CRA indicates that a pipeline transaction can use an existing corporation rather than a Newco
In order to implement pipeline planning, the estate of an individual generally incorporates a new corporation ("Newco") to which it sells shares of a private corporation ("Target"), with or without a tax rollover, in consideration for shares of Newco or a note issued by Newco. Newco will remain in existence for at least one year before being merged with Target to form Amalco, whose assets are gradually used to redeem the shares or note.
CRA indicated that it did not have concerns with these transactions being varied by the estate selling the Target shares to an existing corporation in which it does not hold any shares and whose shares may be held by heirs of the deceased.
Neal Armstrong. Summaries of APFF Financial Strategies and Instruments Roundtable, Q.8 under s. 84(2) and s. 84.1(1).