Income Tax Act — I-3.3 212.3
emed to have received from the CRIC, at the dividend time, a dividend in an amount determined by the formula A × B/C where A is the total of all amounts each of which is the portion of the fair market value at the investment time of any property (not including shares of the capital stock of the CRIC) transferred, any obligation assumed or incurred, or any benefit otherwise conferred, by the CRIC, or of any property transferred to the CRIC which transfer results in the reduction of an amount owing to the CRIC, that can reasonably be considered to relate to the investment, B is (i) if there is one parent, one, and (ii) if there is a group of parents, the fair market value at the dividend time of the shares of the capital stock of the CRIC that are held, directly or indirectly, by the parent, and C is (i) if there is one parent, one, and (ii) if there is a group of parents, the total of all amounts each of which is the fair market value at the dividend time of the shares of the capital stock of the CRIC that are held, directly or indirectly, by a parent; and (b) in computing the paid-up capital in respect of any class of shares of the capital stock of the CRIC at any time that is at or after the investment time, there is to be deducted the amount of any increase in the paid-up capital in respect of the class, determined without reference to this section, that can reasonably be considered to relate to the investment. Dividend substitution election (3) If a CRIC (or a CRIC and a corporation that is a qualifying substitute corporation in respect of the CRIC at the dividend time) and a parent (or a parent and another non-resident person that at the dividend time is related to the parent) jointly elect in writing under this subsection in respect of an investment, and the election is filed with the Minister on or before the filing-due date of the CRIC for its taxation year that includes the dividend time, then the dividend that would, in the absence of this subsection, be deemed under paragraph (2)(a) to have been paid by the CRIC to the parent and received by the parent from the CRIC is deemed to have instead been (a) paid by the CRIC or the qualifying substitute corporation, as agreed on in the election; and (b) paid to, and received by, the parent or the other non-resident person, as agreed on in the election. Definitions (4) The following definitions apply in this section. cross-border class , in respect of an investment, means a class of shares of the capital stock of a CRIC or qualifying substitute corporation if, immediately after the dividend time in respect of the investment, (a) a parent, or a non-resident person that does not deal at arm’s length with a parent, owns at least one share of the class; and (b) no more than 30% of the issued and outstanding shares of the class are owned by one or more persons resident in Canada that do not deal at arm’s length with a parent. ( catégorie transfrontalière ) dividend time , in respect of an investment, means (a) if the CRIC is controlled by a parent or group of parents at the investment time, the investment time; and (b) in any other case, the earlier of (i) the first time, after the investment time, at which the CRIC is controlled by a parent or group of parents, as the case may be, and (ii) the day that is one year after the day that includes the investment time. ( moment du dividende ) qualifying substitute corporation , at any time in respect of a CRIC, means a corporation resident in Canada (a) that is, at that time, controlled by (i) a parent, (ii) a group of parents, or (iii) a non-resident person that does not deal at arm’s length with a parent; (b) that has, at that time, an equity percentage (as defined in subsection 95(4)) in the CRIC; and (c) shares of the capital stock of which are, at that time, owned by a parent or another non-resident person with which the parent does not, at that time, deal at arm’s length. ( société de substitution admissible ) Modification of term