Income Tax Act — I-3.3 183.3
(A) fixed, or (B) determined by reference to a market interest rate (including a Government of Canada Treasury Bill) plus a fixed amount, if any; and (d) entitles any holder of the equity to receive, on the redemption, cancellation or acquisition of the equity by the covered entity or by a person or partnership with whom the covered entity does not deal at arm’s length or is affiliated, an amount that does not exceed the total of the following amounts: (i) the fair market value of the consideration for which the equity was issued, (ii) any unpaid distributions or dividends on the equity that are payable to the holder, (iii) any premium that is payable to the holder solely due to the early redemption, cancellation or acquisition of the equity, and (iv) any other amount in respect of an amount described in subparagraphs (i) to (iii) that is attributable to an increase in the value of a currency other than Canadian currency relative to Canadian currency. ( dette substantielle ) Tax payable (2) Each person or partnership that is a covered entity for a taxation year shall pay a tax for the taxation year equal to the amount determined by the formula 0.02 × (A + B − C) where A is the total fair market value of equity (other than substantive debt) of the covered entity that is redeemed, acquired or cancelled in the taxation year by the covered entity, other than equity that is (a) redeemed, acquired or cancelled in a reorganization transaction, or (b) acquired from a specified affiliate, if that equity was previously deemed by subsection (5) to have been acquired by the covered entity and was previously included in the description of A; B is (a) if equity of the covered entity (other than substantive debt) is redeemed, acquired or cancelled in the taxation year by the covered entity, pursuant to a reorganization transaction described in paragraph (a) or (b) of that definition and any portion of the consideration received by a holder for the equity is not equity consideration described in paragraph (a) or (b) of the definition reorganization transaction , the amount determined by the formula D − E where D is the total fair market value of the equity of the covered entity (other than substantive debt) that is redeemed, acquired or cancelled in a reorganization transaction described in this paragraph; and E is the total fair market value of any equity consideration described in paragraph (a) or (b) of the definition reorganization transaction that is received by a holder as consideration for the equity that is redeemed, acquired or cancelled in a reorganization transaction described in this paragraph; and (b) in any other case, nil; and C is the total fair market value of equity (other than substantive debt) of the covered entity that is (a) issued in a qualifying issuance in the taxation year, or (b) disposed of in the taxation year by a specified affiliate of the covered entity (except a disposition to the covered entity or another specified affiliate of the covered entity), if that equity was previously deemed by subsection (5) to have been acquired by the covered entity and was previously included in the description of A. Tax payable — anti-avoidance (3) Equity that is redeemed, acquired or cancelled, or that is issued by a covered entity, as part of a transaction (as defined in subsection 245(1)) or series of transactions shall be included in the description of A or B or excluded from the description of C in subsection (2) (as the case may be) if it is reasonable to consider that the primary purpose of the transaction or series is to cause a decrease in the amount referred to in the description of A or B in that subsection or an increase in the amount referred to in the description of C in that subsection. De minimis rule (4) Despite subsection (2), if the total of the amounts determined for A and B in subsection (2) for a taxation year is less than $1,000,000 (prorated based upon the number of days in the taxation year if the taxat