10 January 1992 Memorandum (Tax Window, No. 17, p. 12, ¶1773)

The corporation to which assets are transferred in a butterfly may not be amalgamated with another corporation.

The reduction in Part I tax caused by the application of available investment tax credits affects the corporation's safe income only in the years following the claim, for example, through a reduction of the amount of CCA or SR&ED expenditures available in those years.

In order for the exemption in s. 55(3)(a) to apply to a transaction involving a transfer of assets from a corporation owned equally by Messrs. A and B to a second corporation owned equally by them, Mr. A and Mr. B must be acting in concert to control the two corporations not only with respect to the series of transactions in question, but also on a continuing basis.