Crystallization transaction
A child of parent seeks to crystallize an accrued gain on shares of Opco, which is controlled by parent, by transferring those shares to Opco in exchange for Opco issuing shares. As the child disposed of the shares to a non-arm's-length person, s. 120.4(4) would apply to deem the child to have received a taxable dividend equal to twice the amount of the taxable capital gain.
s. 48.1(1) does not apply
As expressly provided in s 48.1(1), a capital gain realized by a specified individual as a result of a deemed disposition under s. 48.1(1) is not subject to the tax under s. 120.4.
No s. 83(2) election
As ss. 120.4(4) and (5) only deem twice the amount of taxable capital gains to be received as a taxable dividends, and do not deem any amount to be paid by the corporation, a dividend refund is not available under s. 129(1) nor is a capital dividend election under s. 83(2).