Income Tax Act — I-3.3 112
dividend 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 (I) it owned the share throughout the 365-day period that ended immediately before the disposition, and (II) the dividend was received when the trust, the beneficiary and persons 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 dividend was received exceeds (iii) 1/2 of the lesser of (A) the loss from the disposition, determined without reference to subsection 112(3.2) and this subsection, and (B) the trust’s capital gain from the disposition immediately before that time of the share because of subsection 104(4), and (b) the total of all amounts each of which is a taxable dividend 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 trust. Loss on share held by trust — excluded dividends (3.31) A qualified dividend received by a trust shall not be included under subparagraph (3.2)(a)(i) or (b)(ii) or (3.3)(a)(i) if the trust establishes that the dividend (a) was received, (i) in any case where the dividend was designated under subsection 104(19) or 104(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 (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 (b) 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 (3.32) A qualified dividend that is a taxable dividend received on the share and that is designated under subsection 104(19) by the trust in respect of a beneficiary that was a corporation, partnership or trust, shall not be included under paragraph (3.2)(b) or (3.3)(b) if the trust establishes that the dividend was received by an individual (other than a trust), or (a) 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 (b) was received on a share that the trust owned throughout the 365-day period that ended immediately before the disposition. Loss on share that is not capital property (4) Subject to subsections 112(5.5) and 112(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, (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; (b) where the taxpayer is a partnership, the total of all dividends received by the partnership on the share; and (c) where the taxpayer is a corporation, the total of all amounts received by the taxpayer on the share each of which is (i) a taxable dividend, to the extent of the amount of the dividend that was deductible 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 taxation year, or (ii) a dividend (other than a taxable dividend). Loss on share that is not capital property — excluded dividends (4.0