I-3 - Taxation Act

Section 261.3 Disposition versions

2006-03-01

261.3. For the purpose of applying sections 255 to 258 at any time in respect of a member of a partnership who would be a member described in section 261.1 of the partnership if the fiscal period of the partnership that includes that time ended at that time, where at any time after 21 February 1994 the member of the partnership makes a contribution of capital to the partnership, the contribution is deemed not to have been made where

(a)  the partnership or a person or partnership with whom the partnership does not deal at arm’s length makes a loan to the member or to a person with whom the member does not deal at arm’s length, or pays an amount as a payment or distribution of the member’s share in the profits or capital of the partnership, or the member or a person with whom the member does not deal at arm’s length becomes indebted to the partnership or a person or partnership with whom the partnership does not deal at arm’s length; and

(b)  it is established, by subsequent events or otherwise, that the loan, payment or indebtedness was made or arose as part of a series of contributions, loans, payments or other similar transactions.

1996, c. 39, s. 78; 1997, c. 3, s. 71.