Income Tax Act — I-3.3 110
n respect of the payment referred to in paragraph (1.43)(c); and (b) paragraph (1)(d) shall, in respect of the right, be read without reference to its subparagraph (i). Determination of amounts relating to employee security options (1.5) For the purpose of paragraph (1)(d), (a) the amount payable by a taxpayer to acquire a security under an agreement referred to in subsection 7(1) shall be determined without reference to any change in the value of a currency of a country other than Canada, relative to Canadian currency, occurring after the agreement was made; (b) the fair market value of a security at the time an agreement in respect of the security was made shall be determined on the assumption that all specified events associated with the security that occurred after the agreement was made and before the sale or issue of the security or the disposition of the taxpayer’s rights under the agreement in respect of the security, as the case may be, had occurred immediately before the agreement was made; and (c) in determining the amount that was included, in respect of a security that a qualifying person has agreed to sell or issue to a taxpayer, in the amount determined under subparagraph 7(1.4)(c)(ii) for the purpose of determining if the condition in paragraph 7(1.4)(c) was satisfied with respect to a particular disposition, an assumption shall be made that all specified events associated with the security that occurred after the particular disposition and before the sale or issue of the security or the taxpayer’s subsequent disposition of rights under the agreement in respect of the security, as the case may be, had occurred immediately before the particular disposition. Meaning of specified event (1.6) For the purpose of subsection (1.5), a specified event associated with a security is (a) where the security is a share of the capital stock of a corporation, (i) a subdivision or consolidation of shares of the capital stock of the corporation, (ii) a reorganization of share capital of the corporation, and (iii) a stock dividend of the corporation; and (b) where the security is a unit of a mutual fund trust, (i) a subdivision or consolidation of the units of the trust, and (ii) an issuance of units of the trust as payment, or in satisfaction of a person’s right to enforce payment, out of the trust’s income (determined before the application of subsection 104(6)) or out of the trust’s capital gains. Reduction in exercise price (1.7) If the amount payable by a taxpayer to acquire securities under an agreement referred to in subsection 7(1) is reduced at any particular time and the conditions in subsection (1.8) are satisfied in respect of the reduction, (a) the rights (referred to in this subsection and subsection (1.8) as the “old rights”) that the taxpayer had under the agreement immediately before the particular time are deemed to have been disposed of by the taxpayer immediately before the particular time; (b) the rights (referred to in this subsection and subsection (1.8) as the “new rights”) that the taxpayer has under the agreement at the particular time are deemed to be acquired by the taxpayer at the particular time; and (c) the taxpayer is deemed to receive the new rights as consideration for the disposition of the old rights. Conditions for subsection (1.7) to apply (1.8) The following are the conditions in respect of the reduction: (a) that the taxpayer would not be entitled to a deduction under paragraph (1)(d) if the taxpayer acquired securities under the agreement immediately after the particular time and this section were read without reference to subsection (1.7); and (b) that the taxpayer would be entitled to a deduction under paragraph (1)(d) if the taxpayer (i) disposed of the old rights immediately before the particular time, (ii) acquired the new rights at the particular time as consideration for the disposition, and (iii) acquired securities under the agreement immediately after the particular time. Notific