Income Tax Act — I-3.3 110
 arm’s length with the particular qualifying person; and (c) at the relevant time, any of the following persons is a specified person: (i) the particular qualifying person, (ii) the other qualifying person, if any, referred to in paragraph (a), or (iii) the other qualifying person, if any, referred to in paragraph (b). Annual vesting limit (1.31) If this subsection applies to a taxpayer in respect of an agreement, the securities to be sold or issued under the agreement, for each vesting year of those securities, are deemed to be non-qualified securities for the purposes of this section in the proportion determined by the formula A/B where A is the amount determined by the formula C + D − $200,000 where C is the total of all amounts each of which is the fair market value at the relevant time of each security under the agreement that has that same vesting year, and D is the lesser of (a) $200,000, and (b) the total of all amounts each of which is an amount determined for C in respect of securities that have that same vesting year under agreements (other than the agreement) entered into at or before the relevant time with the particular qualifying person referred to in subsection (1.3) (or another qualifying person that does not deal at arm’s length with the particular qualifying person), other than (i) securities designated under subsection (1.4), (ii) old securities (within the meaning of subsection 7(1.4)), (iii) securities where the right to acquire those securities is an old right (within the meaning of subsection (1.7)), and (iv) securities in respect of which (A) the right to acquire those securities has expired, or has been cancelled, before the relevant time, and (B) no amount is deductible under paragraph (1)(d) in computing the taxable income of the taxpayer for any year; and B is the amount determined for C. Non-qualified security designation (1.4) If subsection (1.31) applies to a taxpayer in respect of an agreement and the particular qualifying person referred to in paragraph (1.3)(a) designates one or more securities to be sold or issued under the agreement as non-qualified securities, the following rules apply: (a) those securities are deemed to be non-qualified securities for the purposes of this section; and (b) the particular qualifying person may not elect under subsection (1.1) in respect of a right to acquire those securities. Ordering of acquisition of securities (1.41) If a taxpayer acquires a security under an agreement and the acquired security could be a security that is not a non-qualified security, the security is to be considered a security that is not a non-qualified security for the purposes of this section. Ordering of simultaneous agreements — subsection (1.31) (1.42) If two or more agreements to sell or issue options are entered into at the same time and the particular qualifying person referred to in subsection (1.3) designates the order of the agreements, then the agreements are deemed to have been entered into in that order for the purposes of paragraph (b) of the description of D in subsection (1.31). Application of subsection (1.44) (1.43) Subsection (1.44) applies in respect of a taxpayer’s right to acquire a security under an agreement if (a) subsection (1.31) applies to the taxpayer in respect of the agreement; (b) the security is not a non-qualified security; and (c) a payment is made to or for the benefit of the taxpayer for the taxpayer’s transfer or disposition of the right. Cash-out — securities not designated as non-qualified (1.44) If this subsection applies in respect of a taxpayer’s right to acquire a security under an agreement (a) no qualifying person may deduct, in computing its income for a taxation year, an amount (other than a designated amount described in subsection (1.2)) in respect of the payment referred to in paragraph (1.43)(c); and (b) paragraph (1)(d) shall, in respect of the right, be read without reference to its subparagraph (i). Determination of amounts relati