CRA provides a s. 84(2) ruling for a resource property spin-off by a public resource company

A public resource company effected a spin-off of one its properties by transferring it on a taxable basis to a wholly-owned Newco in consideration for Newco shares, and then distributing its Newco shares to its shareholders as a stated capital distribution.

CRA ruled that the distribution did not give rise to a s. 84(4.1) deemed dividend on the basis of the s. 84(2) exception rather than on the basis that it came within the s. 84(4.1)(a) and (b) exclusion for the distribution of sales proceeds (i.e., of the common shares of Newco). Consistently with all the other s. 84(2) spin-off ruling letters, CRA ruled that the shareholders had a cost for the Newco shares equal to their FMV even though there is no specific provision to this effect.

Neal Armstrong. Summary of 2018 Ruling 2017-0731971R3 under s. 84(2).