Income Tax Act — I-3.3 55
Definitions 55 (1) In this section, distribution means a direct or indirect transfer of property of a corporation (referred to in this section as the “distributing corporation”) to one or more corporations (each of which is referred to in this section as a “transferee corporation”) where, in respect of each type of property owned by the distributing corporation immediately before the transfer, each transferee corporation receives property of that type the fair market value of which is equal to or approximates the amount determined by the formula A × B/C where A is the fair market value, immediately before the transfer, of all property of that type owned at that time by the distributing corporation, B is the fair market value, immediately before the transfer, of all the shares of the capital stock of the distributing corporation owned at that time by the transferee corporation, and C is the fair market value, immediately before the transfer, of all the issued shares of the capital stock of the distributing corporation; ( attribution ) permitted acquisition , in relation to a distribution by a distributing corporation, means an acquisition of property by a person or partnership on, or as part of, (a) a distribution, or (b) a permitted exchange or permitted redemption in relation to a distribution by another distributing corporation; ( acquisition autorisée ) permitted exchange , in relation to a distribution by a distributing corporation, means (a) an exchange of shares for shares of the capital stock of the distributing corporation to which subsection 51(1) or 86(1) applies or would, if the shares were capital property to the holder thereof, apply, other than an exchange that resulted in an acquisition of control of the distributing corporation by any person or group of persons, and (b) an exchange of shares of the capital stock of the distributing corporation by one or more shareholders of the distributing corporation (each of whom is referred to in this paragraph as a “participant”) for shares of the capital stock of another corporation (referred to in this paragraph as the “acquiror”) in contemplation of the distribution where (i) no share of the capital stock of the acquiror outstanding immediately after the exchange (other than directors’ qualifying shares) is owned at that time by any person or partnership other than a participant, and either (ii) the acquiror owns, immediately before the distribution, all the shares each of which is a share of the capital stock of the distributing corporation that was owned immediately before the exchange by a participant, or (iii) the fair market value, immediately before the distribution, of each participant’s shares of the capital stock of the acquiror is equal to or approximates the amount determined by the formula (A × B/C) + D where A is the fair market value, immediately before the distribution, of all the shares of the capital stock of the acquiror then outstanding (other than shares issued to participants in consideration for shares of a specified class all the shares of which were acquired by the acquiror on the exchange), B is the fair market value, immediately before the exchange, of all the shares of the capital stock of the distributing corporation (other than shares of a specified class none or all of the shares of which were acquired by the acquiror on the exchange) owned at that time by the participant, C is the fair market value, immediately before the exchange, of all the shares (other than shares of a specified class none or all of the shares of which were acquired by the acquiror on the exchange and shares to be redeemed, acquired or cancelled by the distributing corporation pursuant to the exercise of a statutory right of dissent by the holder of the share) of the capital stock of the distributing corporation outstanding immediately before the exchange, and D is the fair market value, immediately before the distribution, of all the shares issued to the participant b