Income Tax Act — I-3.3 110.61
the description of G in subsection 110.61(2) (except any amount that previously reduced the amount otherwise deductible by the individual in the year under subsection 110.61(2))”, and (iii) the amount, if any, by which (A) the individual’s net capital losses for other taxation years deducted under paragraph 111(1)(b) in computing the individual’s taxable income for the year exceeds (B) the amount, if any, by which the amount determined in respect of the individual for the year under paragraph 3(b) in respect of capital gains and capital losses (except any portion related to a deduction previously claimed by the individual in respect of other subject shares under this subsection) exceeds the amount determined for G. Order of application (2.1) If an individual claims more than one deduction under subsection (2) in a taxation year, the individual is to designate the order in which the deductions are claimed, and if the individual does not designate an order, the Minister may designate the order. Disqualifying event (3) For the purposes of this section, a disqualifying event in respect of a qualifying business transfer occurs at the earliest of (a) the time when the trust that participated in the qualifying business transfer ceases to be an employee ownership trust, and (b) the time that is the beginning of the taxation year of a qualifying business of the trust in which less than 50% of the fair market value of the shares of the qualifying business is derived, directly or indirectly, from assets used principally in an active business carried on by one or more qualifying businesses controlled by the trust at both that time and at the beginning of the preceding taxation year of the qualifying business (unless the active business has ceased to be carried on at that time due to the disposition of all the assets that were used to carry on the business in order to satisfy debts owed to creditors of the trust or of the qualifying business). Consequences of a disqualifying event (4) If a disqualifying event in respect of a qualifying business transfer occurs (a) within 24 months of the disposition time for the qualifying business transfer, subsection (2) is deemed to have never applied in respect of the subject shares disposed of under the qualifying business transfer; or (b) within eight years of the day that is 24 months after the disposition time for the qualifying business transfer, in computing the income of the trust that participated in the qualifying business transfer, the trust is deemed to have a gain equal to the elected amount (within the meaning of clause (1)(e)(ii)(A)) included in the joint election referred to in paragraph (1)(e), for the year in which the disqualifying event occurs, from the disposition of a capital property. Anti-avoidance (5) Despite any other provision in this section, subsection (2) does not apply in respect of a qualifying business transfer if it is reasonable to consider that one of the purposes of any transaction (as defined in subsection 245(1)), or series of transactions, is to (a) involve the trust (or the purchaser corporation) in the qualifying business transfer to accommodate the direct or indirect acquisition of subject shares (or the acquisition of all or substantially all of the risk of loss and opportunity for gain or profit in respect of the subject shares) by another person or partnership (other than the trust or the purchaser corporation) in a manner that permits an individual to claim a deduction under subsection (2) that would otherwise not be available; or (b) organize or reorganize a subject corporation or any other corporation, partnership or trust in a manner that allows a deduction to be claimed under subsection (2) in respect of more than one qualifying business transfer of a business that is relevant to the determination of whether subject shares satisfied the condition set out in paragraph (a) of the definition qualifying business transfer in subsection 248(1). Failure to rep