Income Tax Act — I-3.3 118.1
aragraph 118.1(13)(c). Application of subsection (13.2) (13.1) Subsection (13.2) applies if, as part of a series of transactions, (a) an individual makes, at a particular time, a gift of a particular property to a qualified donee; (b) a particular person holds a non-qualifying security of the individual; and (c) the qualified donee acquires, directly or indirectly, a non-qualifying security of the individual or of the particular person. Non-qualifying securities — third-party accommodation (13.2) If this subsection applies, (a) for the purposes of this section, the fair market value of the particular property is deemed to be reduced by an amount equal to the fair market value of the non-qualifying security acquired by the qualified donee; and (b) for the purposes of subsection (13), (i) if the non-qualifying security acquired by the qualified donee is a non-qualifying security of the particular person, it is deemed to be a non-qualifying security of the individual, (ii) the individual is deemed to have made, at the particular time referred to in subsection (13.1), a gift of the non-qualifying security acquired by the qualified donee, the fair market value of which does not exceed the amount, if any, by which (A) the fair market value of the particular property determined without reference to paragraph (a) exceeds (B) the fair market value of the particular property determined under paragraph (a), and (iii) paragraph (13)(b) does not apply in respect of the gift. Non-qualifying securities — anti-avoidance (13.3) For the purposes of subsections (13.1) and (13.2), if, as part of a series of transactions, an individual makes a gift to a qualified donee and the qualified donee acquires a non-qualifying security of a person (other than the individual or particular person referred to in subsection (13.1)) and it may reasonably be considered, having regard to all the circumstances, that one of the purposes or results of the acquisition of the non-qualifying security by the qualified donee was to facilitate, directly or indirectly, the making of the gift by the individual, then the non-qualifying security acquired by the qualified donee is deemed to be a non-qualifying security of the individual. Exchanged security (14) Where a share (in this subsection referred to as the “new share”) that is a non-qualifying security of an individual has been acquired by a donee referred to in subsection 118.1(13) in exchange for another share (in this subsection referred to as the “original share”) that is a non-qualifying security of the individual by means of a transaction to which section 51, subparagraphs 85.1(1)(a)(i) and 85.1(1)(a)(ii) or section 86 or 87 applies, the new share is deemed for the purposes of this subsection and subsection 118.1(13) to be the same share as the original share. Exchange of beneficial interest in trust (14.1) Where a donee disposes of a beneficial interest in a trust that is a non-qualifying security of an individual in circumstances where paragraph (13)(c) would, but for this subsection, apply in respect of the disposition, and in respect of which the donee receives no consideration other than other non-qualifying securities of the individual, for the purpose of subsection (13) the gift referred to in that subsection is to be read as a reference to a gift of those other non-qualifying securities. Death of donor (15) If, but for this subsection, an individual would be deemed by subsection 118.1(13) to have made a gift after the individual’s death, for the purpose of this section the individual is deemed to have made the gift in the taxation year in which the individual died, except that the amount of interest payable under any provision of this Act is the amount that it would be if this subsection did not apply to the gift. Loanbacks (16) For the purpose of this section, where (a) at any particular time an individual makes a gift of property, (b) if the property is a non-qualifying security of the individual, the gi