Income Tax Act — I-3.3 110.6
 and (2.1) for the taxation year. (3) [Repealed, 1995, c. 3, s. 32] Maximum capital gains deduction (4) Notwithstanding subsections (2) and (2.1), the total amount that may be deducted under this section in computing an individual’s income for a taxation year shall not exceed the total of the amount determined by the formula in paragraph (2)(a) and the amount that may be deducted under subsection (2.2), in respect of the individual for the year. Deemed resident in Canada (5) For the purposes of subsections (2) to (2.2), an individual is deemed to have been resident in Canada throughout a particular taxation year if (a) the individual was resident in Canada at any time in the particular taxation year; and (b) the individual was resident in Canada throughout the immediately preceding taxation year or throughout the immediately following taxation year. Failure to report capital gain (6) Notwithstanding subsections (2) to (2.2), no amount may be deducted under this section in respect of a capital gain of an individual for a particular taxation year in computing the individual’s taxable income for the particular taxation year or any subsequent year, if (a) the individual knowingly or under circumstances amounting to gross negligence (i) fails to file the individual’s return of income for the particular taxation year within one year after the taxpayer’s filing-due date for the particular taxation year, or (ii) fails to report the capital gain in the individual’s return of income for the particular taxation year; and (b) the Minister establishes the facts justifying the denial of such an amount under this section. Deduction not permitted (7) Notwithstanding subsections (2) to (2.2), no amount may be deducted under this section in computing an individual’s taxable income for a taxation year in respect of a capital gain of the individual for the taxation year if the capital gain is from a disposition of property which disposition is part of a series of transactions or events (a) that includes a dividend received by a corporation to which dividend subsection 55(2) does not apply but would apply if this Act were read without reference to paragraph 55(3)(b); or (b) in which any property is acquired by a corporation or partnership for consideration that is significantly less than the fair market value of the property at the time of acquisition (other than an acquisition as the result of an amalgamation or merger of corporations or the winding-up of a corporation or partnership or a distribution of property of a trust in satisfaction of all or part of a corporation’s capital interest in the trust). Deduction not permitted (8) Notwithstanding subsections (2) to (2.2), if an individual has a capital gain for a taxation year from the disposition of a property and it can reasonably be concluded, having regard to all the circumstances, that a significant part of the capital gain is attributable to the fact that dividends were not paid on a share (other than a prescribed share) or that dividends paid on such a share in the taxation year or in any preceding taxation year were less than 90% of the average annual rate of return on that share for that year, no amount in respect of that capital gain shall be deducted under this section in computing the individual’s taxable income for the year. Average annual rate of return (9) For the purpose of subsection 110.6(8), the average annual rate of return on a share (other than a prescribed share) of a corporation for a taxation year is the annual rate of return by way of dividends that a knowledgeable and prudent investor who purchased the share on the day it was issued would expect to receive in that year, other than the first year after the issue, in respect of the share if (a) there was no delay or postponement of the payment of dividends and no failure to pay dividends in respect of the share; (b) there was no variation from year to year in the amount of dividends payable in respect of the share (other