I-3 - Taxation Act

Section 588.2 Disposition versions

2006-03-01

588.2. Where a partnership disposes of a share of the capital stock of a corporation, at any particular time in a fiscal period of the partnership at the end of which a corporation resident in Canada or a foreign affiliate of a corporation resident in Canada is a member of the partnership, the amount determined by the following formula is deemed to be a gain of the member from the disposition of the share by the partnership for the member’s taxation year in which that fiscal period ends:

(A − B) − C.

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 member’s taxable income for a taxation year in relation to any portion of a dividend received by the partnership on the share in a fiscal period that began before the particular time and ended in the member’s taxation year, or 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; and

(c)  C is the aggregate of all amounts each of which is an amount added under section 588.1 in computing the member’s proceeds of a disposition before the particular time of an interest in the partnership.

2004, c. 8, s. 118.