Recapture of specified deferred gain
 5. (1) In this section, “excluded disposition” means, (a) an exchange to which subsection 51 (1) of the Federal Act applies, (b) a disposition on an eligible amalgamation or eligible winding-up, (c) a disposition in respect of which proceeds of disposition are determined under paragraph 47 (1) (a) of the Federal Act, or (d) any other disposition of property in respect of which proceeds of disposition for the purposes of the Federal Act are determined under a specific provision of the Federal Act which permits or requires proceeds of disposition to be less than the amount that would be determined without reference to the specific provision, but not a disposition, (i) that is or is part of an eligible event in respect of the corporation that disposes of the property, or (ii) in respect of which proceeds of disposition are reduced because of paragraph (j) of the definition of “proceeds of disposition” in section 54 of the Federal Act.  O. Reg. 38/09, s. 5. (2) Subsection (3) applies if, (a) a specified deferred gain was included under subsection 4 (1) in calculating the total amount deducted in determining a corporation’s adjusted net income for the purposes of Part II.1 of the Act for a taxation year in respect of an eligible event referred to in clause (a) of the definition of “eligible event” in subsection 0.1 (1) which was or included the disposition of a particular property; (b) before March 22, 2007, the corporation subsequently disposed of all or part of the shares or partnership interest, as the case may be, received as consideration on the disposition of the particular property; (c) the subsequent disposition is not an excluded disposition; and (d) the corporation continuously held the shares or partnership interest or the part of the partnership interest or shares that were disposed of on the subsequent disposition from the time of the eligible event until the subsequent disposition.  O. Reg. 38/09, s. 5. (3) For the purposes of subsection 57.4 (1) of the Act, if the conditions set out in clauses (2) (a), (b), (c) and (d) are satisfied, the corporation must include in determining its adjusted net income for the purposes of Part II.1 of the Act for the taxation year in which the subsequent disposition occurs the amount, if any, in respect of the eligible event calculated using the formula, (A – B) × C/D in which, “A” is the amount of the specified deferred gain in respect of the eligible event that was previously included under subsection 4 (1) in the total amount deducted in determining a corporation’s adjusted net income for a taxation year for the purposes of Part II.1 of the Act, “B” is, (a) if the subsequent disposition involves the disposition of one or more shares, the lesser of, (i) the total amount deemed under subsection 84 (3) of the Federal Act to be received by the corporation in respect of the disposition of the shares, and (ii) the total amount deductible by the corporation under subsection 112 (1) or (2) of the Federal Act or subsection 138 (6) of that Act in respect of the total amount described in subclause (i), or (b) if no shares are disposed of on the subsequent disposition, zero, “C” is the carrying value to the corporation, immediately after the eligible event, of the shares or partnership interest or the part of the shares or partnership interest that were disposed of on the subsequent disposition, and “D” is the carrying value to the corporation, immediately after the eligible event, of all the shares or partnership interest received on the eligible event as consideration for the disposition of the particular property. O. Reg. 38/09, s. 5. (4) Subsection (5) applies if, (a) a specified deferred gain was included under subsection 4 (1) in calculating the total amount deducted in determining a corporation’s adjusted net income for the purposes of Part II.1 of the Act for a taxation year in respect of an eligible event referred to in clause (c) of the definition of “eligible event” in subsection 0.1 (1) which was or included the disposition of a particular property; (b) before March 22, 2007, the corporation subsequently disposed of all or part of the property acquired in replacement of the particular property; (c) the subsequent disposition is not an excluded disposition; and (d) the corporation continuously held the replacement property that was disposed of on the subsequent disposition until the subsequent disposition.  O. Reg. 38/09, s. 5. (5) For the purposes of subsection 57.4 (1) of the Act, if the conditions set out in clauses (4) (a), (b), (c) and (d) are satisfied, the corporation must include in determining its adjusted net income for the purposes of Part II.1 of the Act for the taxation year in which the subsequent disposition occurs the amount in respect of the eligible event calculated using the formula, E × F/G in which, “E” is the amount of the specified deferred gain in respect of the eligible event that was previously included under subsection 4 (1) in the total amount deducted in determining a corporation’s adjusted net income for the purposes of Part II.1 of the Act, “F” is the fair market value, as of the time of the eligible event or the time it was first acquired by the corporation after the eligible event, as the case may be, of the replacement