CRA follows Demers in treating selling-shareholder repayment of Target debt as disposition expense

In the situation where an agreement for the sale of all the shares of a corporation (Aco) requires the share sale proceeds to be applied first to repay a bank loan owing by Aco together with an early repayment penalty, CRA accepts (following Demers) that these amounts are disposition expenses of the selling shareholder (and that Aco is not entitled to s. 18(9.1) deductions for the early repayment penalty).

Neal Armstrong.  Summaries of 11 January 2013 T.I. 2012-0436771E5 under ss. 40(1)(a)(i), 18(9.1) and 20(1)(e).