VIII, s. 114
191(1)In this Part,excluded dividendexcluded dividendmeans a dividend(a)paid by a corporation to a shareholder that had a substantial interest in the corporation at the time the dividend was paid,(b)paid by a corporation that was a financial intermediary corporation or a private holding corporation at the time the dividend was paid,(c)paid by a particular corporation that would, but for paragraphs (h) and (i) of the definitionfinancial intermediary corporationin this subsection, have been a financial intermediary corporation at the time the dividend was paid, except where the dividend was paid to a controlling corporation in respect of the particular corporation or to a specified person (within the meaning assigned by paragraph (h) of the definitiontaxable preferred sharein subsection 248(1)) in relation to such a controlling corporation,(d)paid by a mortgage investment corporation, or(e)that is a capital gains dividend within the meaning assigned by subsection 131(1); (dividende exclu)financial intermediary corporationfinancial intermediary corporationmeans a corporation that is(a)a corporation described in subparagraph (b)(ii) of the definitionretirement savings planin subsection 146(1),(b)an investment corporation,(c)a mortgage investment corporation,(d)a mutual fund corporation,(e)a prescribed venture capital corporation, or(f)a prescribed labour-sponsored venture capital corporation,but does not include(g)a prescribed corporation,(h)a corporation that is controlled by or for the benefit of one or more corporations (each of which is referred to in this subsection as a “controlling corporation”) other than financial intermediary corporations or private holding corporations unless the controlling corporations and specified persons (within the meaning assigned by paragraph (h) of the definitiontaxable preferred sharein subsection 248(1)) in relation to the controlling corporations do not own in the aggregate shares of the capital stock of the corporation having a fair market value of more than 10% of the fair market value of all of the issued and outstanding shares of the capital stock of the corporation (those fair market values being determined without regard to any voting rights attaching to those shares), or(i)any particular corporation in which another corporation (other than a financial intermediary corporation or a private holding corporation) has a substantial interest unless the other corporation and specified persons (within the meaning assigned by paragraph (h) of the definitiontaxable preferred sharein subsection 248(1)) in relation to the other corporation do not own in the aggregate shares of the capital stock of the particular corporation having a fair market value of more than 10% of the fair market value of all of the issued and outstanding shares of the capital stock of the particular corporation (those fair market values being determined without regard to any voting rights attaching to those shares); (intermédiaire financier constitué en société)private holding corporationprivate holding corporationmeans a private corporation the only undertaking of which is the investing of its funds, but does not include(a)a specified financial institution,(b)any particular corporation that owns shares of another corporation in which it has a substantial interest, except where the other corporation would, but for that substantial interest, be a financial intermediary corporation or a private holding corporation, or(c)any particular corporation in which another corporation owns shares and has a substantial interest, except where the other corporation would, but for that substantial interest, be a private holding corporation. (société de portefeuille privée)Marginal note:Substantial interest(2)For the purposes of this Part, a shareholder has a substantial interest in a corporation at any time if the corporation is a taxable Canadian corporation and(a)the shareholder is related (otherwise than by reason of a right referred to in paragraph 251(5)(b)) to the corporation at that time; or(b)the shareholder owned, at that time,(i)shares of the capital stock of the corporation that would give the shareholder 25% or more of the votes that could be cast under all circumstances at an annual meeting of shareholders of the corporation,(ii)shares of the capital stock of the corporation having a fair market value of 25% or more of the fair market value of all the issued shares of the capital stock of the corporation,and either(iii)shares (other than shares that would be taxable preferred shares if the definitiontaxable preferred sharein subsection 248(1) were read without reference to subparagraph (b)(iv) thereof and if they were issued after June 18, 1987 and were not grandfathered shares) of the capital stock of the corporation having a fair market value of 25% or more of the fair market value of all those shares of the capital stock of the corporation, or(iv)in respect of each class of shares of the capital stock of the corporation, shares of that class having a fair market value of 25% or more of the fair market value of all the issued shares of that class,and for the purposes of this paragraph, a shareholder shall be deemed to own at any time each share of the capital stock of a corporation that is owned, otherwise than by reason of this paragraph, at that time by a person to whom the shareholder is related (otherwise than by reason of a right referred to in paragraph 251(5)(b)).Marginal note:Idem(3)Notwithstanding subsection 191(2),(a)where it can reasonably be considered that the principal purpose for a person acquiring an interest that would, but for this subsection, be a substantial interest in a corporation is to avoid or limit the application of Part I or IV.1 or this Part, the person shall be deemed not to have a substantial interest in the corporation;(b)where it can reasonably be considered that the principal purpose for an acquisition of a share