CRA rules on a classic pipeline transaction

CRA ruled on straightforward postmortem pipeline transactions under which an estate holding stepped-up common shares of a portfolio company (“Holdco”), first receives a capital dividend-in-kind from Holdco and then transfers its shares of Holdco to a newly formed Newco in consideration for a promissory note (and preferred shares of Newco, with an s. 85(1) election being filed.) After the passage of the specified time, Holdco and Newco will amalgamate, with the amalgamated corporation then gradually paying off the note in compliance with the redacted minimum schedule.

Neal Armstrong. Summary of 2026 Ruling 2025-1084051R3 F under s. 84(2).