To what extent would a contribution of capital to an insolvent corporation permit an increase in the cost of shares owned by the contributor under s. 53(1)(c)? What if the taxpayer instead purchases additional shares? The Department responded:
Provided that there is some increase in the value of shares of the corporation owned by the taxpayer as a result of a contribution of capital, the cost to the taxpayer of his shares...would, pursuant to paragraph 53(1)(c), be increased by that proportion of the amount of the contribution as may reasonably be regarded as pertaining to the shares of the corporation owned by him.
On a share subscription, any cost basis denied by s. 69(1)(a) may be treated as a contribution of capital provided there is some increase in the value of the taxpayer's shares.
