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I-3 - Taxation Act
Section 745
Disposition versions
745. Subject to the second and third paragraphs, where a share, in this section referred to as the “new share”, has been acquired in exchange for another share, in this section referred to as the “old share”, in a transaction to which any of sections 301, 301.1 and 536 to 555.4 applies, for the purposes of any of sections 741 to 742.3 in respect of a disposition of the new share, the new share is deemed to be the same share as the old share.
For the purposes of the first paragraph, any dividend received on the old share is deemed for the purposes of sections 741 to 742.3 to have been received on the new share only to the extent of the proportion of the dividend that the shareholder’s adjusted cost base of the new share immediately after the exchange is of the shareholder’s adjusted cost base of all new shares, immediately after the exchange, acquired in exchange for the old share.
For the purposes of the first paragraph, the amount by which a loss from the disposition of the new share is reduced because of the application of this section shall not exceed the proportion of the shareholder’s adjusted cost base of the old share immediately before the exchange that the shareholder’s adjusted cost base of the new share immediately after the exchange is of the shareholder’s adjusted cost base of all new shares, immediately after the exchange, acquired in exchange for the old share.
