CRA ruling letter contemplates successive transfer of losses to new Losscos, which then are wound-up into the Profitco

A parent company (Aco), whose only source of taxable income was foreign accrual property income from a non-resident subsidiary but which had losses because of issuing debt to the public, received rulings for the transfer of its losses to a domestic Profitco (held through an intermediate Holdco). This was to be accomplished by Holdco incorporating a new corporation (Lossco1), which would generate losses through triangular transactions between Aco, it, and a Newco incorporated by Aco, with Lossco1 (once it had generated those losses) being transferred on a s. 85(1) rollover basis to Profitco, and wound-up into Profitco on a s. 88(1) rollover basis.

The ruling letter describes a repetition of these transactions (i.e., with a new Lossco and Newco) in a subsequent taxation year, but no rulings are provided (presumably only because CRA requires ruled–upon transactions to be implemented somewhat promptly).

Neal Armstrong. Summaries of 2017 Ruling 2017-0711911R3 under s. 111(1)(a) and s. 88(1.1).