CRA finds that an amalgamation of a former partner with a former partnership subsidiary within 3 months of the partnership wind-up ousts s. 98(5)

A partnership transfers its business on a rollover basis to a Newco, and then is wound-up as described in s. 85(3), so that its general and limited partner (GPCo and LPCo) receive the Newco shares on a pro rata basis. GPCo then is wound-up into LPCo, raising the possibility in the correspondent’s mind that the s. 98(5) rollover could also apply, as a former partner (LPCo) now holds all the former partnership property (the Newco shares).

Be that as it may, LPCo then is amalgamated (within three months following the partnership winding-up) with Newco. In CRA’s view, this would preclude the application of s. 98(5), as the Amalco is a new corporation that will not have been a member of the partnership immediately before the partnership ceased to exist

Neal Armstrong. Summary of 15 January 2018 External T.I. 2017-0722961E5 under s. 98(5).