Income Tax Act — I-3.3 260
tion specified securities lending arrangement , as compensation for a taxable dividend paid on a share described in subparagraph (a)(i) of that definition; ( paiement compensatoire (MPVM) ) specified securities lending arrangement means an arrangement, other than a securities lending arrangement, under which (a) a particular person (referred to in this definition as a “transferor”) transfers or lends at any particular time a property to another person (referred to in this definition as a “transferee”) and the property is (i) a particular share described in paragraph (a) of the definition qualified security , or (ii) a property in respect of which the following conditions are met: (A) the property is (I) an interest in a partnership, or (II) an interest as a beneficiary under a trust, and (B) all or any part of the fair market value of the property, immediately before the particular time, is derived, directly or indirectly, from a share described in subparagraph (i), (b) it may reasonably be expected, at the particular time, that the transferee — or a person that does not deal at arm’s length with, or is affiliated with, the transferee — will transfer or return after the particular time to the transferor — or a person that does not deal at arm’s length with, or is affiliated with, the transferor (referred to in this definition as a “substitute transferor”) — a property that is identical or substantially identical to the property so transferred or lent, and (c) the transferor’s (together with any substitute transferor’s) risk of loss or opportunity for gain or profit with respect to the particular property is not changed in any material respect; ( mécanisme de prêt de valeurs mobilières déterminé ) underlying payment means an amount paid on a qualified security by the issuer of the security. ( paiement sous-jacent ) Eligible dividend (1.1) This subsection applies to an amount if the amount is received by a person who is resident in Canada, the amount is deemed under subsection (5.1) to be a taxable dividend, and the amount is either (a) received as compensation for an eligible dividend, within the meaning assigned by subsection 89(1); or (b) received as compensation for a taxable dividend (other than an eligible dividend) paid by a corporation to a non-resident shareholder in circumstances where it is reasonable to consider that the corporation would, if that shareholder were resident in Canada, have designated the dividend to be an eligible dividend under subsection 89(14). References — borrower and lender (1.2) For the purposes of subsections (8), (8.1), (8.2), (8.3) and (9.1) and 212(2.1) and (3), in respect of a specified securities lending arrangement, (a) a reference to a borrower includes a transferee; and (b) a reference to a lender includes a transferor. Non-disposition (2) Subject to subsections 260(3) and 260(4), for the purposes of this Act, any transfer or loan by a lender of a security under a securities lending arrangement shall be deemed not to be a disposition of the security and the security shall be deemed to continue to be property of the lender and, for the purposes of this subsection, a security shall be deemed to include an identical security that has been transferred or returned to the lender under the arrangement. Disposition of right (3) Where, at any time, a lender receives property (other than an identical security or an amount deemed by subsection 260(4) to have been received as proceeds of disposition) in satisfaction of or in exchange for the lender’s right under a securities lending arrangement to receive the transfer or return of an identical security, for the purposes of this Act the lender shall be deemed to have disposed at that time of the security that was transferred or lent for proceeds of disposition equal to the fair market value of the property received for the disposition of the right (other than any portion thereof that is deemed to have been received by the lender as a taxable divide