Income Tax Act — I-3.3 87
hat shareholder of any class of the capital stock of a predecessor corporation (in this subsection referred to as the “exchanged share”) and the terms and conditions of the new share were the same as, or substantially the same as, the terms and conditions of the exchanged share, for the purposes of applying the provisions of this subsection, subsections 112(2.2) and 112(2.4), Parts IV.1 and VI.1, section 258 and the definitions grandfathered share , short-term preferred share , taxable preferred share and taxable RFI share in subsection 248(1) to the new share, the following rules apply: (a) the new share shall be deemed to have been issued at the time the exchanged share was issued; (b) where the exchanged share was a share described in paragraph (a), (b), (c) or (d) of the definition grandfathered share in subsection 248(1), the new share shall be deemed to be the same share as the exchanged share for the purposes of that definition; (c) the new share shall be deemed to have been acquired by the shareholder at the time the exchanged share was acquired by the shareholder; (d) the new corporation shall be deemed to be the same corporation as, and a continuation of, each predecessor corporation; (e) an election made under subsection 191.2(1) by a predecessor corporation with respect to the class of shares of its capital stock to which the exchanged share belonged shall be deemed to be an election made by the new corporation with respect to the class of shares of its capital stock to which the new share belongs; and (f) where the terms or conditions of the exchanged share or an agreement in respect of the exchanged share specify an amount in respect of the exchanged share for the purposes of subsection 191(4) and an amount equal to the amount so specified in respect of the exchanged share is specified in respect of the new share for the purposes of subsection 191(4), (i) for the purposes of subparagraphs 191(4)(d)(i) and 191(4)(e)(i), the new share shall be deemed to have been issued for the same consideration as that for which the exchanged share was issued and to have been issued for the purpose for which the exchanged share was issued, (ii) for the purposes of subparagraphs 191(4)(d)(ii) and 191(4)(e)(ii), the new share shall be deemed to be the same share as the exchanged share and to have been issued for the purpose for which the exchanged share was issued, and (iii) where the shareholder received no consideration for the disposition of the exchanged share other than the new share, for the purposes of subsection 191(4), (A) in the case of an exchanged share to which subsection 191(4) applies because of paragraph 191(4)(a), the new share shall be deemed to have been issued for consideration having a fair market value equal to the consideration for which the exchanged share was issued, and (B) in the case of an exchanged share to which subsection 191(4) applies because of an event described in paragraph 191(4)(b) or 191(4)(c), the consideration for which the new share was issued shall be deemed to have a fair market value equal to the fair market value of the exchanged share immediately before the time that event occurred. Exchanged rights (4.3) Where there has been an amalgamation or merger of two or more corporations after June 18, 1987 and a right listed on a designated stock exchange to acquire a share of any class of the capital stock of the new corporation (in this subsection referred to as the “new right”) was acquired by a shareholder in consideration for the disposition of a right described in paragraph (d) of the definition grandfathered share in subsection 248(1) to acquire a share of any class of the capital stock of a predecessor corporation (in this subsection referred to as the “exchanged right”), the new right shall be deemed to be the same right as the exchanged right for the purposes of paragraph (d) of the definition grandfathered share in subsection 248(1) where the terms and conditions of the new right we