CRA rules on loss-shifting transactions beneath a non-wholly owning Canadian LP

CRA ruled on loss consolidation transactions in which the Lossco (held by a Canadian LP) made an interest-bearing loan to the Profitco (held directly and indirectly by the LP) and Profitco used those loan proceeds to subscribe for cumulative redeemable retractable preference shares of Lossco. Although the LP did not wholly-own Lossco and also perhaps did not directly or indirectly wholly-own Profitco, those two corporations were affiliated and related. CRA did not provide a GAAR ruling, and instead provided an opinion on the Bill C-59 version (now law) of s. 245.

Neal Armstrong. Summary of 2024 Ruling 2023-0994301R3 F under s. 111(1)(a).