CRA rules on 2-year pipeline transactions

Preliminary transactions to pipeline transactions on which CRA ruled entailed the subject corporation (a portfolio investments company) using its CDA account (which had been increased through the receipt of life insurance proceeds on the life of A) to pay a capital dividend to the estate of A, thereby reducing the FMV of the estate’s shares.


  1. The estate transferred all its shares of the corporation to Newco in consideration for four notes maturing 3, 6, 9 and 12 months after the amalgamation below (and in consideration for voting common shares of Newco, with an election filed under s. 85(1),) - and with the resulting capital loss (which was not denied under ss. 40(3.61) and (3.6)) being carried back under s. 164(6).
  2. Newco will be amalgamated with the corporation (presumably after a year) and the notes will thereafter commence to be repaid consistently with their maturity dates.

The transfer to Newco in 1 above had been completed by the time of the ruling letter.

Neal Armstrong. Summary of 2021 Ruling 2021-0895631R3 under s. 84(2).