CRA confirms that there is no rollover for tax deferred cooperative shares on a triangular amalgamation

Where s. 87(2)(s) applies to an amalgamation of agricultural cooperative corporations, then shareholders will not be considered to have realized income as a result of the disposition of their “old” tax deferred cooperative shares for equivalent new shares, there will be no withholding required under s. 131.1(7) and their new shares will be treated as tax deferred cooperative shares until such time as they are disposed of. CRA has confirmed that s. 87(2)(s) will not apply to shares that are exchanged for shares of the parent on a triangular amalgamation, so that the exchanging shareholders will be required to recognize proceeds of disposition under s. 131.1(2).

Neal Armstrong. Summary of 25 February 2019 External T.I. 2019-0793911E5 F under s. 87(2)(s)(ii).