Income Tax Act — I-3.3 84.1
ayer, the taxpayer and the corporation are deemed not to be dealing with each other at arm’s length at that time; (b) where a taxpayer is deemed by paragraph 110.6(19)(a) to have reacquired a share, the taxpayer is deemed to have acquired the share at the beginning of February 23, 1994 from a person with whom the taxpayer was not dealing at arm’s length; and (c) where a share owned by a particular person, or a share substituted for that share, has by one or more transactions or events between persons not dealing at arm’s length become vested in another person, the particular person and the other person are deemed at all times not to be dealing at arm’s length with each other whether or not the particular person and the other person coexisted. Idem (2.1) For the purposes of subparagraph 84.1(2)(a.1)(ii), where the taxpayer or an individual with whom the taxpayer did not deal at arm’s length (in this subsection referred to as the “transferor”) disposes of a share in a taxation year and claims an amount under subparagraph 40(1)(a)(iii) in computing the gain for the year from the disposition, the amount in respect of which a deduction under section 110.6 was claimed in respect of the transferor’s gain from the disposition shall be deemed to be equal to the lesser of (a) the total of (i) the amount claimed under subparagraph 40(1)(a)(iii) by the transferor for the year in respect of the disposition, and (ii) twice the amount deducted under section 110.6 in computing the taxable income of the transferor for the year in respect of the taxable capital gain from the disposition, and (b) twice the maximum amount that could have been deducted under section 110.6 in computing the taxable income of the transferor for the year in respect of the taxable capital gain from the disposition if (i) no amount had been claimed by the transferor under subparagraph 40(1)(a)(iii) in computing the gain for the year from the disposition, and (ii) all amounts deducted under section 110.6 in computing the taxable income of the transferor for the year in respect of taxable capital gains from dispositions of property to which this subsection does not apply were deducted before determining the maximum amount that could have been deducted under section 110.6 in respect of the taxable capital gain from the disposition, and for the purposes of subparagraph 84.1(2.1)(b)(ii), 1/2 of the total of all amounts determined under this subsection for the year in respect of other property disposed of before the disposition of the share shall be deemed to have been deducted under section 110.6 in computing the taxable income of the transferor for the year in respect of the taxable capital gain from the disposition of property to which this subsection does not apply, and, for the purposes of this subsection, where more than one share to which this subsection applies is disposed of in the year, each such share shall be deemed to have been separately disposed of in the order designated by the taxpayer in the taxpayer’s return of income under this Part for the year. Rules for par. 84.1(2)(b) (2.2) For the purpose of paragraph 84.1(2)(b), (a) in determining whether or not a taxpayer referred to in that paragraph was a member of a group of fewer than 6 persons that controlled a corporation at any time, any shares of the capital stock of that corporation owned at that time by (i) the taxpayer’s child (as defined in subsection 70(10)), who is under 18 years of age, or the taxpayer’s spouse or common-law partner, (ii) a trust of which the taxpayer, a person described in subparagraph 84.1(2.2)(a)(i) or a corporation described in subparagraph 84.1(2.2)(a)(iii), is a beneficiary, or (iii) a corporation controlled by the taxpayer, by a person described in subparagraph 84.1(2.2)(a)(i) or 84.1(2.2)(a)(ii) or by any combination of those persons or trusts are deemed to be owned at that time by the taxpayer and not by the person who actually owned the shares at that time; (b) a group of pe