I-3 - Taxation Act

Section 305 Disposition versions

2019-06-19

305. A shareholder of a corporation who receives after 1971 a stock dividend, in respect of a share owned by him of the capital stock of the corporation, is deemed to acquire the share received by him at a cost equal to the aggregate of

(a)  where the stock dividend is a dividend,

i.  in the case of a shareholder that is an individual, the amount of the stock dividend, and

ii.  in any other case, the aggregate of

(1)  the amount by which the lesser of the amount of the stock dividend and its fair market value exceeds the amount of the dividend that the shareholder may deduct under section 738 in computing the shareholder’s taxable income, except any portion of the dividend that, if paid as a separate dividend, would not be subject to section 308.1 because the amount of the separate dividend would not exceed the amount of the income earned or realized by a corporation after 31 December 1971 and before the safe-income determination time, in relation to the transaction or event or series of transactions or events as part of which the dividend is received, that can reasonably be considered to contribute to the capital gain that would have been realized on a disposition at fair market value of the share on which the dividend was received, if the disposition had occurred immediately before the dividend was paid, and

(2)  the amount determined by the formula

A + B;

(a.1)  where the stock dividend is not a dividend, nil, and

(b)  the amount included under section 112.1 in computing the shareholder’s income in respect of the stock dividend.

In the formula in subparagraph 2 of subparagraph ii of subparagraph a of the first paragraph,

(a)  A is the amount of the deemed gain determined in accordance with paragraph c of section 308.1 in respect of the stock dividend; and

(b)  B is the amount by which the amount of the reduction determined in accordance with subparagraph b of the first paragraph of section 308.2.0.2 in respect of the stock dividend to which paragraph a of section 308.1 would otherwise apply exceeds the amount determined in accordance with subparagraph a in respect of the stock dividend.

1972, c. 23, s. 281; 1974, c. 18, s. 15; 1979, c. 18, s. 23; 1987, c. 67, s. 74; 1993, c. 16, s. 123; 1997, c. 3, s. 71; 2017, c. 1, s. 117; 2019, c. 14, s. 107.

2017-02-08

305. A shareholder of a corporation who receives after 1971 a stock dividend, in respect of a share owned by him of the capital stock of the corporation, is deemed to acquire the share received by him at a cost equal to the aggregate of

(a)  where the stock dividend is a dividend, the amount by which the amount of the stock dividend exceeds the amount of the dividend that the shareholder may deduct under section 738 in computing the shareholder’s taxable income, except any portion of the dividend that, if paid as a separate dividend, would not be subject to section 308.1 because the capital gain referred to in that section could reasonably be considered not to be attributable to anything other than income earned or realized by a corporation after 31 December 1971 and before the safe-income determination time, in relation to the transaction or event or series of transactions or events as part of which the dividend was received;

(a.1)  where the stock dividend is not a dividend, nil, and

(b)  the amount included under section 112.1 in computing the shareholder’s income in respect of the stock dividend.

1972, c. 23, s. 281; 1974, c. 18, s. 15; 1979, c. 18, s. 23; 1987, c. 67, s. 74; 1993, c. 16, s. 123; 1997, c. 3, s. 71; 2017, c. 1, s. 117.

2006-03-01

305. A shareholder of a corporation who receives after 1971 a stock dividend, in respect of a share owned by him of the capital stock of the corporation, is deemed to acquire the share received by him at a cost equal to the aggregate of

(a)  where the stock dividend is a dividend, the amount of the stock dividend,

(a.1)  where the stock dividend is not a dividend, nil, and

(b)  the amount included under section 112.1 in computing the shareholder’s income in respect of the stock dividend.

1972, c. 23, s. 281; 1974, c. 18, s. 15; 1979, c. 18, s. 23; 1987, c. 67, s. 74; 1993, c. 16, s. 123; 1997, c. 3, s. 71.