Income Tax Act — I-3.3 260
f the Canadian share and not by the borrower; (b) the lender is deemed to be the beneficial owner of the Canadian share; and (c) the shares of the capital stock of the issuer owned by the lender are deemed to give it less than 10% of the votes that could be cast at an annual meeting of the shareholders of the issuer and have less than 10% of the fair market value of all of the issued and outstanding shares of the capital stock of the issuer, if (i) the securities lending arrangement or the specified securities lending arrangement is not a fully collateralized arrangement, and (ii) the borrower and the lender are not dealing at arm’s length. Restricted financial institution (9) For the purposes of subsection 187.3(1), where at any time a dividend is received by a restricted financial institution on a share that was last acquired before that time pursuant to an obligation of a borrower to return or transfer a share under a securities lending arrangement, an acquisition of the share under the arrangement shall be deemed at and after that time not to be an acquisition of the share. Non-arm’s length compensation payment (9.1) For the purpose of Part XIII, if the lender under a securities lending arrangement or a specified securities lending arrangement is not dealing at arm’s length with either the borrower under the arrangement or the issuer of the security that is transferred or lent under the arrangement, or both, and subsection (8) deems an amount to be a payment of interest by a person to the lender, the lender is deemed, in respect of that payment, not to be dealing at arm’s length with that person. Partnerships (10) For the purpose of this section, (a) a person includes a partnership; and (b) a partnership is deemed to be a registered securities dealer if each member of the partnership is a registered securities dealer. Corporate members of partnerships (11) A corporation that is, in a taxation year, a member of a partnership is deemed (a) for the purpose of applying subsection (5) in respect of the taxation year, (i) to receive its specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount received by the partnership in that fiscal period, and (ii) in respect of the receipt of its specified proportion of that amount, to be the same person as the partnership; (b) for the purpose of applying paragraphs (6.1)(a) and (6.2)(a) in respect of the taxation year, to become obligated to pay its specified proportion, for each fiscal period of the partnership that ends in the taxation year, of the amount the partnership becomes, in that fiscal period, obligated to pay to another person under the arrangement described in that paragraph; and (c) for the purpose of applying section 129 in respect of the taxation year, to have paid (i) if the partnership is not a registered securities dealer, the corporation’s specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount paid by the partnership (other than an amount for which a deduction in computing income may be claimed under subsection (6.1) or (6.2) by the corporation), and (ii) if the partnership is a registered securities dealer, 1/3 of the corporation’s specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount paid by the partnership (other than an amount for which a deduction in computing income may be claimed under subsection (6.1) or (6.2) by the corporation). Individual members of partnerships (12) An individual that is, in a taxation year, a member of a partnership is deemed (a) for the purpose of applying subsection (5) in respect of the taxation year, (i) to receive the individual’s specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount received by the partnership in that fiscal period, and (ii) in respect of the receipt of the individual’s specified proportion of that