Income Tax Act — I-3.3 (a)
taxable preferred share at any particular time means (a) a share issued after December 15, 1987 that is a short-term preferred share at that particular time, or (b) a share (other than a grandfathered share) of the capital stock of a corporation issued after 8:00 p.m Eastern Daylight Saving Time, June 18, 1987 where, at that particular time by reason of the terms or conditions of the share or any agreement in respect of the share or its issue to which the corporation, or a specified person in relation to the corporation, is a party, (i) it may reasonably be considered, having regard to all the circumstances, that the amount of the dividends that may be declared or paid on the share (in this definition referred to as the “dividend entitlement”) is, by way of a formula or otherwise (A) fixed, (B) limited to a maximum, or (C) established to be not less than a minimum (including any amount determined on a cumulative basis) and with respect to the dividend that may be declared or paid on the share there is a preference over any other dividend that may be declared or paid on any other share of the capital stock of the corporation, (ii) it may reasonably be considered, having regard to all the circumstances, that the amount that the shareholder is entitled to receive in respect of the share on the dissolution, liquidation or winding-up of the corporation or on the redemption, acquisition or cancellation of the share (unless the requirement to redeem, acquire or cancel the share arises only in the event of the death of the shareholder or by reason only of a right to convert or exchange the share) or on a reduction of the paid-up capital of the share by the corporation or by a specified person in relation to the corporation (in this definition referred to as the “liquidation entitlement”) is, by way of a formula or otherwise (A) fixed, (B) limited to a maximum, or (C) established to be not less than a minimum, and, for the purposes of this subparagraph, shareholder includes a shareholder of a shareholder, (iii) the share is convertible or exchangeable at any time, unless (A) it is convertible into or exchangeable for (I) another share of the corporation or a corporation related to the corporation that, if issued, would not be a taxable preferred share, (II) a right or warrant that, if exercised, would allow the person exercising it to acquire only a share of the corporation or a corporation related to the corporation that, if issued, would not be a taxable preferred share, or (III) both a share described in subclause (I) and a right or warrant described in subclause (II), and (B) all the consideration receivable for the share on the conversion or exchange is the share described in subclause (I) or the right or warrant described in subclause (II) or both, as the case may be, and, for the purposes of this clause, where a taxpayer may become entitled on the conversion or exchange of a share to receive any particular consideration (other than consideration described in any of subclauses (I) to (III)) in lieu of a fraction of a share, the particular consideration shall be deemed not to be consideration unless it may reasonably be considered that the particular consideration was receivable as part of a series of transactions or events one of the main purposes of which was to avoid or limit the application of Part IV.1 or VI.1, or (iv) any person (other than the corporation) was, at or immediately before that particular time, obligated, either absolutely or contingently, and either immediately or in the future, to effect any undertaking (in this subparagraph referred to as a “guarantee agreement”), including any guarantee, covenant or agreement to purchase or repurchase the share, and including the lending of funds to or the placing of amounts on deposit with, or on behalf of, the shareholder or any specified person in relation to the shareholder given (A) to ensure that any loss that the shareholder or a specified person in relation to the s