I-3 - Taxation Act

Section 588.1 Disposition versions

2006-03-01

588.1. A corporation resident in Canada or a foreign affiliate of such a corporation that disposes at any particular time of all or a portion of an interest in a partnership of which it is a member, shall add, in computing the proceeds of disposition of that interest, an amount equal to the amount determined by the formula

[(A − B) − (C + D)] × (E / F).

In the formula provided for in the first paragraph,

(a)  A is the aggregate of all amounts each of which is an amount that was deductible under paragraph d of section 746 in computing the taxable income of the member for any taxation year that began before the particular time in relation to any portion of a dividend received by the partnership, or that would have been so deductible if the member were a corporation resident in Canada;

(b)  B is the aggregate of all amounts each of which is the portion of any income or profits tax paid by the partnership or the member to a government of a country other than Canada that can reasonably be attributed to the member’s share of the dividend described in paragraph a;

(c)  C is the aggregate of all amounts each of which is an amount added under this section in computing the member’s proceeds of a disposition before the particular time of another interest in the partnership;

(d)  D is the aggregate of all amounts each of which is an amount deemed by section 588.2 to be a gain of the member from a disposition before the particular time of a share of the capital stock of a corporation by the partnership;

(e)  E is the adjusted cost base, immediately before the particular time, of the portion of the member’s interest in the partnership disposed of by the member at the particular time; and

(f)  F is the adjusted cost base, immediately before the particular time, of the member’s interest in the partnership.

2004, c. 8, s. 118.