Income Tax Act — I-3.3 84.1
he capital stock of the purchaser corporation, the subject corporation or all relevant group entities to an arm’s length person or group of persons, the conditions set out in paragraphs (2.31)(f) and (g) are deemed to be met as of the time of the disposition, provided that all equity interests in all relevant businesses owned, directly or indirectly, by each child referred to in subparagraph (2.31)(f)(i) are included in the disposition, or (ii) subparagraph (2.32)(g)(i) have disposed of, or caused the disposition of, all of the shares in the capital stock of the purchaser corporation, the subject corporation or all relevant group entities to an arm’s length person or group of persons, the conditions set out in paragraphs (2.32)(g) and (h) are deemed to be met as of the time of the disposition, provided that all equity interests in all relevant businesses owned, directly or indirectly, by each child referred to in subparagraph (2.32)(g)(i) are included in the disposition; and (f) if one or more children referred to in (i) subparagraph (2.31)(f)(i) have disposed of, or caused the disposition of, any of the shares in the capital stock of the purchaser corporation, the subject corporation or a relevant group entity to another child or group of children of the taxpayer (in this paragraph referred to as the “new child” or the “new children”), the conditions set out in paragraphs (2.31)(f) and (g) are deemed (A) to be met as of the time of the disposition, and (B) to continue to apply to the new child (or the new children) and any other member of the group of children that controls the subject corporation and the purchaser corporation at the time of the disposition, or (ii) subparagraph (2.32)(g)(i) have disposed of, or caused the disposition of, any of the shares in the capital stock of the purchaser corporation, the subject corporation, or a relevant group entity to another child or group of children of the taxpayer (in this paragraph referred to as the “new child” or the “new children”), the conditions set out in paragraphs (2.32)(g) and (h) are deemed (A) to be met as of the time of the disposition, and (B) to continue to apply to the new child (or the new children) and any other member of the group of children that controls the subject corporation and the purchaser corporation at the time of the disposition; (g) if a child, or each of the children, referred to in (i) subparagraph (2.31)(f)(ii) has died or has, after the disposition of the subject shares, suffered one or more severe and prolonged impairments in physical or mental functions, the conditions set out in paragraphs (2.31)(f) and (g) are deemed to be met as of the time of the death or mental or physical impairment, or (ii) subparagraph (2.32)(g)(ii) has died or has, after the disposition of the subject shares, suffered one or more severe and prolonged impairments in physical or mental functions, the conditions set out in paragraphs (2.32)(g) and (h) are deemed to be met as of the time of the death or mental or physical impairment; (h) if a business of a subject corporation or a relevant group entity has ceased to be carried on due to the disposition of all of the assets that were used to carry on the business in order to satisfy debts owed to creditors of the corporation or of the entity, the conditions set out in respect of the business in subparagraphs (2.31)(f)(ii) and (iii) and (2.31)(g)(i) or (2.32)(g)(ii) and (iii) and (2.32)(h)(i), as applicable, are deemed to be met as of the time of the disposition; and (i) in applying paragraphs (2.31)(g) and (2.32)(h), management refers to the direction or supervision of business activities but does not include the provision of advice. Immediate intergenerational business transfer (2.31) Paragraph (2)(e) applies at the time of a disposition of subject shares (in this subsection referred to as the “disposition time”) by a taxpayer to a purchaser corporation if the following conditions are met: (a) the taxpayer has not previou