Gregory M. Johnson, Wesley R. Novotny, "An Update on Flow-through Shares in the Energy Sector", 2016 Conference Report (Canadian Tax Foundation),12:1-39

Summary Under
Tax Topics - Income Tax Act - Section 66.3 - Subsection 66.3(3)

Application based only on valid flow-through share (FTS) agreement (p. 12:7)

... The Canada Revenue Agency's (CRA's) administrative position is...

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Summary Under
Tax Topics - Income Tax Act - Section 66 - Subsection 66(12.6)

No tracing and aggregation of CEE before flow-through share issuance (pp. 12:8)

The PBC is not required to trace the FTS subscription proceeds to...

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Summary Under
Tax Topics - Income Tax Act - Section 66 - Subsection 66(15) - Flow-Through Share

Whether deletion of using look-back rule results in a new agreement rather than the shares being issued pursuant to the actual old flow-through...

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Summary Under
Tax Topics - Income Tax Regulations - Regulation 6202.1 - Subsection 6202.1(1) - Paragraph 6202.1(1)(d)

Potential issue if flow-through share issued after signing of merger agreement (pp 12:17-18)

Regulation 6202.1(1)(d) could result in a...

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Summary Under
Tax Topics - Income Tax Act - Section 249 - Subsection 249(4)

Loss restriction event should not create flow-through share timing issues (p. 12:18)

...Fortunately, the operating FTS provisions [f.n. 72 For...

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Summary Under
Tax Topics - Income Tax Act - Section 66.7 - Subsection 66.7(10)

Successoring rules not an issue for flow-through shares (p. 12:18)

...[S]ubsection 66.7(10) stipulates that it does not apply for the operative...

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Summary Under
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1.5)

Possibility that s. 88(1.5) does not apply following the winding-up distribution and before the dissolution (p. 12:19)

...[N]o subsequent issues...

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Summary Under
Tax Topics - Income Tax Act - Section 87 - Subsection 87(4.4) - Paragraph 87(4.4)(d) - Subparagraph 87(4.4)(d)(i)

Issues under s. 87(4.4)(d)(i) if further disposition by 1st purchaser or where dissent on amalgamation (pp. 12:19-20)

Subsection 87(4.4) applies...

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Summary Under
Tax Topics - Income Tax Regulations - Regulation 6202.1 - Subsection 6202.1(1.1) - Paragraph 6202.1(1.1)(c)

Prescribed share issues if flow-through subscription receipts (p. 12:21-22)

[I]f the subscription agreement for subscription receipts were...

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Implications of underwriters acquiring flow-through shares (p. 12:22-23)

When underwriters or agents (UWs) are engaged to sell the FTS, care must...

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Summary Under
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2.21)

General release of claims on implementation of CCAA compromise (p. 12:25)

Generally, a [CCAA] plan that provides a release of claims that...

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Summary Under
Tax Topics - Income Tax Act - Section 66 - Subsection 66(12.73)

Indemnity claims of flow-through shareholder generally disappear on CCAA compromise (pp. 12:27)

[I]n National Bank of Canada v. Merit Energy Ltd.,...

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Summary Under
Tax Topics - Income Tax Regulations - Regulation 6202.1 - Subsection 6202.1(5) - Excluded Obligation

No need to contractually preclude general common law right to sue (p. 12:23)

Most provinces have certain statutory rights of rescission. …

All...

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Summary Under
Tax Topics - Income Tax Regulations - Regulation 6202.1 - Subsection 6202.1(1) - Paragraph 6202.1(1)(c)

No need to contractually preclude general common law right to sue (p. 12:23)

Most provinces have certain statutory rights of rescission. …

All...

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Summary Under
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) - Subparagraph 12(1)(x)(iv)

Inclusion of flow-through share indemnity payment under s. 12(1)(x)(iv) and deduction under s. 12(2) as “outlay" (p.12:28-29)

...The CRA's view...

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Summary Under
Tax Topics - Income Tax Act - Section 84 - Subsection 84(9)

Flow-through shares issued after announcement of long-form amalgamation may be prescribed shares (p. 12:20-21)

...On an amalgamation, it is...

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