I-3 - Taxation Act

Section 506.1 Disposition versions

2009-05-15

506.1. Any amount paid by a public corporation on the reduction of the paid-up capital in respect of any class of shares of its capital stock, otherwise than by way of a redemption, acquisition or cancellation of a share of that class or by way of a transaction described in section 505 or Chapter V, is deemed to have been paid by the corporation and received by the person to whom it was paid, as a dividend, unless

(a)  the amount may reasonably be considered to be derived from proceeds of disposition realized by the corporation, or by a person or partnership in which the corporation had a direct or indirect interest at the time that the proceeds were realized, from a transaction that occurred

i.  outside the ordinary course of the business of the corporation, or of the person or partnership that realized the proceeds, and

ii.  within the period that began 24 months before the payment; and

(b)  no amount that may reasonably be considered to be derived from those proceeds was paid by the corporation on a previous reduction of the paid-up capital in respect of any class of shares of its capital stock.

1979, c. 18, s. 41; 1997, c. 3, s. 71; 2009, c. 5, s. 175.

2006-03-01

506.1. Where, at any time after 10 April 1978, a public corporation has reduced the paid-up capital in respect of any class of shares of its capital stock in a manner other than those referred to in section 505, 506 or 541, it is deemed to have paid at that time, on the shares of that class, a dividend equal to the amount paid by it in respect of that reduction.

1979, c. 18, s. 41; 1997, c. 3, s. 71.