;
(b.1) the security was acquired under the agreement by the individual or a person not dealing at arm’s length with the individual in circumstances described in section 51; and
(c) the security
i. is described in clause A or B of subparagraph i.1 of paragraph d of subsection 1 of section 110 of the Income Tax Act (R.S.C. 1985, c. 1, 5th (Suppl.)),
ii. would have been a unit of a mutual fund trust at the time of its sale or issue if those units issued by the trust that were not identical to the security had not been issued, or
iii. would have been a unit of a mutual fund trust if it were issued or sold to the individual at the time the individual disposed of rights under the agreement, and those units issued by the trust that were not identical to the security had not been issued.
725.2. An individual may deduct an amount equal to 25% of the amount of the benefit the individual is deemed to have received in a taxation year under section 49 or any of sections 50 to 52.1, in respect of a security that a particular qualifying person has agreed to sell or issue under an agreement referred to in section 48, or in respect of the transfer or any other disposition of rights under the agreement, if
(a) where rights under the agreement were not acquired by the individual as a result of the disposition of rights to which section 49.4 applied,
i. the amount payable by the individual to acquire the security under the agreement is not less than the amount by which the fair market value of the security at the time the agreement was made exceeds the amount paid by the individual to acquire the right to acquire the security, and
ii. immediately after the agreement was made, the individual was dealing at arm’s length with the following persons:
(1) the particular qualifying person,
(2) each other qualifying person that, immediately after the agreement was made, was an employer of the individual and was not dealing at arm’s length with the particular qualifying person, and
(3) the qualifying person of which the individual had, under the agreement, a right to acquire a security;
(b) where rights under the agreement were acquired by the individual as a result of one or more dispositions to which section 49.4 applied,
i. the amount payable by the individual to acquire the security under the agreement is not less than the amount that was included, in respect of the security, in the amount determined under the second paragraph of section 49.4 in respect of the most recent of those dispositions,
ii. immediately after the agreement the rights under which were the subject of the first of those dispositions, in this subparagraph referred to as the “original agreement”, was made the individual was dealing at arm’s length with
(1) the qualifying person that made the original agreement,
(2) each other qualifying person that, immediately after the agreement was made, was an employer of the individual and was not dealing at arm’s length with the qualifying person that made the original agreement, and
(3) the qualifying person of which the individual had, under the original agreement, a right to acquire a security,
iii. the amount that was included, in respect of each particular security that the individual had a right to acquire under the original agreement, in the amount determined under the third paragraph of section 49.4 in respect of the first of those dispositions was not less than the amount by which the fair market value of the particular security at the time the original agreement was made exceeded the amount paid by the individual to acquire the right to acquire the security, and
iv. for the purpose of determining if the condition in subparagraph b of the first paragraph of section 49.4 was satisfied in respect of each of the particular dispositions following the first of those dispositions, the amount that was included, in respect of each particular security that could be acquired under the agreement the rights under which were the subject of the particular disposition, in the amount determined under the third paragraph of section 49.4 in respect of the particular disposition, was not less than the amount that was included, in respect of the particular security, in the amount determined under the second paragraph of that section in respect of the last of those dispositions preceding the particular disposition; and
(c) the security
i. is described in clause A or B of subparagraph i of paragraph d of subsection 1 of section 110 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement),
ii. would have been a unit of a mutual fund trust at the time of its sale or issue if those units issued by the trust that were not identical to the security had not been issued, or
iii. would have been a unit of a mutual fund trust if it were issued or sold to the individual at the time the individual disposed of rights under the agreement, and those units issued by the trust that were not identical to the security had not been issued.
