Income Tax Act — I-3.3 88
uired to pay tax under Part VII of the Income Tax Act , chapter 148 of the Revised Statutes of Canada, 1952, as it read on March 31, 1977, or (B) capital dividends and life insurance capital dividends on the share or on any share (in this subparagraph referred to as a “replaced share”) for which a share or a replaced share was substituted or exchanged, as is designated by the parent in respect of that capital property in its return of income under this Part for its taxation year in which the subsidiary was so wound up, except that (ii) the amount designated in respect of any such capital property may not exceed the amount determined by the formula A – (B + C) where A is the fair market value of the property at the time the parent last acquired control of the subsidiary, B is the greater of the cost amount to the subsidiary of the property at the time the parent last acquired control of the subsidiary and the cost amount to the subsidiary of the property immediately before the winding-up, and C is the prescribed amount, and (ii.1) for the purpose of calculating the amount in subparagraph (ii) in respect of an interest of the subsidiary in a partnership, the fair market value of the interest at the time the parent last acquired control of the subsidiary is deemed to be the amount determined by the formula A – B where A is the fair market value (determined without reference to this subparagraph) of the interest at that time, and B is the portion of the amount by which the fair market value (determined without reference to this subparagraph) of the interest at that time exceeds its cost amount at that time as may reasonably be regarded as being attributable at that time to the total of all amounts each of which is (A) in the case of a depreciable property held directly by the partnership or held indirectly by the partnership through one or more other partnerships, the amount by which the fair market value (determined without reference to liabilities) of the property exceeds its cost amount, (B) in the case of a Canadian resource property or a foreign resource property held directly by the partnership or held indirectly by the partnership through one or more other partnerships, the fair market value (determined without reference to liabilities) of the property, or (C) in the case of a property that is not a capital property, a Canadian resource property or a foreign resource property and that is held directly by the partnership or held indirectly through one or more other partnerships, the amount by which the fair market value (determined without reference to liabilities) of the property exceeds its cost amount, and (iii) in no case shall the total of amounts so designated in respect of all such capital properties exceed the amount, if any, by which the total determined under subparagraph 88(1)(b)(ii) exceeds the total of the amounts determined under subparagraphs 88(1)(d)(i) and 88(1)(d)(i.1), (d.1) subsection 84(2) and section 21 of the Income Tax Application Rules do not apply to the winding-up of the subsidiary, and subsection 13(21.2) does not apply to the winding-up of the subsidiary with respect to property acquired by the parent on the winding-up; (d.2) in determining, for the purposes of this paragraph and paragraphs 88(1)(c) and 88(1)(d), the time at which a person or group of persons (in this paragraph and paragraph 88(1)(d.3) referred to as the “acquirer”) last acquired control of the subsidiary, where control of the subsidiary was acquired from another person or group of persons (in this paragraph referred to as the “vendor”) with whom the acquirer was not (otherwise than solely because of a right referred to in paragraph 251(5)(b)) dealing at arm’s length, the acquirer is deemed to have last acquired control of the subsidiary at the earlier of (i) the time at which the vendor last acquired control (within the meaning that would be assigned by subsection 186(2) if the reference in that subsection to “another corporatio