property that is disposed of on the subsequent disposition, and “G” is the fair market value, as of the time of the eligible event or the time it was first acquired after the eligible event, as the case may be, of all property acquired in replacement of the particular property. O. Reg. 38/09, s. 5. (6) Subsection (7) applies if, (a) a specified deferred gain was included under subsection 4 (1) in calculating the total amount deducted in determining a particular corporation’s adjusted net income for the purposes of Part II.1 of the Act for a taxation year in respect of an eligible event referred to in clause (a) or (b) of the definition of “eligible event” in subsection 0.1 (1) which was or included the disposition of a particular property; (b) before March 22, 2007, another corporation (in this subsection and subsection (7) referred to as the “recipient corporation”) disposed of the particular property; (c) the particular corporation and the recipient corporation did not deal with each other at arm’s length immediately before or immediately after the eligible event; (d) the subsequent disposition by the recipient corporation is not an excluded disposition; and (e) the recipient corporation continuously held the particular property from the time of the eligible event until the subsequent disposition.  O. Reg. 38/09, s. 5. (7) For the purposes of subsection 57.4 (1) of the Act, if the conditions set out in clauses (6) (a), (b), (c), (d) and (e) are satisfied, the recipient corporation must include in determining its adjusted net income for the purposes of Part II.1 of the Act for the taxation year in which the subsequent disposition occurs the amount, if any, by which “H” exceeds “I” where, “H” is the amount of the specified deferred gain in respect of the disposition by the particular corporation of the particular property that was previously included under subsection 4 (1) in the total amount deducted in determining the particular corporation’s adjusted net income for the purposes of Part II.1 of the Act, and “I” is, (a) if the particular property is shares, the lesser of, (i) the total amount deemed under subsection 84 (3) of the Federal Act to be received by the recipient corporation in respect of the subsequent disposition of the shares, and (ii) the total amount deductible by the recipient corporation under subsection 112 (1) or (2) of the Federal Act or subsection 138 (6) of that Act in respect of the total amount described in subclause (i), or (b) if the particular property does not consist of shares, zero.  O. Reg. 38/09, s. 5. (8) Subsection (9) applies if, (a) a specified deferred gain was included under subsection 4 (1) in calculating the total amount deducted in determining a corporation’s adjusted net income for the purposes of Part II.1 of the Act for a taxation year in respect of an eligible event referred to in clause (d) or (e) of the definition of “eligible event” in subsection 0.1 (1); (b) before March 22, 2007, the corporation disposed of a property acquired on the eligible event; (c) the disposition referred to in clause (b) is not an excluded disposition; and (d) the corporation continuously held the property from the time of the eligible event until the disposition.  O. Reg. 38/09, s. 5. (9) For the purposes of subsection 57.4 (1) of the Act, if the conditions set out in clauses (8) (a), (b), (c) and (d) are satisfied, the corporation must include in determining its adjusted net income for the purposes of Part II.1 of the Act for the taxation year in which the disposition occurs the amount, if any, calculated using the formula, (J × K/L) – M in which, “J” is the amount of the specified deferred gain in respect of the eligible event that was previously included under subsection 4 (1) in the total amount deducted in determining the particular corporation’s adjusted net income for the purposes of Part II.1 of the Act, “K” is the amount, if any, by which the carrying value of the property immediately after the eligible event exceeds the carrying value of the property immediately before the eligible event, “L” is the sum of all amounts each of which is the amount, if any, by which the carrying value, immediately after the eligible event, of a property acquired on the eligible event exceeds its carrying value immediately before the eligible event, and “M” is, (a) if the property is shares, the lesser of, (i) the total amount deemed under subsection 84 (3) of the Federal Act to be received by the corporation in respect of the disposition of the shares, and (ii) the total amount deductible by the corporation under subsection 112 (1) or (2) of the Federal Act or subsection 138 (6) of that Act in respect of the total amount described in subclause (i), or (b) if the property does not consist of shares, zero. O. Reg. 38/09, s. 5. (10) If property of a particular corporation becomes the property of another corporation (referred to in this subsection as the “recipient”) as a result of an eligible winding-up of the particular corporation or an eligible amalgamation of the particular corporation with one or more other corporations, the recipient shall be deemed for the purposes of subsections (2), (3), (4), (5), (6), (7), (8) and (9) to be the same corporation as, and a continuation of, the particular corporation.  O. Reg. 38/09, s. 5.