CRA confirms that a subsequent spin-off by the “profitco” in a loss-shifting transaction will not prejudices the loss shifting rulings given

The mechanics described in a ruling letter for spinning off various business divisions of an indirect subsidiary of a public corporation to newly-incorporated sisters entail the ACB of the shares in the capital of spinner being split pro-rata with that of the spinees – rather than full ACB being generated in the shares of the spinees (see Hanneman). There is a representation that these transactions will not have any "material effect" on the trading price of the parent’s shares (as well as not being disclosed to any shareholder), which is a bit like saying the transactions are somewhat of a waste of time (or at least that the resulting business benefits will not be visible for quite some time).

The spinner was also the "profitco" in a loss shifting transaction for which a 2012 ruling letter was received. Those transactions are described as already having been completed (i.e., the set-up transactions but not the unwind?) CRA confirmed that the transactions described in the second ruling letter would not cause the 2012 rulings to cease to be binding, given that the subsequent transactions of spinner/profitco would occur on a tax-deferred basis and would not create new business activities.

Neal Armstrong. Summaries of 2015 Ruling 2014-0559181R3 under s. 55(3)(a) and s. 111(1)(a).