I-3 - Taxation Act

Section 1049.2.2.5 Disposition versions

2017-12-07

1049.2.2.5. (Repealed).

1988, c. 4, s. 132; 1989, c. 5, s. 223; 1990, c. 7, s. 181; 1997, c. 3, s. 71; 2017, c. 29, s. 201.

2006-03-01

1049.2.2.5. Where a corporation issues a share of its capital stock with the stipulation that it can be included in a stock savings plan, or issues a share of its capital stock in replacement of a share issued with such a stipulation or in replacement of a share issued in substitution for such a share, and the corporation’s net shareholders’ equity is affected, after 16 December 1986, in any manner whatsoever, directly or indirectly, in the year the share issued with such a stipulation was issued but after that issue or in the two years following that year, following a transaction or operation or series of transactions or operations other than that referred to in section 965.11.19 or a particular transaction referred to in section 965.11.19.1 in respect of which the corporation is not bound to meet the requirement prescribed in the second paragraph of section 965.11.17, it incurs a penalty equal to the amount determined under the second paragraph if, in the opinion of the Minister, it is reasonable to believe that the transaction or operation or series of transactions or operations is equivalent to the redemption of a share of a class of its capital stock other than a share described in section 965.11.18.

The amount of the penalty prescribed in the first paragraph in respect of a transaction or operation or a series of transactions or operations is equal to the lesser of the following percentages:

(a)  25% of the amount obtained by multiplying the amount determined under the second paragraph of section 965.11.17 in respect of the transaction, operation or series of transactions or operations by the proportion that the adjusted cost of the aggregate of the shares of the capital stock of the corporation which were issued, in the year of the transaction or operation or series of transactions or operations and before the occurrence thereof or in the two years preceding that year, with the stipulation that they could be included in a stock savings plan, and distributed in Québec and of the shares of the capital stock of the corporation issued in replacement of shares issued with such a stipulation, that were issued in the year of the transaction or operation or series of transactions or operations and before the occurrence thereof or in the two years preceding that year and distributed in Québec, is of the paid-up capital at the time of the issue in respect of the aggregate of such shares of the corporation;

(b)  25% of the adjusted cost of the aggregate of

i.  the shares of the capital stock of the corporation issued, in the year of the transaction or operation or series of transactions or operations but before the occurrence of the transaction or operation or series of transactions or operations or in the two years preceding that year, with the stipulation that they could be included in a stock savings plan, and distributed in Québec to an individual other than a trust, to an investment group or to an investment fund;

ii.  the shares of the capital stock of the corporation issued in replacement of shares that are not contemplated in subparagraph i, that were issued, in the year of the transaction or operation or series of transactions or operations but before the occurrence of the transaction or operation or series of transactions or operations or in the two years preceding that year, with the stipulation that they could be included in a stock savings plan, and distributed in Québec to an individual other than a trust, to an investment group or to an investment fund; and

iii.  the shares of the capital stock of the corporation issued in replacement of shares, other than shares contemplated in subparagraph ii, issued in substitution for shares, other than shares contemplated in subparagraph i, that were issued, in the year of the transaction or operation or series of transactions or operations but before the occurrence of the transaction or operation or series of transactions or operations or in the two years preceding that year, with the stipulation that they could be included in a stock savings plan, and distributed in Québec to an individual other than a trust, to an investment group or to an investment fund.

1988, c. 4, s. 132; 1989, c. 5, s. 223; 1990, c. 7, s. 181; 1997, c. 3, s. 71.