of the capital stock of a corporation (in this paragraph referred to as the “issuer”) by any person (in this paragraph referred to as the “acquirer”) who had, immediately after the time of the acquisition, a substantial interest in the issuer from another person who did not, immediately before that time, have a substantial interest in the issuer, was to avoid or limit the application of Part I or IV.1 or this Part with respect to a dividend on the share, the acquirer and specified persons (within the meaning assigned by paragraph (h) of the definitiontaxable preferred sharein subsection 248(1)) in relation to the acquirer shall be deemed not to have a substantial interest in the issuer with respect to any dividend paid on the share;(c)a corporation described in paragraphs (a) to (f) of the definitionfinancial intermediary corporationin subsection 191(1) shall be deemed not to have a substantial interest in another corporation unless it is related (otherwise than by reason of a right referred to in paragraph 251(5)(b)) to the other corporation;(d)any partnership or trust, other than(i)a partnership all the members of which are related to each other otherwise than by reason of a right referred to in paragraph 251(5)(b),(ii)a trust in which each person who is beneficially interested is(A)related (otherwise than because of a right referred to in paragraph 251(5)(b)) to each other person who is beneficially interested in the trust and who is not a registered charity, or(B)a registered charityand for the purpose of this subparagraph, where a particular person who is beneficially interested in the trust is an aunt, uncle, niece or nephew of another person, the particular person and any person who is a child or descendant of the particular person shall be deemed to be related to the other person and to any person who is the child or descendant of the other person, or(iii)a trust in which only one person (other than a registered charity) is beneficially interested,shall be deemed not to have a substantial interest in a corporation; and(e)where at any time a shareholder holds a share of the capital stock of a corporation to which paragraph (g) of the definitiontaxable preferred sharein subsection 248(1) or paragraph (e) of the definitiontaxable RFI sharein that subsection applies to deem the share to be a taxable preferred share or a taxable RFI share, the shareholder shall be deemed not to have a substantial interest in the corporation at that time.Marginal note:Deemed dividends(4)Where at any particular time(a)a share of the capital stock of a corporation is issued,(b)the terms or conditions of a share of the capital stock of a corporation are changed, or(c)an agreement in respect of a share of the capital stock of a corporation is changed or entered into,and the terms or conditions of the share or the agreement in respect of the share specify an amount in respect of the share, including an amount for which the share is to be redeemed, acquired or cancelled (together with, where so provided, any accrued and unpaid dividends thereon) and where paragraph 191(4)(a) applies, the specified amount does not exceed the fair market value of the consideration for which the share was issued, and where paragraph 191(4)(b) or 191(4)(c) applies, the specified amount does not exceed the fair market value of the share immediately before the particular time, the amount of any dividend deemed to have been paid on a redemption, acquisition or cancellation of the share to which subsection 84(2) or 84(3) applies shall(d)for the purposes of this Part and section 187.2, be deemed to be an excluded dividend and an excepted dividend, respectively, unless(i)where paragraph 191(4)(a) applies, the share was issued for consideration that included a taxable preferred share, or(ii)where paragraph 191(4)(b) or 191(4)(c) applies, the share was, immediately before the particular time, a taxable preferred share, and(e)be deemed not to be a dividend to which subsection 112(2.1) or 138(6) applies to deny a deduction with respect to the dividend in computing the taxable income of a corporation under subsection 112(1) or 112(2) or 138(6), unless(i)where paragraph 191(4)(a) applies, the share was issued for consideration that included a term preferred share or for the purpose of raising capital or as part of a series of transactions or events the purpose of which was to raise capital, and(ii)where paragraph 191(4)(b) or 191(4)(c) applies, the share was, immediately before the particular time, a term preferred share, or the terms or conditions of the share were changed, or the agreement in respect of the share was changed or entered into for the purpose of raising capital or as part of a series of transactions or events the purpose of which was to raise capital.Marginal note:Where s. (4) does not apply(5)Subsection (4) does not apply to the extent that the total of(a)the amount paid on the redemption, acquisition or cancellation of the share, and(b)all amounts each of which is an amount (other than an amount deemed by subsection 84(4) to be a dividend) paid, after the particular time and before the redemption, acquisition or cancellation of the share, on a reduction of the paid-up capital of the corporation in respect of the shareexceeds the specified amount referred to in subsection (4).Marginal note:Excluded dividend — partner(6)If at any time a corporation pays a dividend to a partnership, the corporation is, for the purposes of this subsection and paragraph (a) of the definitionexcluded dividendin subsection (1), deemed to have paid at that time to each member of the partnership a dividend equal to the amount determined by the formulaA × BwhereAis the amount of the dividend paid to the partnership; andBis the member’s specified proportion for the last fiscal period of the partnership that ended before that time (or, if the partnership’s first fiscal period includes that time, for that first fiscal period).
