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(a) where the taxpayer is an individual, the
lesser of
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(i) the total of all amounts each of which
is a dividend received by the taxpayer on
the share in respect of which an election
was made under subsection 83(2) where
subsection 83(2.1) does not deem the
dividend to be a taxable dividend, and
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(ii) that share of the loss determined
without reference to this subsection mi
nus all taxable dividends received by the
taxpayer on the share;
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(b) where the taxpayer is a corporation, the
total of all amounts received by the taxpay
er on the share each of which is
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(i) a taxable dividend, to the extent of the
amount of the dividend that was deduct
ible under this section or subsection
115(1) or 138(6) in computing the tax
payer's taxable income or taxable in
come earned in Canada for any taxation
year,
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(ii) a dividend in respect of which an
election was made under subsection
83(2) where subsection 83(2.1) does not
deem the dividend to be a taxable
dividend, or
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(iii) a life insurance capital dividend; and
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(c) where the taxpayer is a trust, the total of
all amounts each of which is
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(i) a taxable dividend, or
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(ii) a life insurance capital dividend
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received on the share and designated under
subsection 104(19) or (20) by the trust in
respect of a beneficiary that was a corpora
tion, partnership or trust.
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| Loss on share
held by
partnership -
excluded
dividends
|
(3.11) A dividend shall not be included in
the total determined under subparagraph
(3.1)(a)(i) or paragraph (3.1)(b) or (c) where
the taxpayer establishes that
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(a) it was received when the particular
partnership, the taxpayer and persons with
whom the taxpayer was not dealing at arm's
length did not hold in total more than 5% of
the issued shares of any class of the capital
stock of the corporation from which the
dividend was received; and
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(b) it was received on a share that the
particular partnership held throughout the
365-day period that ended immediately
before the disposition.
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| Loss on share
held by trust
|
(3.2) Subject to subsections (5.5) and (5.6),
the amount of any loss of a trust (other than a
mutual fund trust) from the disposition of a
share of the capital stock of a corporation that
is capital property of the trust is deemed to be
the amount of the loss determined without
reference to this subsection minus the total of
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(a) the amount, if any, by which the lesser
of
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(i) the total of all amounts each of which
is a dividend received by the trust on the
share in respect of which an election was
made under subsection 83(2) where sub
section 83(2.1) does not deem the divi
dend to be a taxable dividend, and
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(ii) the loss determined without reference
to this subsection minus the total of all
amounts each of which is the amount of
a taxable dividend
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(A) received by the trust on the share,
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(B) received on the share and desig
nated under subsection 104(19) by the
trust in respect of a beneficiary who is
an individual (other than a trust), or
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(C) received on the share and desig
nated under subsection 104(19) by the
trust in respect of a beneficiary that
was a corporation, partnership or
another trust where the trust esta
blishes that
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(I) it owned the share throughout the
365-day period that ended immedi
ately before the disposition, and
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(II) the dividend was received while
the trust, the beneficiary and per
sons not dealing at arm's length with
the beneficiary owned in total less
than 5% of the issued shares of any
class of the capital stock of the
corporation from which the divi
dend was received
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(iii) where the trust is an individual's
estate, the share was acquired as a
consequence of the individual's death
and the disposition occurs during the
trust's first taxation year, 1/4 of the lesser
of
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(A) the loss determined without refer
ence to this subsection, and
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(B) the individual's capital gain from
the disposition of the share immediate
ly before the individual's death, and
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(b) the total of all amounts each of which is
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(i) a taxable dividend, or
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(ii) a life insurance capital dividend
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received on the share and designated under
subsection 104(19) or (20) by the trust in
respect of a beneficiary that was a corpora
tion, partnership or trust.
