CRA continues to accept deliberate triggering of CDA additions for distribution purposes

CRA noted that the approach of the GAAR Committee to surplus-stripping has changed significantly:

  • Since 2015-0610701C6 the Committee has considered that it will no longer recommend the application of GAAR to certain corporate reorganizations through which there is a deliberate triggering of a capital gain in order to distribute a capital dividend to its shareholders.
  • Conversely, consistently with Descarries and Pomerleau, the Committee will now apply GAAR to a surplus-stripping arrangement involving the transfer of a family business to a related party.

Neal Armstrong. Summary of 7 March 2019 CTF GAAR Seminar - Suzanne Saydeh on GAAR Committee under s. 245(4).