Income Tax Act — I-3.3 93
 foreign affiliate of the corporation is an exempt dividend to the extent of the amount, if any, by which the portion of the dividend that was not prescribed to have been paid out of the pre-acquisition surplus of the other affiliate exceeds the total of such portion of the income or profits tax that can reasonably be considered to have been paid in respect of that portion of the dividend by the particular affiliate or by a partnership in which the particular affiliate had, at the time of the payment of the income or profits tax, a partnership interest, either directly or indirectly; and (c) the prescribed amount is deemed to be an amount that is received, at the adjustment time referred to in subsection 5905(7.7) of the Income Tax Regulations, by a particular foreign affiliate of a corporation resident in Canada from another foreign affiliate of the corporation and that is in respect of an exempt dividend on a share of the capital stock of the other affiliate. Loss on disposition of shares of foreign affiliate (4) If a taxpayer resident in Canada or a foreign affiliate (which taxpayer or foreign affiliate is referred to in this subsection as the “transferee”) of the taxpayer has acquired shares of the capital stock of one or more foreign affiliates (each referred to in this subsection as an “acquired affiliate”) of the taxpayer on a disposition of shares (such shares disposed of being referred to in this subsection as the “disposed shares”) of the capital stock of any other foreign affiliate of the taxpayer (other than, where the transferee is a foreign affiliate of the taxpayer, a disposition of shares that are, immediately before the acquisition, excluded property of the transferee or a disposition to which subsection 40(3.4) applies), the following rules apply: (a) the capital loss, if any, of the transferee from the disposition, is deemed to be nil; and (b) in computing the adjusted cost base to the transferee of a share of a particular class of the capital stock of an acquired affiliate that is owned by the transferee immediately after the disposition, there is to be added the amount determined by the formula [(A – B) × C/D]/E where A is the total of all amounts each of which is the cost amount to the transferee, immediately before the disposition, of a disposed share, B is the total of (i) the total of all amounts each of which is the proceeds of disposition of a disposed share, and (ii) the total of all amounts in respect of the computation of losses of the transferee from the dispositions of the disposed shares, each of which is, in respect of the disposition of a disposed share, the amount by which the amount for A in the formula in paragraph (2.01)(a) exceeds the amount determined by that formula, C is the fair market value, immediately after the disposition, of all shares of the particular class owned, immediately after the disposition, by the transferee, D is the fair market value, immediately after the disposition, of all shares owned, immediately after the disposition, by the transferee of the capital stock of all acquired affiliates, and E is the number of shares of the particular class that are owned by the transferee immediately after the disposition. Late filed elections (5) Where the election referred to in subsection 93(1) was not made on or before the day on or before which the election was required by that subsection to be made, the election shall be deemed to have been made on that day if, on or before the day that is 3 years after that day, (a) the election is made in prescribed manner; and (b) an estimate of the penalty in respect of that election is paid by the corporation when that election is made. Special cases (5.1) Where, in the opinion of the Minister, the circumstances of a case are such that it would be just and equitable (a) to permit an election under subsection 93(1) to be made after the day that is 3 years after the day on or before which the election was required by that subsection to be