Income Tax Regulations — 5301
icular time in the course of the winding up, all or substantially all of the property of the subsidiary has been distributed to a parent within the meaning of subsection 88(1) of the Act, the following rules apply: (a) there shall be added to the amount of the parent’s first instalment base for its taxation year that includes the particular time the amount of the subsidiary’s first instalment base for its taxation year that includes the particular time; (b) there shall be added to the amount of the parent’s second instalment base for its taxation year that includes the particular time the amount of the subsidiary’s second instalment base for its taxation year that includes the particular time; (c) there shall be added to the amount of the parent’s first instalment base for its taxation year immediately following its taxation year referred to in paragraph (a) the amount that is the proportion of the subsidiary’s first instalment base for its taxation year referred to in paragraph (a) that (i) the number of complete months that ended at or before the particular time in the taxation year of the parent that includes the particular time is of (ii) 12; and (d) there shall be added to the amount of the parent’s second instalment base for its taxation year immediately following its taxation year referred to in paragraph (a) the amount of the subsidiary’s first instalment base for its taxation year that includes the particular time. (7) The amount of an instalment of tax for the taxation year referred to in paragraphs (6)(a) and (b) that a parent is deemed under subsection 161(4.1) of the Act to have been liable to pay before the particular time referred to in subsection (6) shall be determined as if subsection (6) were not applicable in respect of a distribution of property described in that subsection occurring after the day on or before which the instalment was required to be paid. (8) Subject to subsection (9), if at a particular time a corporation (in this subsection referred as the “transferor”) has disposed of all or substantially all of its property to another corporation with which it was not dealing at arm’s length (in this subsection and subsection (9) referred to as the “transferee”) and subsection 85(1), (2) or 142.7(3) of the Act applied in respect of the disposition of any of the property, the following rules apply: (a) there shall be added to the amount of the transferee’s first instalment base for its taxation year that includes the particular time the amount of the transferor’s first instalment base for its taxation year that includes the particular time; (b) there shall be added to the amount of the transferee’s second instalment base for its taxation year that includes the particular time the amount of the transferor’s second instalment base for its taxation year that includes the particular time; (c) there shall be added to the amount of the transferee’s first instalment base for its taxation year immediately following its taxation year referred to in paragraph (a) the amount that is the proportion of the transferor’s first instalment base for its taxation year referred to in paragraph (a) that (i) the number of complete months that ended at or before the particular time in the taxation year of the transferee that includes the particular time is of (ii) 12; and (d) there shall be added to the amount of the transferee’s second instalment base for its taxation year immediately following its taxation year referred to in paragraph (a) the amount of the transferor’s first instalment base for its taxation year that includes the particular time. (9) The amount of an instalment of tax for the taxation year referred to in paragraphs (8)(a) and (b) that a transferee is deemed under subsection 161(4.1) of the Act to have been liable to pay before the particular time referred to in subsection (8) shall be determined as if subsection (8) were not applicable in respect of a disposition of property described in that subsection oc