I-3 - Taxation Act

Section 832.5 Disposition versions

2006-03-01

832.5. For the purposes of paragraph d of subsection 2 of section 504, where, after 15 December 1987, sections 521 to 526, 528 and 832.3 apply in respect of a transfer of property by a person or partnership to an insurance corporation resident in Canada, the contributed surplus of the corporation arising on the transfer is deemed to be equal to the amount by which the amount of such contributed surplus otherwise determined exceeds the amount by which

(a)  the aggregate of

i.  the fair market value, immediately after the transfer, of any consideration, other than shares of the capital stock of the corporation, received or receivable by the person or partnership from the corporation for the transferred property,

ii.  the increase in the paid-up capital of all the shares of the capital stock of the corporation, determined without reference to subsection 11.7 of section 138 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement) and subsection 2.1 of section 85 of the said Act as they apply in respect of the transfer, arising on the transfer, and

iii.  the increase in the contributed surplus of the corporation, determined without reference to this section as it applies in respect of the transfer, exceeds

(b)  the aggregate of

i.  all amounts each of which is an amount required to be deducted in computing the paid-up capital of a class of shares of the capital stock of the corporation under subsection 11.7 of section 138 of the Income Tax Act and subsection 2.1 of section 85 of the said Act, as the case may be, as they apply in respect of the transfer, and

ii.  the cost to the corporation of the transferred property.

1990, c. 59, s. 314; 1997, c. 3, s. 71; 1997, c. 14, s. 144.