Income Tax Act — I-3.3 87
ll be deemed to be the same right as the exchanged right for the purposes of paragraph (d) of the definition grandfathered share in subsection 248(1) where the terms and conditions of the new right were the same as, or substantially the same as, the terms and conditions of the exchanged right and the terms and conditions of the share receivable on an exercise of the new right were the same as, or substantially the same as, the terms and conditions of the share that would have been received on an exercise of the exchanged right. Flow-through shares (4.4) Where (a) there is an amalgamation of two or more corporations each of which is a principal-business corporation (within the meaning assigned by subsection 66(15)) or a corporation that at no time carried on business, (b) a predecessor corporation entered into an agreement with a person at a particular time for consideration given by the person to the predecessor corporation, (c) for the consideration under the agreement (i) a share (in this subsection referred to as the “old share”) of the predecessor corporation that was a flow-through share (other than a right to acquire a share) was issued to the person before the amalgamation, or (ii) a right was issued to the person before the amalgamation to acquire a share that would, if it were issued, be a flow-through share, and (d) the new corporation (i) issues, on the amalgamation and in consideration for the disposition of the old share, a share (in this subsection referred to as a “new share”) of any class of its capital stock to the person (or to any person or partnership that subsequently acquired the old share) and the terms and conditions of the new share are the same as, or substantially the same as, the terms and conditions of the old share, or (ii) is, because of the right referred to in subparagraph (c)(ii), obliged after the amalgamation to issue to the person a share of any class of the new corporation’s capital stock that would, if it were issued, be a flow-through share, for the purposes of subsection 66(12.66) and Part XII.6 and for the purposes of renouncing an amount under subsection 66(12.6), 66(12.601) or 66(12.62) in respect of Canadian exploration expenses or Canadian development expenses that would, but for the renunciation, be incurred by the new corporation after the amalgamation, (e) the person shall be deemed to have given the consideration under the agreement to the new corporation for the issue of the new share, (f) the agreement shall be deemed to have been entered into between the new corporation and the person at the particular time, (g) the new share shall be deemed to be a flow-through share of the new corporation, and (h) the new corporation shall be deemed to be the same corporation as, and a continuation of, the predecessor corporation. Options to acquire shares of predecessor corporation (5) Where there has been an amalgamation of two or more corporations after May 6, 1974, each taxpayer (except any predecessor corporation) who immediately before the amalgamation owned a capital property that was an option to acquire shares of the capital stock of a predecessor corporation (in this subsection referred to as the “old option”) and who received no consideration for the disposition of that option on the amalgamation, other than an option to acquire shares of the capital stock of the new corporation (in this subsection referred to as the “new option”), shall be deemed (a) to have disposed of the old option for proceeds equal to the adjusted cost base to the taxpayer of that option immediately before the amalgamation, and (b) to have acquired the new option at a cost to the taxpayer equal to the proceeds described in paragraph 87(5)(a), and where the old option was taxable Canadian property of the taxpayer, the new option is deemed to be, at any time that is within 60 months after the amalgamation, taxable Canadian property of the taxpayer. Adjusted cost base of option (5.1) Where the cost to a taxpa