Income Tax Act — I-3.3 110.1
of a corporation is granted to a qualified donee; (b) the option is exercised so that the property is disposed of by the corporation and acquired by the qualified donee at a particular time; and (c) either (i) the amount that is 80% of the fair market value of the property at the particular time is greater than or equal to the total of (A) the consideration received by the corporation from the qualified donee for the property, and (B) the consideration received by the corporation from the qualified donee for the option, or (ii) the corporation establishes to the satisfaction of the Minister that the granting of the option or the disposition of the property was made by the corporation with the intention to make a gift to the qualified donee. Granting of an option (12) If this subsection applies, notwithstanding subsection 49(3), (a) the corporation is deemed to have received proceeds of disposition of the property equal to the property’s fair market value at the particular time; and (b) there shall be included in the total referred to in paragraph (1)(a), for the corporation’s taxation year that includes the particular time, the amount by which the property’s fair market value exceeds the total described in subparagraph (11)(c)(i). Disposition of an option (13) If an option to acquire a particular property of a corporation is granted to a qualified donee and the option is disposed of by the qualified donee (otherwise than by the exercise of the option) at a particular time (a) the corporation is deemed to have disposed of a property at the particular time (i) the adjusted cost base of which to the corporation immediately before the particular time is equal to the consideration, if any, paid by the qualified donee for the option, and (ii) the proceeds of disposition of which are equal to the lesser of the fair market value of the particular property at the particular time and the fair market value of any consideration (other than a non-qualifying security of any person) received by the qualified donee for the option; and (b) there shall be included in the total referred to in paragraph (1)(a) for the corporation’s taxation year that includes the particular time the amount, if any, by which the proceeds of disposition as determined by paragraph (a) exceed the consideration, if any, paid by the qualified donee for the option. Returned property (14) Subsection (15) applies if a qualified donee has issued to a corporation a receipt referred to in subsection (2) in respect of a transfer of a property (in this subsection and subsection (15) referred to as the “original property”) and a particular property that is (a) the original property is later transferred to the corporation (unless that later transfer is reasonable consideration or remuneration for property acquired by or services rendered to a person); or (b) any other property that may reasonably be considered compensation for or a substitute for, in whole or in part, the original property, is later transferred to the corporation. Returned property (15) If this subsection applies, then (a) irrespective of whether the transfer of the original property by the corporation to the qualified donee referred to in subsection (14) was a gift, the corporation is deemed not to have disposed of the original property at the time of that transfer nor to have made a gift; (b) if the particular property is identical to the original property, the particular property is deemed to be the original property; and (c) if the particular property is not the original property, then (i) the corporation is deemed to have disposed of the original property at the time that the particular property is transferred to the corporation for proceeds of disposition equal to the greater of the fair market value of the particular property at that time and the fair market value of the original property at the time that it was transferred by the corporation to the donee, and (ii) if the transfer of the original property