Section 191

Subsection 191(1) - Definitions

Private Holding Corporation

Administrative Policy

3 March 1992 T.I. (Tax Window, No. 17, p. 22, ¶1776)

A venture capital corporation would not meet the requirement that its only undertaking be "the investing of its funds" if it has a substantial...

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Subsection 191(2) - Substantial interest

Administrative Policy

91 C.R. - Q.7

The beneficiary of a trust owning shares of a corporation is not itself considered to have a substantial interest.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Ownership 14

88 C.R. - Q.38

The determination of whether a shareholder has a substantial interest in a corporation is made before rather than after the redemption of the...

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Subsection 191(3) - Idem [Substantial interest]

Administrative Policy

18 December 2013 External T.I. 2013-0511101E5 F - Substantial interest - Part VI.1

As a result of an estate freeze, X held non-voting and non-participating Class B shares of a Quebec CCPC (the "Corporation"). An inter vivos trust...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition no disposition of shares that became voting by operation of law (due to cancellation of voting shares) 171
Tax Topics - Income Tax Act - Section 249 - Subsection 249(4) voting rights shifted to 2nd trust with same trustees: no control change 179
Tax Topics - Income Tax Act - Section 251.2 - Subsection 251.2(2) - Paragraph 251.2(2)(a) no acquisition of control where votes pass from trust to an estate with the same individuals as executors 187

Subsection 191(4) - Deemed dividends

See Also

Dangerfield v. Canada, 2004 DTC 6025, 2003 FCA 480

A court order that specified that child support was to commence on May 1, 1997 thereby established a "commencement day" for purposes of s. 56.1(4)...

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Henderson Estate v. M.N.R, 73 DTC 5471, [1973] CTC 636 (FCTD), aff'd 75 D.TC 5332, [1975] C.TC 485 (FCA)

Cattanach J. indicated that with respect to a share warrant, shares have been issued by the company, whereas no shares are issued on the granting...

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Administrative Policy

4 May 2016 External T.I. 2016-0634551E5 - Ss 191(4) and PAC

The terms of taxable preferred shares specify an amount (not exceeding their issuance consideration) for which they are to be redeemed for the...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Price Adjustment Clause effectiveness of share price adjustment clause on previously redeemed preferred shares can trigger Part VI.1 tax 56

28 January 2008 External T.I. 2007-0250831E5 F - Part IV.1 and VI.1 Taxes - Subsection 55(2)

Retractable preferred shares ("Rollover Preferred Shares") of a CCPC (“Subco”) held by a public corporation (“Pubco”) which had ceased to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) - Subparagraph 55(3)(a)(i) s. 55(3)(a)(i) exception does not apply to a redemption of a preferred share giving rise to a deemed dividend irrespective of conversion of that dividend to capital gain 358
Tax Topics - Income Tax Act - Section 191.1 - Subsection 191.1(1) - Paragraph 191.1(1)(a) dividend subject to s. 55(2) can also be subject to Pt. VI.1 tax 110
Tax Topics - Income Tax Act - Section 187.2 application of Pt. IV.1 tax to a deemed dividend is ousted to the extent s. 55(2) applies 115

25 September 1991 Memorandum (Tax Window, No. 10, p. 5, ¶1480)

The conditions in s. 191(4) are not met unless the share terms specify a dollar amount for which the shares are to be redeemed.

15 May 1990 T.I. (October 1990 Access Letter, ¶1483)

Where an individual transfers shares of Opco to Holdco in consideration for retractable preferred shares whose redemption amount will be...

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May 1990 Vancouver District Office Round Table (October 1990 Access Letter, ¶1445)

Where an asset with a fair market value of $100 is transferred to a corporation for a preferred share having a redemption amount of $100 plus any...

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May 1990 Meeting of Toronto Chapter of I.C.A.O. (October 1990 Access Letter, ¶1445)

"The terms or conditions of the share or the agreement in respect of the share must specify an actual dollar amount for the purposes of...

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89 C.R. - Q.20

"Unless the terms and conditions of the share or an agreement in respect of the share specified a different amount for the purposes of ss.191(4),...

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88 C.R. - Q.37

Provided that the preferred shares received by minority common shareholders on an amalgamation squeeze-out specify in their terms a redemption...

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Articles

Charles P. Marquette, "Hybrid Sale of Shares and Assets of a Business", Canadian Tax Journal, (2014) 62:3, 857 – 79.

CRA interpretation of specified amount (pp. 877-8)

[I]n a hybrid transaction in in which a redemption of the shares will trigger a deemed...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) 520

Subsection 191(5) - Where s. (4) does not apply

Administrative Policy

2021 Ruling 2021-0904311R3 F - Butterfly Reorganization

CRA ruled on transactions under which the assets of a farming corporation (DC) owned by the two farmer brothers were split under a net asset...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution butterfly transaction for a farming corp (DC) of two brothers coupled with an immediate gift of shares of DC and TC to their respective sons under s. 73(4.1) 544
Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) - Paragraph 186(1)(b) circularity avoided through intervening taxation year end of transferee corp 74

30 November 1995 Ruling 9609563 - SHORT-TERM PREFERRED SHARES AND TAXABLE PREFERRED SHARES

Although shares would be short-term preferred shares if the price paid to a shareholder therefor was in excess of the greater of the fair market...

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Articles

John O’Connor, Eryn Fanjoy, "Substantial Issuer Bids: A Tax Update", Corporate Finance, Vol. XXIV, No 1 (Federated Press), p.1, 2021

Market price re setting specified amount in substantial issuer bids (“SIBs) (pp. 5-6)

It is interesting to examine Canadian market practice with...

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