Submitted by narmstrong on Tue, 08/21/2018 - 03:20
cross-border butterfly with 4-party exchange and preceding distribution of DC to foreign parent to qualify as permitted exchange/rental property valued at nil/post-butterfly equaling cash payment
Current Structure
Foreign Parentco, which is governed by the laws of (foreign) Country 1 and has two classes of issued and outstanding shares...
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cross-border butterfly with 4-party exchange and preceding distribution of DC to foreign parent to qualify as permitted exchange/rental property valued at nil/post-butterfly equaling cash payment
cross-border butterfly with 4-party exchange and preceding distribution of DC to foreign parent to qualify as permitted exchange/rental property valued at nil/post-butterfly equaling cash payment
cross-border butterfly with 4-party exchange and preceding distribution of DC to foreign parent to qualify as permitted exchange/rental property valued at nil/post-butterfly equaling cash payment
cross-border butterfly with 4-party exchange and preceding distribution of DC to foreign parent to qualify as permitted exchange/rental property valued at nil/post-butterfly equaling cash payment
full cost of property acquired under 4-party exchange
222
Principal Issues: Whether the Canadian Butterfly Transactions, in the context of a cross-border butterfly, as described below, meet legislative and administrative requirements?
Position: Transactions meet requirements.
Reasons: Consistent with law and administrative requirements.
a double transfer of shares under s. 85(1) and 85.1(3) would not affect the shares’ capital property status
179
Principal Issues: 1. Does paragraph 55(3)(a) apply in the context of this internal reorganization? 2. Does subsection 245(2) apply with respect to this internal reorganization? 3. Do the back-to-back transfers of shares of XXXXXXXXXX subsidiaries (i.e., the property) cause the characterization of the property to change from capital property, for purposes of subsection 85.1(3)?
Position: 1. Yes; 2. No 3. No.
Reasons: 1. There is no transaction described in subparagraphs 55(3)(a)(i) to (v) that forms a part of the same series of transactions or events that include the deemed dividends; 2. The Proposed Transactions do not include an avoidance transaction; furthermore, there is no creation or streaming of cost base and the preferred shares in the Proposed Transactions are cross-redeemed for notes that are set-off and cancelled; 3. XXXXXXXXXX.
Canadian royalties received exempt of U.K. tax by non-dom U.K. resident not eligible for Treaty-reduced rate
277
Principal Issues: What is the meaning of the phrase "relieved from tax" in Article 27(2) of the Canada-UK Income Tax Convention (“the Canada-UK Treaty”)?
Position: "Relieved from tax" means that the tax otherwise imposed by Canada is partly or wholly reduced under a provision of the Canada-UK Treaty.
Reasons: Such interpretation is consistent with the object and scheme of the Canada-UK Treaty.
