The Rulings Directorate leaves it for the TSOs to figure out who pays the Part IV tax on a RDTOH circularity problem

A Canadian-controlled private corporation (ACo) held a minority interest in another corporation (BCo) in the form of two classes of shares, one of which had been held on V-day (December 31, 1971), so that the accrued capital gain on the V-day shares represented potential pre-1972 CSOH which could be distributed under s. 88(2) as a capital distribution on the winding-up of ACo.  CRA ruled, based on previous GAAR committee deliberations, that it was acceptable for ACo to distribute this incipient surplus to its individual shareholders without itself being wound-up.  This was to be accomplished by ACo spinning-off the V-day shares to a Newco held by its shareholders, with BCo then being wound up in the hands of its shareholders including Newco and ACo (which until then continued to hold the post-72 shares of BCo), and with Newco itself then being wound up (so that the Newco shareholders accessed 100% of the pre-1972 CSOH under s. 88(2).)

The spin-off mechanics entailed ACo and Newco receiving equal deemed dividends from each other.  This gave rise to a RDTOH circularity problem, as ACo had a RTOH balance.  The Rulings Directorate stated that the district CRA offices "will have to be consulted in order to determine which corporation will receive the dividend refund and which corporation will be subject to the Part IV tax liability under paragraph 186(1)(b)."

Neal Armstrong.  Summary of 2013 Ruling 2012-0443081R3 ("Distribution of pre-72 Capital Surplus on Hand") under s. 186(1).