Income Tax Regulations (C.R.C., c. 945)

Regulations are current to 2017-11-20 and last amended on 2017-07-01. Previous Versions

Prescribed Shares

  •  (1) For the purposes of paragraph (f) of the definition term preferred share in subsection 248(1) of the Act, a share last acquired before June 29, 1982 and of a class of the capital stock of a corporation that is listed on a designated stock exchange in Canada is a prescribed share unless more than 10 per cent of the issued and outstanding shares of that class are owned by

    • (a) the owner of that share; or

    • (b) the owner of that share and persons related to him.

  • (2) For the purposes of paragraph (f) of the definition term preferred share in subsection 248(1) of the Act, a share acquired after June 28, 1982 and of a class of the capital stock of a corporation that is listed on a designated stock exchange in Canada is a prescribed share at any particular time with respect to another corporation that receives a dividend at the particular time in respect of the share unless

    • (a) where the other corporation is a restricted financial institution,

      • (i) the share is not a taxable preferred share,

      • (ii) dividends (other than dividends received on shares prescribed under subsection (5)) are received at the particular time by the other corporation or by the other corporation and restricted financial institutions with which the other corporation does not deal at arm’s length, in respect of more than 5 per cent of the issued and outstanding shares of that class, and

      • (iii) a dividend is received at the particular time by the other corporation or a restricted financial institution with which the other corporation does not deal at arm’s length, in respect of a share (other than a share prescribed under subsection (5)) of that class acquired after December 15, 1987 and before the particular time;

    • (b) where the other corporation is a restricted financial institution, the share

      • (i) is not a taxable preferred share,

      • (ii) was acquired after December 15, 1987 and before the particular time, and

      • (iii) was, by reason of subparagraph (h)(i), (ii), (iii) or (v) of the definition term preferred share in subsection 248(1) of the Act, deemed to have been issued after December 15, 1987 and before the particular time; or

    • (c) in any case, dividends (other than dividends received on shares prescribed under subsection (5)) are received at the particular time by the other corporation or by the other corporation and persons with whom the other corporation does not deal at arm’s length in respect of more than 10 per cent of the issued and outstanding shares of that class.

  • (3) For the purposes of paragraph 112(2.2)(g) of the Act and paragraph (f) of the definition term preferred share in subsection 248(1) of the Act, a share of any of the following series of preferred shares of the capital stock of Massey-Ferguson Limited issued after July 15, 1981 and before March 23, 1982 is a prescribed share:

    • (a) $25 Cumulative Redeemable Retractable Convertible Preferred Shares, Series C;

    • (b) $25 Cumulative Redeemable Retractable Preferred Shares, Series D; or

    • (c) $25 Cumulative Redeemable Retractable Convertible Preferred Shares, Series E.

  • (4) For the purposes of the definition taxable RFI share in subsection 248(1) of the Act, a share of a class of the capital stock of a corporation that is listed on a designated stock exchange in Canada is a prescribed share at any particular time with respect to another corporation that is a restricted financial institution that receives a dividend at the particular time in respect of the share unless dividends (other than dividends received on shares prescribed under subsection (5.1)) are received at that time by the other corporation, or by the other corporation and restricted financial institutions with which the other corporation does not deal at arm’s length, in respect of more than

    • (a) 10 per cent of the shares of that class that were issued and outstanding at the last time, before the particular time, at which the other corporation or a restricted financial institution with which the other corporation does not deal at arm’s length acquired a share of that class, where no dividend is received at the particular time by any such corporation in respect of a share (other than a share prescribed under subsection (5.1)) of that class acquired after December 15, 1987 and before the particular time; or

    • (b) 5 per cent of the shares of that class that were issued and outstanding at the last time, before the particular time, at which the other corporation or a restricted financial institution with which the other corporation does not deal at arm’s length acquired a share of that class, where a dividend is received at the particular time by any such corporation in respect of a share (other than a share prescribed under subsection (5.1)) of that class acquired after December 15, 1987 and before the particular time.

