RSM424H1 Study Guide - Final Guide: Issued Shares
11 Jun 2017
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Implications: s84. 1(1)(a) a reduction in the puc of any shares issued by the purchaser corporation. Puc (new shares) = puc (old shares) boot: s84. 1(1)(b) any non-share consideration received by the taxpayer may be deemed to be a dividend. Cg xx (x) xx xx (x) xx (x) xx. Section 84. 1 is intended to prevent the stripping out of r/e as capital proceeds by means of related party sales. Acb (new shares) = acb (old shares) 0 : exchanged shares must be held by the taxpayer as capital property. The cost of shares to the purchaser is deemed to be the lesser of: fmv of the exchanged shares (immediately before the exchange), and, puc of the exchanged shares (immediately before the exchange) If the vendor corporation is qsbc and vendor wants to use the capital gains deduction may report capital gain on the disposition of shares on her tax return.
