Income Tax Act — I-3.3 87
orporation immediately before the amalgamation or merger, that (i) the paid-up capital, determined without reference to this subsection, of the particular class of shares of the capital stock of the new corporation immediately after the amalgamation or merger is of (ii) the paid-up capital, determined without reference to this subsection, in respect of all of the issued and outstanding shares of the capital stock of the new corporation immediately after the amalgamation or merger; and (b) there shall be added an amount equal to the lesser of (i) the amount, if any, by which (A) the total of all amounts each of which is an amount deemed by subsection 84(3), 84(4) or 84(4.1) to be a dividend on shares of the particular class paid by the new corporation before the particular time exceeds (B) the total that would be determined under clause 87(3)(b)(i)(A) if this Act were read without reference to paragraph 87(3)(a), and (ii) the amount required by paragraph 87(3)(a) to be deducted in computing the paid-up capital of shares of the particular class. Election for non-application of subsection (3) (3.1) Where, (a) there is an amalgamation of 2 or more corporations, (b) all of the issued shares, immediately before the amalgamation, of each class of shares (other than a class of shares all of the issued shares of which were cancelled on the amalgamation) of the capital stock of each predecessor corporation (in this subsection referred to as the “exchanged class”) are converted into all of the issued shares, immediately after the amalgamation, of a separate class of shares of the capital stock of the new corporation (in this subsection referred to as the “substituted class”), (c) immediately after the amalgamation, the number of shareholders of each substituted class, the number of shares of each substituted class owned by each shareholder, the number of issued shares of each substituted class, the terms and conditions of each share of a substituted class, and the paid-up capital of each substituted class determined without reference to the provisions of this Act are identical to the number of shareholders of the exchanged class from which the substituted class was converted, the number of shares of each such exchanged class owned by each shareholder, the number of issued shares of each such exchanged class, the terms and conditions of each share of such exchanged class, and the paid-up capital of each such exchanged class determined without reference to the provisions of this Act, respectively, immediately before the amalgamation, and (d) the new corporation elects in its return of income filed in accordance with section 150 for its first taxation year to have the provisions of this subsection apply, for the purpose of computing at any particular time the paid-up capital in respect of any particular class of shares of the capital stock of the new corporation, (e) subsection 87(3) does not apply in respect of the amalgamation, and (f) each substituted class shall be deemed to be the same as, and a continuation of, the exchanged class from which it was converted. Shares of predecessor corporation (4) Where there has been an amalgamation of two or more corporations after May 6, 1974, each shareholder (except any predecessor corporation) who, immediately before the amalgamation, owned shares of the capital stock of a predecessor corporation (in this subsection referred to as the “old shares”) that were capital property to the shareholder and who received no consideration for the disposition of those shares on the amalgamation, other than shares of the capital stock of the new corporation (in this subsection referred to as the “new shares”), shall be deemed (a) to have disposed of the old shares for proceeds equal to the total of the adjusted cost bases to the shareholder of those shares immediately before the amalgamation, and (b) to have acquired the new shares of any particular class of the capital stock of the new corporation at a cost t