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| Loss on share
held by
trust -
special cases
|
(3.3) Notwithstanding subsection (3.2),
where a trust has at any time acquired a share
of the capital stock of a corporation because of
subsection 104(4), the amount of any loss of
the trust from a disposition after that time is
deemed to be the amount of the loss deter
mined without reference to subsection (3.2)
and this subsection minus the total of
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(a) the amount, if any, by which the lesser
of
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(i) the total of all amounts each of which
is a dividend received after that time by
the trust on the share in respect of which
an election was made under subsection
83(2) where subsection 83(2.1) does not
deem the dividend to be a taxable
dividend, and
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(ii) the loss determined without reference
to subsection (3.2) and this subsection
minus the total of all amounts each of
which is the amount of a taxable dividend
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(A) received by the trust on the share
after that time,
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(B) received on the share after that
time and designated under subsection
104(19) by the trust in respect of a
beneficiary who is an individual (other
than a trust), or
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(C) received on the share after that
time and designated under subsection
104(19) by the trust in respect of a
beneficiary that was a corporation,
partnership or another trust where the
trust establishes that
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(I) it owned the share throughout the
365-day period that ended immedi
ately before the disposition, and
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(II) the dividend was received when
the trust, the beneficiary and per
sons not dealing at arm's length with
the beneficiary owned in total less
than 5% of the issued shares of any
class of the capital stock of the
corporation from which the divi
dend was received
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(iii) 1/4 of the lesser of
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(A) the loss from the disposition,
determined without reference to sub
section (3.2) and this subsection, and
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(B) the trust's capital gain from the
disposition immediately before that
time of the share because of subsection
104(4), and
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(b) the total of all amounts each of which is
a taxable dividend received on the share
after that time and designated under subsec
tion 104(19) by the trust in respect of a
beneficiary that was a corporation, partner
ship or trust.
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| Loss on share
held by
trust -
excluded
dividends
|
(3.31) No dividend received by a trust shall
be included under subparagraph (3.2)(a)(i) or
(b)(ii) or (3.3)(a)(i) where the trust establishes
that the dividend
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(i) in any case where the dividend was
designated under subsection 104(19) or
(20) by the trust, when the trust, the
beneficiary and persons with whom the
beneficiary was not dealing at arm's
length did not own in total more than 5%
of the issued shares of any class of the
capital stock of the corporation from
which the dividend was received, or
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(ii) in any other case, when the trust and
persons with whom the trust was not
dealing at arm's length did not own in
total more than 5% of the issued shares of
any class of the capital stock of the
corporation from which the dividend was
received, and
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(b) was received on a share that the trust
owned throughout the 365-day period that
ended immediately before the disposition.
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| Loss on share
held by
trust -
excluded
dividends
|
(3.32) No taxable dividend received on the
share and designated under subsection
104(19) by the trust in respect of a beneficiary
that was a corporation, partnership or trust
shall be included under paragraph (3.2)(b) or
(3.3)(b) where the trust establishes that the
dividend was received by an individual (other
than a trust), or
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(a) was received when the trust, the benefi
ciary and persons with whom the beneficia
ry was not dealing at arm's length did not
own in total more than 5% of the issued
shares of any class of the capital stock of the
corporation from which the dividend was
received; and
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(b) was received on a share that the trust
owned throughout the 365-day period that
ended immediately before the disposition.
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| Loss on share
that is not
capital
property
|
(4) Subject to subsections (5.5) and (5.6),
the amount of any loss of a taxpayer (other
than a trust) from the disposition of a share of
the capital stock of a corporation that is
property (other than capital property) of the
taxpayer is deemed to be the amount of the
loss determined without reference to this
subsection minus,
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(a) where the taxpayer is an individual and
the corporation is resident in Canada, the
total of all dividends received by the
individual on the share;
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(b) where the taxpayer is a partnership, the
total of all dividends received by the
partnership on the share; and
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(c) where the taxpayer is a corporation, the
total of all amounts received by the taxpay
er on the share each of which is
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(i) a taxable dividend, to the extent of the
amount of the dividend that was deduct
ible under this section, section 113 or
subsection 115(1) or 138(6) in computing
the taxpayer's taxable income or taxable
income earned in Canada for any taxa
tion year, or
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(ii) a dividend (other than a taxable
dividend).
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| Loss on share
that is not
capital
property -
excluded
dividends
|
(4.01) A dividend shall not be included in
the total determined under paragraph (4)(a),
(b) or (c) where the taxpayer establishes that
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(a) it was received when the taxpayer and
persons with whom the taxpayer was not
dealing at arm's length did not own in total
more than 5% of the issued shares of any
class of the capital stock of the corporation
from which the dividend was received; and
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(b) it was received on a share that the
taxpayer owned throughout the 365-day
period that ended immediately before the
disposition.
