I-3 - Taxation Act

Section 295 Disposition versions

2017-02-08

295. Where, at a particular time, an option described in subparagraph b of the second paragraph of section 294 expires, the corporation that granted the option is deemed to have disposed, at that time for proceeds of disposition equal to the amount received by it in consideration for the granting of the option, of capital property the adjusted cost base of which to the corporation immediately before that time is deemed to be nil, unless

(a)  the option is held, at the particular time, by a person who deals at arm’s length with the corporation and the option was granted by the corporation to a person who was dealing at arm’s length with the corporation at the time that the option was granted; or

(b)  the option is an option to acquire shares of the capital stock of the corporation in consideration for expenses incurred pursuant to an agreement described in paragraph e of any of sections 364, 395 and 408 or in paragraph c of section 418.2.

1972, c. 23, s. 272; 1973, c. 17, s. 28; 1975, c. 22, s. 53; 1982, c. 5, s. 62; 1994, c. 22, s. 136; 1996, c. 39, s. 273; 1997, c. 3, s. 71; 2017, c. 1, s. 115.

2006-03-01

295. (1)  Where a corporation after 31 December 1971 grants an option to purchase shares of its capital stock, bonds or debentures which it is to issue, the corporation is deemed to have disposed of capital property and realized a gain equal to the amount it has received as consideration for the granting of the option at the time the option expires.

(2)  Subsection 1 does not apply to an option to acquire shares of the capital stock of a corporation as consideration for the incurring, pursuant to an agreement described in paragraph e of section 364 or to which paragraph e of section 395 or 408 or paragraph c of section 418.2, as the case may be, refers, of expenses described in such paragraphs.

1972, c. 23, s. 272; 1973, c. 17, s. 28; 1975, c. 22, s. 53; 1982, c. 5, s. 62; 1994, c. 22, s. 136; 1996, c. 39, s. 273; 1997, c. 3, s. 71.