Marginal note:Proportional holdings in trust property
259 (1) For the purposes of subsections 146(6), (10) and (10.1) and 146.3(7), (8) and (9) and Parts X, X.2, XI and XI.1, where at any time a taxpayer described in section 205 acquires, holds or disposes of a particular unit in a qualified trust and the trust elects for any period that includes that time to have the provisions of this subsection apply,
(a) the taxpayer shall be deemed not to acquire, hold or dispose of at that time, as the case may be, the particular unit;
(b) where the taxpayer holds the particular unit at that time, the taxpayer shall be deemed to hold at that time that proportion (referred to in this subsection as the “specified portion”) of each property (in this subsection referred to as a “relevant property”) held by the trust at that time that one (or, where the particular unit is a fraction of a whole unit, that fraction) is of the number of units of the trust outstanding at that time;
(c) the cost amount to the taxpayer at that time of the specified portion of a relevant property shall be deemed to be equal to the specified portion of the cost amount at that time to the trust of the relevant property;
(d) where that time is the later of
(i) the time the trust acquires the relevant property, and
(ii) the time the taxpayer acquires the particular unit,
the taxpayer shall be deemed to acquire the specified portion of a relevant property at that time;
(e) where that time is the time the specified portion of a relevant property is deemed by paragraph 259(1)(d) to have been acquired, the fair market value of the specified portion of the relevant property at that time shall be deemed to be the specified portion of the fair market value of the relevant property at the time of its acquisition by the trust;
(f) where that time is the time immediately before the time the trust disposes of a particular relevant property, the taxpayer shall be deemed to dispose of, immediately after that time, the specified portion of the particular relevant property for proceeds equal to the specified portion of the proceeds of disposition to the trust of the particular relevant property;
(g) where that time is the time immediately before the time the taxpayer disposes of the particular unit, the taxpayer shall be deemed to dispose of, immediately after that time, the specified portion of each relevant property for proceeds equal to the specified portion of the fair market value of that relevant property at that time; and
(h) where the taxpayer is deemed because of this subsection
(i) to have acquired a portion of a relevant property as a consequence of the acquisition of the particular unit by the taxpayer and the acquisition of the relevant property by the trust, and
(ii) subsequently to have disposed of the specified portion of the relevant property,
the specified portion of the relevant property shall, for the purposes of determining the consequences under this Act of the disposition and without affecting the proceeds of disposition of the specified portion of the relevant property, be deemed to be the portion of the relevant property referred to in subparagraph 259(1)(h)(i).
Marginal note:Proportional holdings in corporate property
(2) Subsection 259(1) applies to an election by a qualified corporation as if
(a) the reference to “a qualified trust” were read as “the capital stock of a qualified corporation”;
(b) the references to “unit” were read as “share”; and
(c) the references to “the trust” were read as “the corporation”.
Marginal note:Election
(3) The election by a trust or a corporation (in this subsection referred to as the “elector”) under subsection 259(1) shall be made by the elector filing a prescribed form with the Minister and shall apply for the period beginning 15 months before the day of filing thereof (or such later time as the elector designates in its election) and ending at such time as the election is revoked by the elector filing with the Minister a notice of revocation (or at such earlier time within the 15-month period before the day on which the notice of revocation is filed with the Minister as the elector designates in its notice of revocation).
Marginal note:Requirement to provide information
(4) Where a trust or a corporation elects under subsection 259(1),
(a) it shall, not more than 30 days after making the election, notify each person who, before the election is made and during the period for which the election is made, held a unit in the trust or a share in the capital stock of the corporation, as the case may be, of the election; and
(b) where any person who holds such a unit or share during the period for which the election is made makes a written request to the trust or the corporation for information that is necessary for the purpose of determining the consequences under this Act of the election for that person, the trust or the corporation, as the case may be, shall provide the person with that information not more than 30 days after the receipt of the request.
Marginal note:Definitions
(5) In this section,
qualified corporation
société admissible
qualified corporation at any time means a corporation described in paragraph 149(1)(o.2) where, at that time,
(a) all the issued and outstanding shares of the capital stock of the corporation are identical to each other, or
(b) all the issued and outstanding shares of the capital stock of the corporation are held by one person; (société admissible)
qualified trust
fiducie admissible
qualified trust at any time means a trust (other than a registered investment or a trust that is prescribed to be a small business investment trust) where
(a) each trustee of the trust at that time is a corporation that is licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as a trustee or a person who is a trustee of a trust governed by a registered pension plan,
(b) all the interests of the beneficiaries under the trust at that time are described by reference to units of the trust all of which are at that time identical to each other,
(c) it has never before that time borrowed money except where the borrowing was for a term not exceeding 90 days and the borrowing was not part of a series of loans or other transactions and repayments, and
(d) it has never before that time accepted deposits. (fiducie admissible)
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- R.S., 1985, c. 1 (5th Supp.), s. 259
- 1994, c. 7, Sch. VIII, s. 142, c. 21, s. 115
- Date modified: