Marginal note:Tax-deferred transaction — flow-through shares

38.1 If a taxpayer acquires a property (in this section referred to as the “acquired property”) that is included in a flow-through share class of property in the course of a transaction or series of transactions to which any of section 51, subsections 73(1), 85(1) and (2) and 85.1(1), sections 86 and 87 and subsections 88(1) and 98(3) apply

• (a) if the transfer of the acquired property is part of a gifting arrangement (within the meaning assigned by section 237.1) or of a transaction or series of transactions to which subsection 98(3) applies, or the transferor is a person with whom the taxpayer was, at the time of the acquisition, not dealing at arm’s length, there shall be added, at the time of the transfer, to the taxpayer’s exemption threshold in respect of the flow-through share class of property, and deducted from the transferor’s exemption threshold in respect of the flow-through share class of property, the amount determined by the formula

  A × B

  where

  A

  is the amount by which the transferor’s exemption threshold in respect of the flow-through share class of property immediately before that time exceeds the capital gain, if any, of the transferor as a result of the transfer, and

  B

  is the proportion that the fair market value of the acquired property immediately before the transfer is of the fair market value of all property of the transferor immediately before the transfer that is included in the flow-through share class of property; and

• (b) if the transferor receives particular shares of the capital stock of the taxpayer as consideration for the acquired property and those particular shares are listed on a designated stock exchange or are shares of a mutual fund corporation, then for the purposes of this section and subsection 40(12)

  • (i) the particular shares are deemed to be flow-through shares of the transferor, and

  • (ii) there shall be added to the transferor’s exemption threshold in respect of the flow-through share class of property that includes the particular shares the amount that is determined under paragraph (a) or that would be so determined if paragraph (a) applied to the taxpayer.

• Marginal note:Donated flow-through shares

  (12) If at any time a taxpayer disposes of one or more capital properties that are included in a flow-through share class of property and subparagraph 38(a.1)(i) or (iii) applies to the disposition (in this subsection referred to as the “actual disposition”), then the taxpayer is deemed to have a capital gain from a disposition at that time of another capital property equal to the lesser of

  • (a) the taxpayer’s exemption threshold at that time in respect of the flow-through share class of property, and

  • (b) the total of all amounts each of which is a capital gain from the actual disposition (for greater certainty, calculated without reference to this subsection).

Marginal note:Life estates in real property

• 43.1 (1) Notwithstanding any other provision of this Act, if at any time a taxpayer disposes of a remainder interest in real property (except as a result of a transaction to which subsection 73(3) would otherwise apply or by way of a gift to a donee described in the definition “total charitable gifts”, “total Crown gifts” or “total ecological gifts” in subsection 118.1(1)) to a person or partnership and retains a life estate or an estate pur autre vie (in this section referred to as the “life estate”) in the property, the taxpayer is deemed

Marginal note:Life estates in real property

• 43.1 (1) Notwithstanding any other provision of this Act, if at any time a taxpayer disposes of a remainder interest in real property (except as a result of a transaction to which subsection 73(3) would otherwise apply or by way of a gift to a qualified donee) to a person or partnership and retains a life estate or an estate pur autre vie (in this section referred to as the “life estate”) in the property, the taxpayer is deemed

the individual is deemed, except for the purposes of sections 7 and 35, paragraph 110(1)(d.1) and subsections 120.4(4) and (5),

• (i.4) unless that time is immediately before a disposition of the interest, if the taxpayer is a member of the partnership and the taxpayer has been a specified member of the partnership at all times since becoming a member of the partnership, or the taxpayer is at that time a limited partner of the partnership for the purposes of subsection 40(3.1),

  • (A) where that time is in the taxpayer’s first taxation year for which the taxpayer is eligible to deduct an amount in respect of the partnership under subsection 34.2(11), the portion of the amount deducted in computing the taxpayer’s income for the taxation year under subsection 34.2(11) in respect of the partnership that would have been deductible if the definition “qualifying transitional income” in subsection 34.2(1) were read without reference to paragraph (b), and

  • (B) where that time is in any other taxation year, the portion of the amount deducted in computing the taxpayer’s income for the taxation year immediately preceding that other year under subsection 34.2(11) in respect of the partnership that would have been deductible if the definition “qualifying transitional income” in subsection 34.2(1) were read without reference to paragraph (b),

“exemption threshold”

« seuil d’exonération »

“exemption threshold”, of a taxpayer at a particular time in respect of a flow-through share class of property, means the amount determined by the formula

A – B

where

A

is the total of

• (a) the total of all amounts, each of which is an amount that would be the cost to the taxpayer, computed without reference to subsection 66.3(3), of a flow-through share that was included at any time before the particular time in the flow-through share class of property and that was issued by a corporation to the taxpayer on or after the taxpayer’s fresh-start date in respect of the flow-through share class of property at that time, other than a flow-through share that the taxpayer was obligated, before March 22, 2011, to acquire pursuant to the terms of a flow-through share agreement entered into between the corporation and the taxpayer, and

• (b) the total of all amounts, each of which is an amount that would be the adjusted cost base to the taxpayer of an interest in a partnership — computed as if subparagraph 53(1)(e)(vii.1) and clauses 53(2)(c)(ii)(C) and (D) did not apply to any amount incurred by the partnership in respect of a flow-through share held by the partnership, either directly or indirectly through another partnership — that was included at any time before the particular time in the flow-through share class of property, if

  • (i) the taxpayer

    • (A) acquired the interest on or after the taxpayer’s fresh-start date in respect of the flow-through share class of property at the particular time (other than an interest that the taxpayer was obligated, before August 16, 2011, to acquire pursuant to the terms of an agreement in writing entered into by the taxpayer), or

    • (B) made a contribution of capital to the partnership on or after August 16, 2011,

  • (ii) at any time after the taxpayer acquired the interest or made the contribution of capital, the taxpayer is deemed by subsection 66(18) to have made or incurred an outlay or expense in respect of a flow-through share held by the partnership, either directly or indirectly through another partnership, and

  • (iii) at any time between the time that the taxpayer acquired the interest or made the contribution of capital and the particular time, more than 50% of the fair market value of the assets of the partnership is attributable to property included in a flow-through share class of property, and

B

is the total, if any, of all amounts, each of which is the lesser of

• (a) the total of all amounts, each of which is a capital gain from a disposition of a property included in the flow-through share class of property, other than a capital gain referred to in paragraph 38.1(a), at an earlier time that is

  • (i) before the particular time, and

  • (ii) after the first time that the taxpayer acquired a flow-through share referred to in paragraph (a) of the description of A or acquired a partnership interest referred to in paragraph (b) of the description of A, and

• (b) the exemption threshold of the taxpayer in respect of the flow-though share class of property immediately before that earlier time;

“flow-through share class of property”

« catégorie de biens constituée d’actions accréditives »

“flow-through share class of property” means a group of properties,

• (a) in respect of a class of shares of the capital stock of a corporation, each of which is

  • (i) a share of the class, if any share of the class or any right described in subparagraph (ii) is, at any time, a flow-through share to any person,

  • (ii) a right to acquire a share of the class, if any share of that class or any right described in this subparagraph is, at any time, a flow-through share to any person, or

  • (iii) a property that is an identical property of a property described in subparagraph (i) or (ii), or

• (b) each of which is an interest in a partnership, if at any time more than 50% of the fair market value of the partnership’s assets is attributable to property included in a flow-through share class of property;

“fresh-start date”

« date de nouveau départ »

“fresh-start date”, of a taxpayer at a particular time in respect of a flow-through share class of property, means

• (a) in the case of a partnership interest that is included in the flow-through share class of property, the day that is the later of

  • (i) August 16, 2011, and

  • (ii) the last day, if any, before the particular time, on which the taxpayer held an interest in the partnership, and

• (b) in the case of any other property that is included in the flow-though share class of property, the day that is the later of

  • (i) March 22, 2011, and

  • (ii) the last day, if any, before the particular time, on which the taxpayer disposed of all property included in the flow-through share class of property;

• (C) the amount of any payment out of or under a specified pension plan, and

• Marginal note:Indirect payments

  (2) A payment or transfer of property made pursuant to the direction of, or with the concurrence of, a taxpayer to another person for the benefit of the taxpayer or as a benefit that the taxpayer desired to have conferred on the other person (other than by an assignment of any portion of a retirement pension under section 65.1 of the Canada Pension Plan or a comparable provision of a provincial pension plan as defined in section 3 of that Act) shall be included in computing the taxpayer’s income to the extent that it would be if the payment or transfer had been made to the taxpayer.

