Income Tax Act — I-3.3 88
.7) for the purpose of subparagraph 88(1)(c)(iii), a leasehold interest in a depreciable property and an option to acquire a depreciable property are depreciable properties; (c.8) for the purpose of clause (c.2)(iii)(A), a specified class of the capital stock of a corporation is a class of shares of the capital stock of the corporation where (i) the paid-up capital in respect of the class was not, at any time, less than the fair market value of the consideration for which the shares of that class then outstanding were issued, (ii) the shares are non-voting in respect of the election of the board of directors of the corporation, except in the event of a failure or default under the terms or conditions of the shares, (iii) under neither the terms and conditions of the shares nor any agreement in respect of the shares are the shares convertible into or exchangeable for shares other than shares of a specified class of the capital stock of the corporation, and (iv) under neither the terms and conditions of the shares nor any agreement in respect of the shares is any holder of the shares entitled to receive on the redemption, cancellation or acquisition of the shares by the corporation or by any person with whom the corporation does not deal at arm’s length an amount (excluding any premium for early redemption) greater than the total of the fair market value of the consideration for which the shares were issued and the amount of any unpaid dividends on the shares; (c.9) for the purposes of paragraph (c.4), a reference to a share of the capital stock of a corporation includes a right to acquire a share of the capital stock of the corporation; (d) the amount determined under this paragraph in respect of each property of the subsidiary distributed to the parent on the winding-up is such portion of the amount, if any, by which the total determined under subparagraph 88(1)(b)(ii) exceeds the total of (i) the amount, if any, by which (A) the total of all amounts each of which is an amount in respect of any property owned by the subsidiary immediately before the winding-up, equal to the cost amount to the subsidiary of the property immediately before the winding-up, plus the amount of any money of the subsidiary on hand immediately before the winding-up, exceeds the total of (B) all amounts each of which is the amount of any debt owing by the subsidiary, or of any other obligation of the subsidiary to pay any amount, that was outstanding immediately before the winding-up, and (C) the amount of any reserve (other than a reserve referred to in paragraph 20(1)(n), subparagraph 40(1)(a)(iii) or 44(1)(e)(iii) of this Act or in subsection 64(1) or (1.1) of the Income Tax Act , chapter 148 of the Revised Statutes of Canada, 1952, as those two provisions read immediately before November 3, 1981) deducted in computing the subsidiary’s income for its taxation year during which its assets were distributed to the parent on the winding-up, and (i.1) the total of all amounts each of which is an amount in respect of any share of the capital stock of the subsidiary disposed of by the parent on the winding-up or in contemplation of the winding-up, equal to the total of all amounts received by the parent or by a corporation with which the parent was not dealing at arm’s length (otherwise than because of a right referred to in paragraph 251(5)(b) in respect of the subsidiary) in respect of (A) taxable dividends on the share or on any share (in this subparagraph referred to as a “replaced share”) for which the share or a replaced share was substituted or exchanged to the extent that the amounts thereof were deductible from the recipient’s income for any taxation year by virtue of section 112 or subsection 138(6) and were not amounts on which the recipient was required to pay tax under Part VII of the Income Tax Act , chapter 148 of the Revised Statutes of Canada, 1952, as it read on March 31, 1977, or (B) capital dividends and life insurance capital dividends