I-3 - Taxation Act

Section 543.1 Disposition versions

2006-03-01

543.1. Notwithstanding paragraph b of section 542 and section 543, where the fair market value of the shares disposed of by the taxpayer exceeds, immediately before the disposition, the aggregate of the cost deemed to him under paragraph a of section 542 of any property contemplated therein, and of the fair market value, immediately after the disposition, of every share contemplated in paragraph b of section 542, and it is reasonable to regard all or any portion of such excess as a benefit that the taxpayer desires to have conferred on a person related to the taxpayer, the following rules apply:

(a)  the taxpayer is deemed to dispose of the shares for proceeds equal to the lesser of their fair market value immediately before the disposition and of the aggregate of the cost deemed to him under paragraph a of section 542 of any property contemplated therein, and of the amount of the benefit conferred;

(b)  the taxpayer’s capital loss resulting from the disposition of shares is deemed to be nil; and

(c)  the cost to the taxpayer of a share of any class of the capital stock of the corporation receivable by him in consideration for the shares disposed of is deemed to be that proportion of the amount by which the adjusted cost base to the taxpayer, immediately before the disposition, of each share disposed of exceeds the aggregate determined in paragraph a, that the fair market value, immediately after the disposition, of such share of such class is of the fair market value, at the same time, of the aggregate of the shares receivable by him as consideration for the disposition.

1982, c. 5, s. 123; 1997, c. 3, s. 71.