Income Tax Act — I-3.3 84
ction or event, to the extent that subsection 84(1) is applicable in respect of that transaction or event; and (b) in respect of any purchase by a corporation of any of its shares in the open market, if the corporation acquired those shares in the manner in which shares would normally be purchased by any member of the public in the open market. When dividend payable (7) A dividend that is deemed by this section or section 84.1, 128.1 or 212.1 to have been paid at a particular time is deemed, for the purposes of this Subdivision and sections 131 and 133, to have become payable at that time. Where s. (3) does not apply (8) Subsection 84(3) does not apply to deem a dividend to have been received by a shareholder of a public corporation where the shareholder is an individual resident in Canada who deals at arm’s length with the corporation and the shares redeemed, acquired or cancelled are prescribed shares of the capital stock of the corporation. Shares disposed of on redemptions, etc. (9) For greater certainty it is declared that where a shareholder of a corporation has disposed of a share of the capital stock of the corporation as a result of the redemption, acquisition or cancellation of the share by the corporation, the shareholder shall, for the purposes of this Act, be deemed to have disposed of the share to the corporation. Reduction of contributed surplus (10) For the purpose of paragraph 84(1)(c.3), there shall be deducted in determining at any time a corporation’s contributed surplus that arose after March 31, 1977 in any manner described in that paragraph the lesser of (a) the amount, if any, by which the amount of a dividend paid by the corporation at or before that time and after March 31, 1977 and when it was a public corporation exceeded its retained earnings immediately before the payment of the dividend, and (b) the amount of its contributed surplus immediately before the payment of the dividend referred to in paragraph 84(10)(a) that arose after March 31, 1977. Computation of contributed surplus (11) For the purpose of subparagraph 84(1)(c.3)(ii), where the property acquired by the corporation (in this subsection referred to as the “acquiring corporation”) consists of shares (in this subsection referred to as the “subject shares”) of any class of the capital stock of another corporation resident in Canada (in this subsection referred to as the “subject corporation”) and, immediately after the acquisition of the subject shares, the subject corporation would be connected (within the meaning that would be assigned by subsection 186(4) if the references in that subsection to “payer corporation” and “particular corporation” were read as “subject corporation” and “acquiring corporation”, respectively) with the acquiring corporation, the contributed surplus of the acquiring corporation that arose on the acquisition of the subject shares shall be deemed to be the lesser of (a) the amount added to the contributed surplus of the acquiring corporation on the acquisition of the subject shares, and (b) the amount, if any, by which the paid-up capital in respect of the subject shares at the time of the acquisition exceeded the fair market value of any consideration given by the acquiring corporation for the subject shares. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] R.S., 1985, c. 1 (5th Supp.), s. 84; 1994, c. 7, Sch. II, s. 62, c. 21, s. 35; 1999, c. 22, s. 23, c. 31, s. 135(F); 2012, c. 31, s. 16; 2013, c. 34, s. 219; 2016, c. 12, s. 25; 2018, c. 27, s. 5