Income Tax Act — I-3.3 118.1
ift. Loanbacks (16) For the purpose of this section, where (a) at any particular time an individual makes a gift of property, (b) if the property is a non-qualifying security of the individual, the gift is an excepted gift, and (c) within 60 months after the particular time (i) the donee holds a non-qualifying security of the individual that was acquired by the donee after the time that is 60 months before the particular time, or (ii) the individual or any person or partnership with which the individual does not deal at arm’s length uses property of the donee under an agreement that was made or modified after the time that is 60 months before the particular time, and the property was not used in the carrying on of the donee’s charitable activities, the fair market value of the gift is deemed to be that value otherwise determined minus the total of all amounts each of which is the fair market value of the consideration given by the donee to so acquire a non-qualifying security so held or the fair market value of such a property so used, as the case may be. Ordering rule (17) For the purpose of applying subsection (16) to determine the fair market value of a gift made at any time by a taxpayer, the fair market value of consideration given to acquire property described in subparagraph (16)(c)(i) or of property described in subparagraph (16)(c)(ii) is deemed to be that value otherwise determined minus any portion of it that has been applied under that subsection to reduce the fair market value of another gift made before that time by the taxpayer. Non-qualifying security defined (18) For the purposes of this section, non-qualifying security of an individual at any time means (a) an obligation (other than an obligation of a financial institution to repay an amount deposited with the institution or an obligation listed on a designated stock exchange) of the individual or the individual’s estate or of any person or partnership with which the individual or the estate does not deal at arm’s length immediately after that time; (b) a share (other than a share listed on a designated stock exchange) of the capital stock of a corporation with which the individual or the estate or, where the individual is a trust, a person affiliated with the trust, does not deal at arm’s length immediately after that time; (b.1) a beneficial interest of the individual or the estate in a trust that (i) immediately after that time is affiliated with the individual or the estate, or (ii) holds, immediately after that time, a non-qualifying security of the individual or estate, or held, at or before that time, a share described in paragraph (b) that is, after that time, held by the donee; or (c) any other security (other than a security listed on a designated stock exchange) issued by the individual or the estate or by any person or partnership with which the individ-ual or the estate does not deal at arm’s length (or, in the case where the person is a trust, with which the individual or estate is affiliated) immediately after that time. Excepted gift (19) For the purposes of this section, a gift made by a taxpayer is an excepted gift if (a) the security is a share; (b) the donee is not a private foundation; (c) either, (i) if the taxpayer is an individual’s graduated rate estate, (A) the individual dealt at arm’s length with the donee immediately before the individual’s death, and (B) the graduated rate estate deals at arm’s length with the donee (determined without reference to paragraph 251(1)(b)), or (ii) if subparagraph (i) does not apply, the taxpayer deals at arm’s length with the donee; and (d) where the donee is a charitable organization or a public foundation, the taxpayer deals at arm’s length with each director, trustee, officer and like official of the donee. Financial institution defined (20) For the purpose of subsection 118.1(18), financial institution means a corporation that is (a) a member of the Canadian Payments Association; or (b) a credit