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| Fair market
value of
shares held as
inventory
|
(4.1) For the purpose of section 10, the fair
market value at any time of a share of the
capital stock of a corporation is deemed to be
equal to the fair market value of the share at
that time, plus
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(a) where the shareholder is a corporation,
the total of all amounts received by the
shareholder on the share before that time
each of which is
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(i) a taxable dividend, to the extent of the
amount of the dividend that was deduct
ible under this section, section 113 or
subsection 115(1) or 138(6) in computing
the shareholder's taxable income or tax
able income earned in Canada for any
taxation year, or
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(ii) a dividend (other than a taxable
dividend);
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(b) where the shareholder is a partnership,
the total of all amounts each of which is a
dividend received by the shareholder on the
share before that time; and
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(c) where the shareholder is an individual
and the corporation is resident in Canada,
the total of all amounts each of which is a
dividend received by the shareholder on the
share before that time (or, where the
shareholder is a trust, that would have been
so received if this Act were read without
reference to subsection 104(19)).
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| Fair market
value of
shares held as
inventory -
excluded
dividends
|
(4.11) A dividend shall not be included in
the total determined under paragraph (4.1)(a),
(b) or (c) where the shareholder establishes
that
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(a) it was received when the shareholder
and persons with whom the shareholder was
not dealing at arm's length did not hold in
total more than 5% of the issued shares of
any class of the capital stock of the
corporation from which the dividend was
received; and
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(b) it was received on a share that the
shareholder held throughout the 365-day
period that ended at the time referred to in
subsection (4.1).
|
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| Loss on share
held by trust
|
(4.2) Subject to subsections (5.5) and (5.6),
the amount of any loss of a trust from the
disposition of a share that is property (other
than capital property) of the trust is deemed to
be the amount of the loss determined without
reference to this subsection minus
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(a) the total of all amounts each of which is
a dividend received by the trust on the
share, to the extent that the amount was not
designated under subsection 104(20) in
respect of a beneficiary of the trust; and
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|
(b) the total of all amounts each of which is
a dividend received on the share that was
designated under subsection 104(19) or
(20) by the trust in respect of a beneficiary
of the trust.
|
|
| Loss on share
held by
trust -
excluded
dividends
|
(4.21) A dividend shall not be included in
the total determined under paragraph (4.2)(a)
where the taxpayer establishes that
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(a) it was received when the trust and
persons with whom the trust was not dealing
at arm's length did not own in total more
than 5% of the issued shares of any class of
the capital stock of the corporation from
which the dividend was received; and
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|
(b) it was received on a share that the trust
owned throughout the 365-day period that
ended immediately before the disposition.
|
|
| Loss on share
held by
trust -
excluded
dividends
|
(4.22) A dividend shall not be included in
the total determined under paragraph (4.2)(b)
where the taxpayer establishes that
|
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|
(a) it was received when the trust, the
beneficiary and persons with whom the
beneficiary was not dealing at arm's length
did not own in total more than 5% of the
issued shares of any class of the capital
stock of the corporation from which the
dividend was received; and
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|
(b) it was received on a share that the trust
owned throughout the 365-day period that
ended immediately before the disposition.
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|
(2) Paragraph 112(5.1)(b) of the Act is
replaced by the following:
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|
(b) the taxpayer did not hold the share
throughout the 365-day period that ended
immediately before the disposition ; and
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|
(3) Subparagraph (b)(iv) of the descrip
tion of B in subsection 112(5.2) of the Act is
replaced by the following:
|
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|
(iv) a dividend (other than a taxable
dividend) received by the taxpayer on
the share,
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|
(4) Paragraph (b) of the description of C
in subsection 112(5.2) of the Act is replaced
by the following:
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|
(b) where the taxpayer is a corporation or
trust, a loss of the taxpayer on a deemed
disposition of the share before that time
was reduced because of subsection (3),
(3.2), (4) or (4.2) , or
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|
(5) Section 112 of the Act is amended by
adding the following after subsection (5.2):
|
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| Subsection
(5.2) -
excluded
dividends
|
(5.21) A dividend shall not be included in
the total determined under paragraph (b) of the
description of B in subsection (5.2) unless
|
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|
(a) the dividend was received when the
taxpayer and persons with whom the tax
payer did not deal at arm's length held in
total more than 5% of the issued shares of
any class of the capital stock of the
corporation from which the dividend was
received; or
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|
(b) the share was not held by the taxpayer
throughout the 365-day period that ended
immediately before the disposition.
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|
(6) The portion of subsection 112(5.5) of
the Act before paragraph (a) is replaced by
the following:
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