CRA declines to give comfort that a U.S. style merger qualifies as an ETA s. 271 merger

As a result of the merger of USCo1 into USCo2 with USCo2 as the survivor (“MergeCo”), all of the assets of the Canadian branch business of USCo1 are transferred to USCo2. Would ETA s. 271 (which applies where “two or more corporations are merged or amalgamated to form one corporation”) deem such transfer not to be a supply? CRA responded:

Where pursuant to the state, provincial or federal laws under which the entities are incorporated, the predecessors are continued as one corporation with the new successor being a continuation of the predecessors (otherwise than as a result of a purchase or distribution of property ...), it appears that section 271 would apply.

This, of course, was ducking the question. Everyone would accept that a conventional Canadian continuation-style amalgamation would be a qualifying amalgamation (or merger). The question is whether a conventional U.S.-style absorptive merger with only one survivor would qualify as a merger (or amalgamation) to “form” one corporation. This answer suggests that CRA is either unsure or negative on the issue. Since the questioner did not provide anything other than the bare bones of the U.S. corporate law, diffidence is unsurprising.

Neal Armstrong. Summary of 23 March 2017 CBA Commodity Taxes Roundtable, Q. 5 under ETA s. 271.