  • (5) For the purpose of paragraph (f) of the definition term preferred share in subsection 248(1) of the Act, a share of a class of the capital stock of a corporation that is listed on a designated stock exchange in Canada is a prescribed share at any particular time with respect to another corporation that is registered or licensed under the laws of a province to trade in securities and that holds the share for the purpose of sale in the course of the business ordinarily carried on by it unless

    • (a) it may reasonably be considered that the share was acquired as part of a series of transactions or events one of the main purposes of which was to avoid or limit the application of subsection 112(2.1) of the Act; or

    • (b) the share was not acquired by the other corporation in the course of an underwriting of shares of that class to be distributed to the public and

      • (i) dividends are received at the particular time by the other corporation or by the other corporation and corporations controlled by the other corporation in respect of more than 10 per cent of the issued and outstanding shares of that class,

      • (ii) the other corporation is a restricted financial institution and

        • (A) the share is not a taxable preferred share,

        • (B) dividends are received at the particular time by the other corporation or by the other corporation and corporations controlled by the other corporation in respect of more than five per cent of the issued and outstanding shares of that class, and

        • (C) a dividend is received at the particular time by the other corporation or a corporation controlled by the other corporation in respect of a share of that class acquired after December 15, 1987 and before the particular time, or

      • (iii) the other corporation is a restricted financial institution and the share

        • (A) is not a taxable preferred share,

        • (B) was acquired after December 15, 1987 and before the particular time, and

        • (C) was, by reason of subparagraph (h)(i), (ii), (iii) or (v) of the definition term preferred share in subsection 248(1) of the Act, deemed to have been issued after December 15, 1987 and before the particular time.

  • (5.1) For the purpose of the definition taxable RFI share in subsection 248(1) of the Act, a share of a class of the capital stock of a corporation that is listed on a designated stock exchange in Canada is a prescribed share at any particular time with respect to another corporation that is registered or licensed under the laws of a province to trade in securities and that holds the share for the purpose of sale in the course of the business ordinarily carried on by it unless

    • (a) it may reasonably be considered that the share was acquired as part of a series of transactions or events one of the main purposes of which was to avoid or limit the application of section 187.3 of the Act; or

    • (b) the share was not acquired by the other corporation in the course of an underwriting of shares of that class to be distributed to the public and

      • (i) dividends are received at the particular time by the other corporation, or by the other corporation and corporations controlled by the other corporation, in respect of more than 10 per cent of the shares of that class issued and outstanding at the last time before the particular time at which any such corporation acquired a share of that class,

      • (ii) the other corporation is a restricted financial institution and

        • (A) dividends are received at the particular time by the other corporation, or by the other corporation and corporations controlled by the other corporation, in respect of more than 5 per cent of the shares of that class issued and outstanding at the last time before the particular time at which any such corporation acquired a share of that class, and

        • (B) a dividend is received at the particular time by the other corporation, or a corporation controlled by the other corporation, in respect of a share of that class acquired after December 15, 1987 and before the particular time, or

      • (iii) the other corporation is a restricted financial institution and the share

        • (A) was acquired after December 15, 1987 and before the particular time, and

        • (B) was, because of subparagraph (h)(i), (ii), (iii) or (v) of the definition term preferred share in subsection 248(1) of the Act, deemed to have been issued after December 15, 1987 and before the particular time.

  • (6) For the purposes of paragraph (f) of the definition term preferred share in subsection 248(1) of the Act, a share of the capital stock of a corporation that is a member institution of a deposit insurance corporation, within the meaning assigned by section 137.1 of the Act, is a prescribed share with respect to the deposit insurance corporation and any subsidiary wholly-owned corporation of the deposit insurance corporation deemed by subsection 137.1(5.1) of the Act to be a deposit insurance corporation.

  • (7) For the purposes of the definition taxable preferred share in subsection 248(1) of the Act, the following shares are prescribed shares at any particular time:

    • (a) the 8.5 per cent Cumulative Redeemable Convertible Class A Preferred Shares of St. Marys Paper Inc. issued on July 7, 1987, where such shares are not deemed, by reason of paragraph (e) of the definition taxable preferred share in subsection 248(1) of the Act, to have been issued after that date and before the particular time; and

    • (b) the Cumulative Redeemable Preferred Shares of CanUtilities Holdings Ltd. issued before July 1, 1991, unless the amount of the consideration for which all such shares were issued exceeds $300,000,000 or the particular time is after July 1, 2001.

