CRA indicates that a s. 86 reorg before shares are transferred by the executors to a spousal trust will taint the s. 70(6) rollover

CRA confirmed its position at 2015 APFF Roundtable, Q.9 that where the will of the deceased stipulates that specified shares are to be transferred by the executors to a spousal trust but, before they do this, there is a share reorganization that results in different shares being received by the spousal trust, the s. 70(6) spousal rollover will not be available, and the terminal return will reflect a disposition at fair market value.

CRA did not discuss the distinction between s. 86 and s. 51 reorgs. S. 51(1)(c) deems the old shares not to have been disposed of.

Neal Armstrong. Summary of 13 June 2017 STEP Roundtable, Q.11 under s. 70(6).