I-3 - Taxation Act

Section 543.2 Disposition versions

2006-03-01

543.2. The following rules apply in respect of each share receivable by a taxpayer as consideration for the disposition referred to in section 541:

(a)  the taxpayer shall deduct after the disposition, in computing the adjusted cost base to the taxpayer of the share, the amount determined by the formula

A × B / C;

(b)  the taxpayer shall add after the disposition, in computing the adjusted cost base to the taxpayer of the share, the amount determined under subparagraph a in respect of the acquisition.

For the purposes of the formula in subparagraph a of the first paragraph,

(a)  A is the amount by which

i.  the aggregate of all amounts deducted under paragraph b.1 of section 257 in computing, immediately before the disposition, the adjusted cost base to the taxpayer of the shares disposed of, exceeds

ii.  the amount that would be, but for subparagraph b of the first paragraph of section 234, the taxpayer’s capital gain for the taxation year that includes the time of the disposition, from the disposition of the shares disposed of;

(b)  B is the fair market value of the share at the time it was acquired by the taxpayer as consideration for the disposition of the shares disposed of; and

(c)  C is the fair market value of all shares receivable by the taxpayer in consideration for the disposition at the time referred to in subparagraph b.

1996, c. 39, s. 150.