Income Tax Act — I-3.3 87
ph 87(4)(b) to be the cost of those shares, and (ii) in any case where the parent owned, immediately after the merger, all the issued shares of the capital stock of the new corporation, such portion of (A) the amount, if any, by which (I) the amount by which the total of the money on hand of the new corporation and all amounts each of which is the cost amount to the new corporation of a property owned by it, immediately after the merger, exceeds the total of all amounts each of which is the amount of any debt owing by the new corporation, or of any other obligation of the new corporation to pay any amount, that was outstanding immediately after the merger, exceeds (II) the total of the adjusted cost bases to the parent of all shares of the capital stock of each predecessor corporation beneficially owned by it immediately before the merger as is designated by the parent in respect of the shares of that particular class in its return of income under this Part for its taxation year in which the merger occurred, except that (B) in no case shall the amount so designated in respect of the shares of a particular class exceed the amount, if any, by which the total fair market value, immediately after the merger, of the shares of that particular class issued by virtue of the merger exceeds the cost of those shares to the parent determined without reference to this paragraph, and (C) in no case shall the total of the amounts so designated in respect of the shares of each class of the capital stock of the new corporation exceed the amount determined under clause 87(9)(c)(ii)(A). Share deemed listed (10) Where (a) a new corporation is formed as a result of an amalgamation, (b) the new corporation is a public corporation, (c) the new corporation issues a share (in this subsection referred to as the “new share”) of its capital stock, (d) the new share is issued in exchange for a share (in this subsection referred to as the “old share”) of the capital stock of a predecessor corporation, (e) immediately before the amalgamation, the old share was listed on a designated stock exchange, and (f) the new share is redeemed, acquired or cancelled by the new corporation within 60 days after the amalgamation, the new share is deemed, for the purposes of subsection 116(6), the definitions qualified investment in subsections 146(1), 146.1(1), 146.3(1) and 146.4(1), in section 204 and in subsection 207.01(1), and the definition taxable Canadian property in subsection 248(1), to be listed on the exchange until the earliest time at which it is so redeemed, acquired or cancelled. Vertical amalgamations (11) Where at any time there is an amalgamation of a corporation (in this subsection referred to as the “parent”) and one or more other corporations (each of which in this subsection is referred to as the “subsidiary”) each of which is a subsidiary wholly-owned corporation of the parent, (a) the shares of the subsidiary are deemed to have been disposed of by the parent immediately before the amalgamation for proceeds equal to the proceeds that would be determined under paragraph 88(1)(b) if subsections 88(1) and 88(1.7) applied, with any modifications that the circumstances require, to the amalgamation; and (b) the cost to the new corporation of each capital property of the subsidiary acquired on the amalgamation is deemed to be the amount that would have been the cost to the parent of the property if the property had been distributed at that time to the parent on a winding-up of the subsidiary and subsections 88(1) and 88(1.7) had applied to the winding-up. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] R.S., 1985, c. 1 (5th Supp.), s. 87; 1994, c. 7, Sch. II, s. 65, Sch. VI, s. 3, Sch. VIII, s. 37, c. 8, s. 9, c. 21, s. 39; 1995, c. 3, s. 23, c. 21, ss. 30, 54; 1996, c. 21, s. 15; 1997, c. 25, s. 18, c. 26, s. 83; 1998, c. 19, s. 15, 117; 1999, c. 22, s. 24; 2000, c. 19, s. 13; 2001, c.