Income Tax Act — I-3.3 112
taxpayer is a corporation or trust, a loss of the taxpayer on a deemed disposition of the share before that time was reduced because of subsection 112(3), 112(3.2), 112(4) or 112(4.2), or (c) where the taxpayer is a partnership, a loss of a member of the partnership on a deemed disposition of the share before that time was reduced because of subsection (3.1) or (4), and D is the total of all amounts each of which is the amount by which the taxpayer’s proceeds of disposition on a deemed disposition of the share before that time were decreased because of this subsection. Subsection (5.2) — excluded dividends (5.21) A dividend, other than a dividend received under subsection 84(3), shall not be included in the total determined under subparagraph (b)(ii) of the description of B in subsection (5.2) unless (a) the dividend was received when the taxpayer and persons with whom the taxpayer did not deal at arm’s length held in total more than 5% of the issued shares of any class of the capital stock of the corporation from which the dividend was received; or (b) the share was not held by the taxpayer throughout the 365-day period that ended immediately before the disposition. Adjustment not applicable (5.3) For the purpose of determining the cost of a share to a taxpayer on a deemed reacquisition of the share after a deemed disposition of the share, the taxpayer’s proceeds of disposition shall be determined without regard to subsection 112(5.2). Deemed dispositions (5.4) Where a taxpayer disposes of a share at any time, (a) for the purpose of determining whether subsection 112(5.2) applies to the disposition, the conditions in subsections 112(5) and 112(5.1) shall be applied without regard to a deemed disposition and reacquisition of the share before that time; and (b) total amounts under subsection 112(5.2) in respect of the disposition shall be determined from the time when the taxpayer actually acquired the share. Stop-loss rules not applicable (5.5) Subsections 112(3) to 112(4) and 112(4.2) do not apply to the disposition of a share by a taxpayer in a taxation year that begins after October 1994 where (a) the share is a mark-to-market property for the year and the taxpayer is a financial institution in the year; or (b) subsection 112(5.2) applies to the disposition. Stop-loss rules restricted (5.6) In determining whether any of subsections 112(3) to 112(4) and 112(4.2) apply to reduce a loss of a taxpayer from the disposition of a share, this Act shall be read without reference to paragraphs 112(3.01)(b) and 112(3.11)(b), subclauses 112(3.2)(a)(ii)(C)(I) and 112(3.3)(a)(ii)(C)(I) and paragraphs 112(3.31)(b), 112(3.32)(b), 112(4.01)(b), 112(4.21)(b) and 112(4.22)(b) where (a) the disposition occurs (i) because of subsection 142.5(2) in a taxation year that includes October 31, 1994, or (ii) because of paragraph 142.6(1)(b) after October 30, 1994; or (b) the share was a mark-to-market property of the taxpayer for a taxation year that begins after October 1994 in which the taxpayer was a financial institution. Meaning of certain expressions (6) For the purposes of this section, (a) “dividend” and “taxable dividend” do not include a capital gains dividend (within the meaning assigned by subsection 131(1)) or any dividend received by a taxpayer on which the taxpayer 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; (b) one corporation is controlled by another corporation if more than 50% of its issued share capital (having full voting rights under all circumstances) belongs to the other corporation, to persons with whom the other corporation does not deal at arm’s length, or to the other corporation and persons with whom the other corporation does not deal at arm’s length; and (c) financial institution , mark-to-market property and tracking property have the same meaning as in subsection 142.2(1). Interpretation — qualified dividend (6.1) For