Income Tax Act — I-3.3 85.1
 year in which the disposition occurs; (d) if the particular unit’s fair market value at the time of the disposition exceeds the exchange share’s fair market value immediately after the disposition, and it is reasonable to regard any part of the excess as a benefit that the taxpayer desired to have conferred on a person, or partnership, with whom the taxpayer does not deal at arm’s length, the excess is deemed to be an amount that section 15 requires to be included in computing the taxpayer’s income for the taxpayer’s taxation year in which the disposition occurs; (e) the cost to the corporation of the particular unit is deemed to be the lesser of (i) the fair market value of the particular unit immediately before the disposition, and (ii) the amount determined for B in the formula in paragraph (f) in respect of the particular unit; and (f) in computing the paid-up capital in respect of each class of shares of the capital stock of the corporation at any time after the disposition there shall be deducted the amount determined by the formula (A – B) × C/A where A is the increase, if any, as a result of the disposition, in the paid-up capital in respect of all the shares of the capital stock of the corporation, computed without reference to this paragraph as it applies to the disposition, B is the amount determined by the formula D – E where D is (i) unless subparagraph (ii) applies, the total of all amounts each of which is (A) if the SIFT wind-up entity is a trust, the fair market value of property received by the SIFT wind-up entity on the issuance of the particular unit, or (B) if the SIFT wind-up entity is a partnership, (I) an amount that has at any time been added, in computing the adjusted cost base to any taxpayer of the particular unit on or before the disposition, because of subparagraph 53(1)(e)(iv) or (x), or (II) an amount that would at any time have been added, in computing the adjusted cost base to any taxpayer of the particular unit on or before the disposition, because of subparagraph 53(1)(e)(i) if subsection 96(1) were read without reference to its paragraph (d) and the partnership deducted all amounts otherwise deductible because of that paragraph, and (ii) if the SIFT wind-up entity has on or after the end of the exchange period issued a unit, nil, and E is the total of all amounts each of which (i) if the SIFT wind-up entity is a trust, has become payable by the SIFT wind-up entity, in respect of the particular unit, to any holder of the unit on or before the disposition, other than an amount that has become payable out of its income (determined without reference to subsection 104(6)) or capital gains, and (ii) if the SIFT wind-up entity is a partnership, (A) has at any time been deducted, in computing the adjusted cost base to any taxpayer of the particular unit on or before the disposition, because of subparagraph 53(2)(c)(iv) or (v), or (B) would have at any time been deducted, in computing the adjusted cost base to any taxpayer of the particular unit on or before the disposition, because of subparagraph 53(2)(c)(i) if subsection 96(1) were read without reference to its paragraph (d) and the partnership deducted all amounts otherwise deductible because of that paragraph, and C is the increase, if any, as a result of the disposition, in the paid-up capital in respect of the class of shares, computed without reference to this paragraph as it applies to the disposition. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] R.S., 1985, c. 1 (5th Supp.), s. 85.1; 1994, c. 7, Sch. VIII, s. 36, c. 21, s. 37; 2001, c. 17, s. 63; 2009, c. 2, s. 18; 2010, c. 12, s. 7; 2013, c. 34, ss. 63, 221 2026, c. 3, s. 22