(a)paid by a corporation to a shareholder that had a substantial interest in the corporation at the time the dividend was paid,(b)paid by a corporation that was a financial intermediary corporation or a private holding corporation at the time the dividend was paid,(c)paid by a particular corporation that would, but for paragraphs (h) and (i) of the definitionfinancial intermediary corporationin this subsection, have been a financial intermediary corporation at the time the dividend was paid, except where the dividend was paid to a controlling corporation in respect of the particular corporation or to a specified person (within the meaning assigned by paragraph (h) of the definitiontaxable preferred sharein subsection 248(1)) in relation to such a controlling corporation,(d)paid by a mortgage investment corporation, or(e)that is a capital gains dividend within the meaning assigned by subsection 131(1); (dividende exclu)
(a)a corporation described in subparagraph (b)(ii) of the definitionretirement savings planin subsection 146(1),(b)an investment corporation,(c)a mortgage investment corporation,(d)a mutual fund corporation,(e)a prescribed venture capital corporation, or(f)a prescribed labour-sponsored venture capital corporation,
(g)a prescribed corporation,(h)a corporation that is controlled by or for the benefit of one or more corporations (each of which is referred to in this subsection as a “controlling corporation”) other than financial intermediary corporations or private holding corporations unless the controlling corporations and specified persons (within the meaning assigned by paragraph (h) of the definitiontaxable preferred sharein subsection 248(1)) in relation to the controlling corporations do not own in the aggregate shares of the capital stock of the corporation having a fair market value of more than 10% of the fair market value of all of the issued and outstanding shares of the capital stock of the corporation (those fair market values being determined without regard to any voting rights attaching to those shares), or(i)any particular corporation in which another corporation (other than a financial intermediary corporation or a private holding corporation) has a substantial interest unless the other corporation and specified persons (within the meaning assigned by paragraph (h) of the definitiontaxable preferred sharein subsection 248(1)) in relation to the other corporation do not own in the aggregate shares of the capital stock of the particular corporation having a fair market value of more than 10% of the fair market value of all of the issued and outstanding shares of the capital stock of the particular corporation (those fair market values being determined without regard to any voting rights attaching to those shares); (intermédiaire financier constitué en société)
(a)a specified financial institution,(b)any particular corporation that owns shares of another corporation in which it has a substantial interest, except where the other corporation would, but for that substantial interest, be a financial intermediary corporation or a private holding corporation, or(c)any particular corporation in which another corporation owns shares and has a substantial interest, except where the other corporation would, but for that substantial interest, be a private holding corporation. (société de portefeuille privée)
(a)the shareholder is related (otherwise than by reason of a right referred to in paragraph 251(5)(b)) to the corporation at that time; or(b)the shareholder owned, at that time,(i)shares of the capital stock of the corporation that would give the shareholder 25% or more of the votes that could be cast under all circumstances at an annual meeting of shareholders of the corporation,(ii)shares of the capital stock of the corporation having a fair market value of 25% or more of the fair market value of all the issued shares of the capital stock of the corporation,and either(iii)shares (other than shares that would be taxable preferred shares if the definitiontaxable preferred sharein subsection 248(1) were read without reference to subparagraph (b)(iv) thereof and if they were issued after June 18, 1987 and were not grandfathered shares) of the capital stock of the corporation having a fair market value of 25% or more of the fair market value of all those shares of the capital stock of the corporation, or(iv)in respect of each class of shares of the capital stock of the corporation, shares of that class having a fair market value of 25% or more of the fair market value of all the issued shares of that class,and for the purposes of this paragraph, a shareholder shall be deemed to own at any time each share of the capital stock of a corporation that is owned, otherwise than by reason of this paragraph, at that time by a person to whom the shareholder is related (otherwise than by reason of a right referred to in paragraph 251(5)(b)).