  • (8) For the purposes of paragraph 112(2.2)(d) of the Act, paragraph (i) of the definition short-term preferred share, the definition taxable preferred share in paragraph (f) of the definition term preferred share in subsection 248(1) of the Act, the Exchangeable Preference Shares of Canada Cement Lafarge Ltd. (in this subsection referred to as the “subject shares”), the Exchangeable Preference Shares of Lafarge Canada Inc. and the shares of any corporation formed as a result of an amalgamation or merger of Lafarge Canada Inc. with one or more other corporations are prescribed shares at any particular time where the terms and conditions of such shares at the particular time are the same as, or substantially the same as, the terms and conditions of the subject shares as of June 18, 1987 and, for the purposes of this subsection, the amalgamation or merger of one or more corporations with another corporation formed as a result of an amalgamation or merger of Lafarge Canada Inc. with one or more other corporations shall be deemed to be an amalgamation of Lafarge Canada Inc. with another corporation.

  • (9) For the purposes of determining under subsections (2), (4), (5) and (5.1) the time at which a share of a class of the capital stock of a corporation was acquired by a taxpayer, shares of that class acquired by the taxpayer at any particular time before a disposition by the taxpayer of shares of that class shall be deemed to have been disposed of before shares of that class acquired by the taxpayer before that particular time.

  • (10) For the purposes of subsections (2), (4), (5) and (5.1) and this subsection,

    • (a) where a taxpayer is a beneficiary of a trust and an amount in respect of the beneficiary has been designated by the trust in a taxation year pursuant to subsection 104(19) of the Act, the taxpayer shall be deemed to have received the amount so designated at the time it was received by the trust; and

    • (b) where a taxpayer is a member of a partnership and a dividend has been received by the partnership, the taxpayer’s share of the dividend shall be deemed to have been received by the taxpayer at the time the dividend was received by the partnership.

  • (11) For the purposes of subsections (2), (4), (5) and (5.1),

    • (a) a share of the capital stock of a corporation acquired by a person after December 15, 1987 pursuant to an agreement in writing entered into before December 16, 1987 shall be deemed to have been acquired by that person before December 16, 1987;

    • (b) a share of the capital stock of a corporation acquired by a person after December 15, 1987 and before July, 1988 as part of a distribution to the public made in accordance with the terms of a prospectus, preliminary prospectus, registration statement, offering memorandum or notice filed before December 16, 1987 with a public authority pursuant to and in accordance with the securities legislation of the jurisdiction in which the shares were distributed shall be deemed to have been acquired by that person before December 16, 1987;

    • (c) where a share that was owned by a particular restricted financial institution on December 15, 1987 has, by one or more transactions between related restricted financial institutions, been transferred to another restricted financial institution, the share shall be deemed to have been acquired by the other restricted financial institution before that date and after June 28, 1982 unless at any particular time after December 15, 1987 and before the share was transferred to the other restricted financial institution the share was owned by a shareholder who, at that particular time, was a person other than a restricted financial institution related to the other restricted financial institution; and

    • (d) where at any particular time there has been an amalgamation (within the meaning assigned by section 87 of the Act) and

      • (i) each of the predecessor corporations (within the meaning assigned by section 87 of the Act) was a restricted financial institution throughout the period beginning December 16, 1987 and ending at the particular time and the predecessor corporations were related to each other throughout that period, or

      • (ii) each of the predecessor corporations and the new corporation (within the meaning assigned by section 87 of the Act) is a corporation described in any of paragraphs (a) to (d) of the definition restricted financial institution in subsection 248(1) of the Act,

      a share acquired by the new corporation from a predecessor corporation on the amalgamation shall be deemed to have been acquired by the new corporation at the time it was acquired by the predecessor corporation.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/80-130, s. 2;
  • SOR/84-948, s. 16;
  • SOR/85-963, s. 1;
  • SOR/86-1092, s. 16;
  • SOR/89-409, s. 4;
  • SOR/92-681, s. 3(F);
  • SOR/94-686, ss. 33(F);
  • 78(F), 79(F);
  • SOR/95-357, s. 1;
  • 2007, c. 35, ss. 78, 89.
 
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