Income Tax Act — I-3.3 260
y the taxpayer); or (b) if the particular amount is in respect of an amount other than an amount that is, or is deemed by subsection (5.1) to have been, received as a taxable dividend, (i) where the taxpayer disposes of the borrowed security and includes the gain or loss, if any, from the disposition in computing its income from a business, the particular amount, or (ii) in any other case, the lesser of (A) the particular amount, and (B) the amount, if any, in respect of the security distribution to which the SLA compensation payment or dealer compensation payment relates that is included in computing the income, and not deducted in computing the taxable income, for any taxation year of the taxpayer or of any person to whom the taxpayer is related. Deductible amount (6.1) There may be deducted in computing a corporation’s income under Part I from a business or property for a taxation year an amount equal to the lesser of (a) the total of all amounts each of which is an amount that the corporation becomes obligated in the taxation year to pay to another person under an arrangement described in paragraph (b) of the definition dividend rental arrangement in subsection 248(1) that, if paid, would be deemed by subsection (5.1) to have been received by another person as a taxable dividend, and (b) the amount of the dividends received by the corporation under the arrangement that were identified in its return of income under Part I for the year as an amount in respect of which no amount was deductible because of subsection 112(2.3) in computing the taxpayer’s taxable income or taxable income earned in Canada. Deductible amount for registered securities dealer (6.2) If a registered securities dealer enters into a specified hedging transaction in respect of a DRA share of the registered securities dealer or a person that does not deal at arm’s length with, or is affiliated with, the registered securities dealer, there may be deducted in computing the income of the registered securities dealer under Part I from a business or property for a taxation year an amount (other than any portion of the amount for which a deduction in computing income may be claimed under subsection (6.1) by the registered securities dealer) equal to the lesser of (a) the total of all amounts each of which is an amount that the registered securities dealer becomes obligated in the taxation year to pay to another person as compensation for a dividend under the specified hedging transaction that, if paid, would be deemed by subsection (5.1) to have been received by another person as a taxable dividend, and (b) the amount of the dividends that were received in respect of the DRA share by the registered securities dealer or the person that does not deal at arm’s length with, or is affiliated with, the registered securities dealer (as the case may be, referred to as the “dividend recipient” in this paragraph) and that were identified in the dividend recipient’s return of income under Part I for the year as an amount in respect of which no amount was deductible because of subsection 112(2.3) in computing the dividend recipient’s taxable income or taxable income earned in Canada. Subsections 112(2.01) and (2.3) — ordering (6.3) For the purposes of paragraphs (6.1)(b) and (6.2)(b), the amount of any dividends received by a corporation in respect of which no amount was deductible because of subsection 112(2.3) includes an amount that was not deductible under both subsections 112(2.01) and (2.3). Dividend refund (7) For the purpose of section 129, if a corporation pays an amount for which no deduction in computing the corporation’s income may be claimed under subsection (6.1) or (6.2) and subsection (5.1) deems the amount to have been received by another person as a taxable dividend, (a) the corporation is deemed to have paid the amount as a taxable dividend, where the corporation is not a registered securities dealer; and (b) the corporation is deemed to have paid 1/3 of