I-3 - Taxation Act

Section 112.3.1 Disposition versions

2021-06-04

112.3.1. For the purposes of this section and sections 111 and 112, the following rules apply:

(a)  a contemplated shareholder of a corporation is

i.  a person or partnership on whom a benefit is conferred by the corporation in contemplation of the person or partnership becoming a shareholder of the corporation, or

ii.  a member of a partnership on whom a benefit is conferred by the corporation in contemplation of the partnership becoming a shareholder of the corporation;

(b)  a person or partnership that is (or is deemed by this subparagraph to be) a member of a particular partnership that is a member of another partnership is deemed to be a member of the other partnership;

(c)  a benefit conferred by a corporation on an individual is a benefit conferred on a shareholder of the corporation, a member of a partnership that is a shareholder of the corporation or a contemplated shareholder of the corporation–except to the extent that the amount or value of the benefit is included in computing the income of the individual or any other person–if the individual is an individual, other than an excluded trust in respect of the corporation, who does not deal at arm’s length with, or is affiliated with, the shareholder, member of the partnership or contemplated shareholder, as the case may be; and

(d)  (subparagraph repealed).

For the purposes of subparagraph c of the first paragraph, an excluded trust in respect of a corporation is a trust in which no individual (other than an excluded trust in respect of the corporation) who does not deal at arm’s length with, or is affiliated with, a shareholder of the corporation, a member of a partnership that is a shareholder of the corporation or a contemplated shareholder of the corporation, is beneficially interested.

2015, c. 21, s. 118; 2021, c. 18, s. 25.

2015-10-21

112.3.1. For the purposes of this section and sections 111 and 112, the following rules apply:

(a)  a contemplated shareholder of a corporation is

i.  a person or partnership on whom a benefit is conferred by the corporation in contemplation of the person or partnership becoming a shareholder of the corporation, or

ii.  a member of a partnership on whom a benefit is conferred by the corporation in contemplation of the partnership becoming a shareholder of the corporation;

(b)  a person or partnership that is (or is deemed by this subparagraph to be) a member of a particular partnership that is a member of another partnership is deemed to be a member of the other partnership;

(c)  a benefit conferred by a corporation on an individual is a benefit conferred on a shareholder of the corporation, a member of a partnership that is a shareholder of the corporation or a contemplated shareholder of the corporation–except to the extent that the amount or value of the benefit is included in computing the income of the individual or any other person–if the individual is an individual, other than an excluded trust in respect of the corporation, who does not deal at arm’s length with, or is affiliated with, the shareholder, member of the partnership or contemplated shareholder, as the case may be; and

(d)  if a corporation not resident in Canada (in this subparagraph referred to as the “original corporation”) governed by the laws of a foreign jurisdiction is divided under those laws into two or more corporations not resident in Canada and, as a consequence of the division, a shareholder of the original corporation acquires at any time one or more shares of another corporation (in this subparagraph referred to as the “new corporation”), the original corporation is deemed at that time to have conferred a benefit on the shareholder equal to the value at that time of the shares of the new corporation acquired by the shareholder except to the extent that any of subparagraphs i to iii of subparagraph a.1 of the first paragraph of section 112 or subparagraph b of that first paragraph applies to the acquisition of the shares.

For the purposes of subparagraph c of the first paragraph, an excluded trust in respect of a corporation is a trust in which no individual (other than an excluded trust in respect of the corporation) who does not deal at arm’s length with, or is affiliated with, a shareholder of the corporation, a member of a partnership that is a shareholder of the corporation or a contemplated shareholder of the corporation, is beneficially interested.

2015, c. 21, s. 118.