Income Tax Act — I-3.3 18
n of a person or partnership is not a property of the person or partnership, the person or partnership is deemed (i) to hold the position at any time while it is a position of the person or partnership, and (ii) to have disposed of the position when the position is settled or extinguished in respect of the person or partnership; (b) a disposition of a position is deemed to include a disposition of a portion of the position; (c) a position held by one or more persons or partnerships referred to in paragraph (a) of the definition offsetting position in subsection (17) is deemed to be an offsetting position in respect of a particular position of a person or partnership if (i) there is a high degree of negative correlation between changes in value of the position and the particular position, and (ii) it can reasonably be considered that the principal purpose of the series of transactions or events, or any of the transactions in the series, of which the holding of both the position and the particular position are part, is to avoid, reduce or defer tax that would otherwise be payable under this Act; and (d) one or more positions held by one or more persons or partnerships referred to in paragraph (a) of the definition offsetting position in subsection (17) are deemed to be a successor position in respect of a particular position of a person or partnership if (i) a portion of the particular position was disposed of at a particular time, (ii) the position is, or the positions include, as the case may be, a position that consists of the portion of the particular position that was not disposed of (in this paragraph referred to as the “remaining portion of the particular position”), (iii) where there is more than one position, the position or positions that do not consist of the remaining portion of the particular position were entered into during the period that begins 30 days before, and ends 30 days after, the particular time, (iv) the position is, or the positions taken together would be, as the case may be, an offsetting position in respect of a second position (within the meaning of the definition successor position in subsection (17)), (v) the second position was an offsetting position in respect of the particular position, and (vi) it can reasonably be considered that the principal purpose of the series of transactions or events, or any of the transactions in the series, of which the disposition of a portion of the particular position and the holding of one or more positions are part, is to avoid, reduce or defer tax that would otherwise be payable under this Act. Different taxation years (22) Subsection (23) applies if (a) at any time in a particular taxation year of a transferor, a position referred to in any of subparagraphs (ii) to (iv) of the description of D in subsection (19) (in this subsection and subsection (23) referred to as the “gain position”) is held by a connected person; (b) the connected person disposes of the gain position in the particular taxation year; and (c) the taxation year of the connected person in which the disposition referred to in paragraph (b) occurs ends after the end of the particular taxation year. Different taxation years (23) If this subsection applies, for the purposes of the definition unrecognized profit in subsection (17) and subsection (19), the portion of the profit, if any, realized from the disposition of the gain position referred to in paragraph (22)(b) that is determined by the following formula is deemed to be unrecognized profit in respect of the gain position until the end of the taxation year of the connected person in which the disposition occurs: A × B/C where A is the amount of the profit otherwise determined; B is the number of days in the taxation year of the connected person in which the disposition referred to in paragraph (22)(b) occurs that are after the end of the particular taxation year; and C is the total number of days in the taxation year of the connected person