CRA issues butterfly ruling letter respecting a foreign spin-off transaction

CRA has issued another ruling letter on a cross-border butterfly, in which a spin-off business is transferred from DC, which is a Canadian sub of a foreign public company (Foreign Pubco), to TC, which is a subsidiary of a non-resident subsidiary (Foreign Spinco Parent) of Foreign Pubco.  Foreign Spinco Parent is then distributed as a dividend-in-kind to the public shareholders of Foreign Pubco.

Similarly to the ruling described in an October 28th post, there was a requirement that the equity of TC not represent 10% or more of the equity of ForeignSpinco Parent in order to stay on-side with s. 55(3.1)(b)(i).

Neal Armstrong.  Summary of 2012 Ruling 2012-0439381R3 under s. 55(1) - distribution.