Income Tax Act — I-3.3 86.1
the taxpayer elects in writing filed with the taxpayer’s return of income for the taxation year in which the distribution occurs that this section apply to the distribution and provides information satisfactory to the Minister (i) of the number, cost amount (determined without reference to this section) and fair market value of the taxpayer’s original shares immediately before the distribution, (ii) of the number, and fair market value, of the taxpayer’s original shares and the spin-off shares immediately after the distribution of the spin-off shares to the taxpayer, (iii) except where the election is filed with the taxpayer’s return of income for the year in which the distribution occurs, concerning the amount of the distribution, the manner in which the distribution was reported by the taxpayer and the details of any subsequent disposition of original shares or spin-off shares for the purpose of determining any gains or losses from those dispositions, and (iv) of such other matters that are required, in prescribed form. Cost adjustments (3) Where a spin-off share is distributed by a corporation to a taxpayer pursuant to an eligible distribution with respect to an original share of the taxpayer, (a) there shall be deducted for the purpose of computing the cost amount to the taxpayer of the original share at any time the amount determined by the formula A × (B/C) where A is the cost amount, determined without reference to this section, to the taxpayer of the original share at the time that is immediately before the distribution or, if the original share is disposed of by the taxpayer, before the distribution, at the time that is immediately before its disposition, B is the fair market value of the spin-off share immediately after its distribution to the taxpayer, and C is the total of (i) the fair market value of the original share immediately after the distribution of the spin-off share to the taxpayer, and (ii) the fair market value of the spin-off share immediately after its distribution to the taxpayer; and (b) the cost to the taxpayer of the spin-off share is the amount by which the cost amount of the taxpayer’s original share was reduced as a result of paragraph (a). Inventory (4) For the purpose of calculating the value of the property described in an inventory of a taxpayer’s business, (a) an eligible distribution to the taxpayer of a spin-off share that is included in the inventory is deemed not to be an acquisition of property in the fiscal period of the business in which the distribution occurs; and (b) for greater certainty, the value of the spin-off share is to be included in computing the value of the inventory at the end of that fiscal period. Reassessments (5) Notwithstanding subsections 152(4) to (5), the Minister may make at any time such assessments, reassessments, determinations and redeterminations that are necessary where information is obtained that the conditions in subparagraph (2)(c)(iii) or (d)(iii) are not, or are no longer, satisfied. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] 2001, c. 17, s. 64; 2005, c. 30, s. 3; 2007, c. 35, s. 68; 2013, c. 34, s. 222