Income Tax Act — I-3.3 138
here (a) a non-resident insurer (in this subsection referred to as the “transferor”) has, at any time in a taxation year, ceased to carry on all or substantially all of an insurance business carried on by it in Canada in that year, (b) the transferor has, at that time or within 60 days after that time, transferred all or substantially all of the property (in this subsection referred to as the “transferred property) that is owned by it at that time and that was designated insurance property in respect of the business for the taxation year that, because of paragraph (h), ended immediately before that time (i) to a corporation (in this subsection referred to as the “transferee”) that is a qualified related corporation (within the meaning assigned by subsection 219(8)) of the transferor that began immediately after that time to carry on that insurance business in Canada, and (ii) for consideration that includes shares of the capital stock of the transferee, (c) the transferee has, at that time or within 60 days thereafter, assumed or reinsured all or substantially all of the obligations of the transferor that arose in the course of carrying on that insurance business in Canada, and (d) the transferor and the transferee have jointly elected in prescribed form and in accordance with subsection 138(11.6), the following rules apply: (e) subject to paragraph 138(11.5)(k.1), where the fair market value, at that time, of the consideration (other than shares of the capital stock of the transferee or a right to receive any such shares) received or receivable by the transferor for the transferred property does not exceed the total of the cost amounts to the transferor, at that time, of the transferred property, the proceeds of disposition of the transferor and the cost to the transferee of the transferred property shall be deemed to be the cost amount, at that time, to the transferor of the transferred property, and in any other case, the provisions of subsection 85(1) shall be applied in respect of the transfer, (f) where the provisions of subsection 85(1) are not required to be applied in respect of the transfer, the cost to the transferor of any particular property (other than shares of the capital stock of the transferee or a right to receive any such shares) received or receivable by it as consideration for the transferred property shall be deemed to be the fair market value, at that time, of the particular property, (g) where the provisions of subsection 85(1) are not required to be applied in respect of the transfer, the cost to the transferor of any shares of the capital stock of the transferee received or receivable by the transferor as consideration for the transferred property shall be deemed to be (i) where the shares are preferred shares of any class of the capital stock of the transferee, the lesser of (A) the fair market value of those shares immediately after the transfer of the transferred property, and (B) the amount determined by the formula A × B/C where A is the amount, if any, by which the proceeds of disposition of the transferor of the transferred property determined under paragraph 138(11.5)(e) exceed the fair market value, at that time, of the consideration (other than shares of the capital stock of the transferee or a right to receive any such shares) received or receivable by the transferor for the transferred property, B is the fair market value, immediately after the transfer of the transferred property, of those preferred shares of that class, and C is the fair market value, immediately after the transfer of the transferred property, of all preferred shares of the capital stock of the transferee receivable by the transferor as consideration for the transferred property, and (ii) where the shares are common shares of any class of the capital stock of the transferee, the amount determined by the formula A × B/C where A is the amount, if any, by which the proceeds of disposition of the transferor of the transferr