CRA provides numerical speed limits on a pipeline for a company with a marketable securities “business”

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 of the note over time.

The ruling letter stipulates that the amalgamation will occur no sooner than 12 months after the sale to Newco, and that thereafter the note will be paid off no faster than 15% per quarter for the first year. This contrasts with, for example, 2014-0540861R3 F and 2014-0548621R3, where these two parameters were 12 months and 25% per quarter, and 2016-0670871R3, where they were 30 months and 15% per quarter.

Neal Armstrong. Summary of 2018 Ruling 2018-0767431R3 under s. 84(2).