• Marginal note:Limitations of scholarship exemption

  (3.1) For the purpose of determining the total in paragraph (3)(a) for a taxation year,

  • (a) a scholarship, fellowship or bursary (in this subsection referred to as an “award”) is not considered to be received in connection with the taxpayer’s enrolment in an educational program described in subparagraph (3)(a)(i) except to the extent that it is reasonable to conclude that the award is intended to support the taxpayer’s enrolment in the program, having regard to all the circumstances, including the terms and conditions that apply in respect of the award, the duration of the program and the period for which support is intended to be provided; and

  • (b) if an award is received in connection with an educational program in respect of which the taxpayer may deduct an amount by reason of paragraph (b) of the description of B in subsection 118.6(2) for the taxation year, for the immediately preceding taxation year or for the following taxation year (in this paragraph referred to as the “claim year”), the amount included under subparagraph (1)(n)(i) in computing the taxpayer’s income for the taxation year in respect of the award may not exceed the amount that is the total of amounts, each of which is the cost of materials related to the program or a fee paid to a designated educational institution in respect of the program, as defined in subsection 118.6(1), in respect of the claim year.

• (B.01) the amount included in computing the taxpayer’s income for the year as a payment (other than a payment that is part of a series of periodic payments or that relates to an actuarial surplus) received by the taxpayer out of or under a registered pension plan or a specified pension plan as a consequence of the death of an individual of whom the taxpayer was a child or grandchild, if the taxpayer was, immediately before the death, financially dependent on the individual for support because of mental or physical infirmity,

1. a payment (other than a payment that is part of a series of periodic payments or that relates to an actuarial surplus) received by the taxpayer out of or under a registered pension plan or a specified pension plan,

“eligible individual”

« particulier admissible »

“eligible individual” means a child or grandchild of a deceased annuitant under a registered retirement savings plan or registered retirement income fund, or of a deceased member of a registered pension plan or a specified pension plan, who was financially dependent on the deceased for support, at the time of the deceased’s death, by reason of mental or physical infirmity.

• (c) a payment (other than a payment that is part of a series of periodic payments or that relates to an actuarial surplus) out of or under a registered pension plan or a specified pension plan.

• (ii) prospect, explore, drill or mine for minerals in a mineral resource in Canada other than a bituminous sands deposit or an oil shale deposit,

• (c) any oil or gas well in Canada or any real property or immovable in Canada the principal value of which depends on its petroleum, natural gas or related hydrocarbon content (not including any depreciable property),

• (d) any right to a rental or royalty computed by reference to the amount or value of production from an oil or a gas well in Canada, or from a natural accumulation of petroleum, natural gas or a related hydrocarbon in Canada, if the payer of the rental or royalty has an interest in, or for civil law a right in, the well or accumulation, as the case may be, and 90% or more of the rental or royalty is payable out of, or from the proceeds of, the production from the well or accumulation,

• (e) any right to a rental or royalty computed by reference to the amount or value of production from a mineral resource in Canada, other than a bituminous sands deposit or an oil shale deposit, if the payer of the rental or royalty has an interest in, or for civil law a right in, the mineral resource and 90% or more of the rental or royalty is payable out of, or from the proceeds of, the production from the mineral resource,

• (f) any real property or immovable in Canada (not including any depreciable property) the principal value of which depends on its mineral resource content other than where the mineral resource is a bituminous sands deposit or an oil shale deposit,

• (g) any right to or interest in — or, for civil law, any right to or in — any property described in any of paragraphs (a) to (e), other than a right or an interest that the taxpayer has because the taxpayer is a beneficiary under a trust or a member of a partnership, or

• (h) an interest in real property described in paragraph (f) or a real right in an immovable described in that paragraph, other than an interest or a right that the taxpayer has because the taxpayer is a beneficiary under a trust or a member of a partnership;