CRA stretches out the timeline for implementing a pipeline

CRA has provided the usual rulings for a pipeline transaction in which the estate sells a company with a “business” of investing and trading in marketable securities to a Newco for consideration comprising mostly a note, followed by an amalgamation of the two companies and the repayment by Amalco to the estate or beneficiaries of the note over time.

The ruling letter stipulates that the amalgamation will occur no sooner than 30 months after the sale to Newco, and that thereafter the note will be paid off no faster than 15% per quarter. This contrasts with, for example, 2014-0540861R3 F and 2014-0548621R3, where these two parameters were 12 months and 25% per quarter.

Neal Armstrong. Summary of 2017 Ruling 2016-0670871R3 under s. 84(2).