Income Tax Application Rules — I-3.31 26
hares that were altered, in form only, because of the exchange. Reorganization of capital (27) Where, after May 6, 1974, there has been a reorganization of the capital of a corporation to which section 86 of the amended Act applies on which a taxpayer has acquired shares of a particular class of the capital stock of the corporation (in this subsection referred to as the “new shares”) as the sole consideration for the disposition on the reorganization of shares of another class of the capital stock of the corporation (in this subsection referred to as the “old shares”) owned by the taxpayer on December 31, 1971 and thereafter without interruption until immediately before the reorganization and the cost to the taxpayer of the new shares was determined otherwise than because of subsection 86(2) of the amended Act, notwithstanding any other provision of this Act or of the amended Act, for the purposes of subsection 88(2.1) of the amended Act and of determining the cost to the taxpayer and the adjusted cost base to the taxpayer of the new shares, (a) the property that was the old shares shall be deemed not to have been disposed of by the taxpayer because of the reorganization but to have been altered, in form only, because of the reorganization and to have continued in existence in the form of the new shares; and (b) the property that is the new shares shall be deemed not to have been acquired by the taxpayer because of the reorganization but to have been in existence prior thereto in the form of the old shares that were altered, in form only, because of the reorganization. Idem (28) Where a taxpayer acquired a property (in this subsection referred to as the “first property”) in circumstances to which any of subsections (5) and (21) to (27) applied and subsequently acquires, in exchange for or in consideration for the disposition of the first property, another property in circumstances to which any of subsections (21) to (27) would apply if the taxpayer had owned the first property on December 31, 1971 and thereafter without interruption until the time of the subsequent acquisition, for the purposes of applying subsections (21) to (27) in respect of that subsequent acquisition, the taxpayer shall be deemed to have owned the first property on December 31, 1971 and thereafter without interruption until the time of the subsequent acquisition. Effect of election under subsection 110.6(19) (29) Where subsection 110.6(19) of the amended Act applies to a particular property, for the purposes of determining the cost and the adjusted cost base to a taxpayer of any property at any time after February 22, 1994, the particular property shall be deemed not to have been owned by any taxpayer on December 31, 1971. Additions to taxable Canadian property (30) Subsections (1.1) to (29) do not apply to a disposition by a non-resident person of a property (a) that the person last acquired before April 27, 1995; (b) that would not be a taxable Canadian property immediately before the disposition if section 115 of the amended Act were read as it applied to dispositions that occurred on April 26, 1995; and (c) that would be a taxable Canadian property immediately before the disposition if section 115 of the amended Act were read as it applied to dispositions that occurred on January 1, 1996. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] R.S., 1985, c. 2 (5th Supp.), s. 26; 1994, c. 7, Sch. II, s. 200, c. 21, s. 118; 1995, c. 3, s. 57, c. 21, s. 79; 1997, c. 25, s. 72; 1998, c. 19, s. 249; 2001, c. 17, ss. 232, 249