Budget Implementation Act, 2017, No. 2 (S.C. 2017, c. 33)

• Marginal note:Eligible derivatives

  (1.12) Notwithstanding subsection (1.1), an eligible derivative (as defined in subsection 10.1(5)) of a taxpayer to which subsection 10.1(6) applies is not an eligible property of the taxpayer in respect of a disposition by the taxpayer to a corporation.

• (a) a partnership has disposed, to a taxable Canadian corporation for consideration that includes shares of the corporation’s capital stock, of any partnership property (other than an eligible derivative, as defined in subsection 10.1(5), of the partnership if subsection 10.1(6) applies to the partnership) that was

• (e.41) if subsection 10.1(6) applied to a predecessor corporation in its last taxation year, each eligible derivative (as defined in subsection 10.1(5)) of the predecessor corporation immediately before the end of its last taxation year is deemed to have been reacquired, or reissued or renewed, as the case may be, by the new corporation at its fair market value immediately before the amalgamation;

• (e.42) for the purposes of subsection 10.1(7), the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

• Marginal note:Taxable Canadian property — conditions for rollover

  (8.4) Subsection (8.5) applies at any time if

  • (a) there is at that time a foreign merger of two or more predecessor foreign corporations (within the meaning assigned by subsection (8.1), if that subsection and subsection (8.2) were read without reference to the expression “otherwise than as a result of the distribution of property to one corporation on the winding-up of another corporation”) that were, immediately before that time,

    • (i) resident in the same country, and

    • (ii) related to each other (determined without reference to paragraph 251(5)(b));

  • (b) because of the foreign merger,

    • (i) a predecessor foreign corporation (referred to in this subsection and subsection (8.5) as the “disposing predecessor foreign corporation”) disposes of a property (referred to in this subsection and subsection (8.5) as the “subject property”) that is, at that time,

      • (A) a taxable Canadian property (other than treaty-protected property) of the disposing predecessor foreign corporation, and

      • (B) any of the following:

        • (I) a share of the capital stock of a corporation,

        • (II) an interest in a partnership, and

        • (III) an interest in a trust, and

    • (ii) the subject property becomes property of a corporation that is a new foreign corporation for the purposes of subsection (8.1);

  • (c) no shareholder (except any predecessor foreign corporation) that owned shares of the capital stock of a predecessor foreign corporation immediately before the foreign merger received consideration for the disposition of those shares on the foreign merger, other than shares of the capital stock of the new foreign corporation;

  • (d) if the subject property is a share of the capital stock of a corporation or an interest in a trust, the corporation or trust is not, at any time in the 24-month period beginning at that time, as part of a transaction or event, or series of transactions or events including the foreign merger, subject to a loss restriction event; and

  • (e) the new foreign corporation and the disposing predecessor foreign corporation jointly elect in writing under this paragraph in respect of the foreign merger and file the election with the Minister on or before the filing-due date of the disposing predecessor foreign corporation (or the date that would be its filing-due date, if subsection (8.5) did not apply in respect of the disposition of the subject property) for the taxation year that includes that time.

• Marginal note:Foreign merger — taxable Canadian property rollover

  (8.5) If this subsection applies at any time,

  • (a) if the subject property is an interest in a partnership,

    • (i) the disposing predecessor foreign corporation is deemed not to dispose of the subject property (other than for the purposes of subsection (8.4)), and

    • (ii) the new foreign corporation is deemed

      • (A) to have acquired the subject property at a cost equal to the cost of the subject property to the disposing predecessor foreign corporation, and

      • (B) to be the same corporation as, and a continuation of, the disposing predecessor foreign corporation in respect of the subject property; and

  • (b) if the subject property is a share of the capital stock of a corporation or an interest in a trust,

    • (i) the subject property is deemed to have been disposed of at that time by the disposing predecessor foreign corporation to the new foreign corporation (that is referred to in subparagraph (8.4)(b)(ii)) for proceeds of disposition equal to the adjusted cost base of the subject property to the disposing predecessor foreign corporation immediately before that time, and

    • (ii) the cost of the subject property to the new foreign corporation is deemed to be the amount that is deemed by subparagraph (i) to be the proceeds of disposition of the subject property.

the new share is deemed, for the purposes of subsection 116(6), the definitions qualified investment in subsections 146(1), 146.1(1), 146.3(1) and 146.4(1), in section 204 and in subsection 207.01(1), and the definition taxable Canadian property in subsection 248(1), to be listed on the exchange until the earliest time at which it is so redeemed, acquired or cancelled.

• (e.2) paragraphs 87(2)(c), (d.1), (e.1), (e.3), (g) to (l), (l.21) to (u), (x), (z.1), (z.2), (aa), (cc), (ll), (nn), (pp), (rr) and (tt) to (ww), subsection 87(6) and, subject to section 78, subsection 87(7) apply to the winding-up as if the references in those provisions to

• (e.2) paragraphs 87(2)(c), (d.1), (e.1), (e.3), (e.42), (g) to (l), (l.21) to (u), (x), (z.1), (z.2), (aa), (cc), (ll), (nn), (pp), (rr) and (tt) to (ww), subsection 87(6) and, subject to section 78, subsection 87(7) apply to the winding-up as if the references in those provisions to

• (j) for the purposes of subsection 10.1(6), the subsidiary’s taxation year in which an eligible derivative (as defined in subsection 10.1(5)) was distributed to, or assumed by, the parent on the winding-up is deemed to have ended immediately before the time when the eligible derivative was distributed or assumed.