(i)shares of the capital stock of the corporation that would give the shareholder 25% or more of the votes that could be cast under all circumstances at an annual meeting of shareholders of the corporation,(ii)shares of the capital stock of the corporation having a fair market value of 25% or more of the fair market value of all the issued shares of the capital stock of the corporation,
(iii)shares (other than shares that would be taxable preferred shares if the definitiontaxable preferred sharein subsection 248(1) were read without reference to subparagraph (b)(iv) thereof and if they were issued after June 18, 1987 and were not grandfathered shares) of the capital stock of the corporation having a fair market value of 25% or more of the fair market value of all those shares of the capital stock of the corporation, or(iv)in respect of each class of shares of the capital stock of the corporation, shares of that class having a fair market value of 25% or more of the fair market value of all the issued shares of that class,
(a)where it can reasonably be considered that the principal purpose for a person acquiring an interest that would, but for this subsection, be a substantial interest in a corporation is to avoid or limit the application of Part I or IV.1 or this Part, the person shall be deemed not to have a substantial interest in the corporation;(b)where it can reasonably be considered that the principal purpose for an acquisition of a share of the capital stock of a corporation (in this paragraph referred to as the “issuer”) by any person (in this paragraph referred to as the “acquirer”) who had, immediately after the time of the acquisition, a substantial interest in the issuer from another person who did not, immediately before that time, have a substantial interest in the issuer, was to avoid or limit the application of Part I or IV.1 or this Part with respect to a dividend on the share, the acquirer and specified persons (within the meaning assigned by paragraph (h) of the definitiontaxable preferred sharein subsection 248(1)) in relation to the acquirer shall be deemed not to have a substantial interest in the issuer with respect to any dividend paid on the share;(c)a corporation described in paragraphs (a) to (f) of the definitionfinancial intermediary corporationin subsection 191(1) shall be deemed not to have a substantial interest in another corporation unless it is related (otherwise than by reason of a right referred to in paragraph 251(5)(b)) to the other corporation;(d)any partnership or trust, other than(i)a partnership all the members of which are related to each other otherwise than by reason of a right referred to in paragraph 251(5)(b),(ii)a trust in which each person who is beneficially interested is(A)related (otherwise than because of a right referred to in paragraph 251(5)(b)) to each other person who is beneficially interested in the trust and who is not a registered charity, or(B)a registered charityand for the purpose of this subparagraph, where a particular person who is beneficially interested in the trust is an aunt, uncle, niece or nephew of another person, the particular person and any person who is a child or descendant of the particular person shall be deemed to be related to the other person and to any person who is the child or descendant of the other person, or(iii)a trust in which only one person (other than a registered charity) is beneficially interested,shall be deemed not to have a substantial interest in a corporation; and(e)where at any time a shareholder holds a share of the capital stock of a corporation to which paragraph (g) of the definitiontaxable preferred sharein subsection 248(1) or paragraph (e) of the definitiontaxable RFI sharein that subsection applies to deem the share to be a taxable preferred share or a taxable RFI share, the shareholder shall be deemed not to have a substantial interest in the corporation at that time.
(i)a partnership all the members of which are related to each other otherwise than by reason of a right referred to in paragraph 251(5)(b),(ii)a trust in which each person who is beneficially interested is(A)related (otherwise than because of a right referred to in paragraph 251(5)(b)) to each other person who is beneficially interested in the trust and who is not a registered charity, or(B)a registered charity
(A)related (otherwise than because of a right referred to in paragraph 251(5)(b)) to each other person who is beneficially interested in the trust and who is not a registered charity, or(B)a registered charity
(iii)a trust in which only one person (other than a registered charity) is beneficially interested,
(a)a share of the capital stock of a corporation is issued,(b)the terms or conditions of a share of the capital stock of a corporation are changed, or(c)an agreement in respect of a share of the capital stock of a corporation is changed or entered into,
(d)for the purposes of this Part and section 187.2, be deemed to be an excluded dividend and an excepted dividend, respectively, unless(i)where paragraph 191(4)(a) applies, the share was issued for consideration that included a taxable preferred share, or(ii)where paragraph 191(4)(b) or 191(4)(c) applies, the share was, immediately before the particular time, a taxable preferred share, and(e)be deemed not to be a dividend to which subsection 112(2.1) or 138(6) applies to deny a deduction with respect to the dividend in computing the taxable income of a corporation under subsection 112(1) or 112(2) or 138(6), unless(i)where paragraph 191(4)(a) applies, the share was issued for consideration that included a term preferred share or for the purpose of raising capital or as part of a series of transactions or events the purpose of which was to raise capital, and(ii)where paragraph 191(4)(b) or 191(4)(c) applies, the share was, immediately before the particular time, a term preferred share, or the terms or conditions of the share were changed, or the agreement in respect of the share was changed or entered into for the purpose of raising capital or as part of a series of transactions or events the purpose of which was to raise capital.
(i)where paragraph 191(4)(a) applies, the share was issued for consideration that included a taxable preferred share, or(ii)where paragraph 191(4)(b) or 191(4)(c) applies, the share was, immediately before the particular time, a taxable preferred share, and
(i)where paragraph 191(4)(a) applies, the share was issued for consideration that included a term preferred share or for the purpose of raising capital or as part of a series of transactions or events the purpose of which was to raise capital, and(ii)where paragraph 191(4)(b) or 191(4)(c) applies, the share was, immediately before the particular time, a term preferred share, or the terms or conditions of the share were changed, or the agreement in respect of the share was changed or entered into for the purpose of raising capital or as part of a series of transactions or events the purpose of which was to raise capital.
(a)the amount paid on the redemption, acquisition or cancellation of the share, and(b)all amounts each of which is an amount (other than an amount deemed by subsection 84(4) to be a dividend) paid, after the particular time and before the redemption, acquisition or cancellation of the share, on a reduction of the paid-up capital of the corporation in respect of the share
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]R.S., 1985, c. 1 (5th Supp.), s. 1911994, c. 7, Sch