Principal Issues: In a situation where there may be a certain number of taxation years between the time of the commencement of the wind-up and the formal dissolution of a wholly-owned subsidiary:
(1) Would CCRA reassess the parent corporation if it claimed a subsidiary's loss in its first taxation year commencing after the commencement of the winding-up, pursuant to s.s. 88(1.1), even though the subsidiary is not formally dissolved ?
(2) If the parent waited until the subsidiary is formally dissolved to claim a subsidiary's loss, would CCRA pay interest on a refund from the day the original return to which the loss is being applied was filed to the day of the reassessment ?
(3) Can the CCRA reassess the parent's first taxation year commencing after the commencement of the winding-up to allow the subsidiary's loss if the normal reassesssment period for that taxation year expired before the subsidiary is officially dissolved ?
(4) Can the parent corporation protect its right to claim the subsidiary's loss in its first taxation year commencing after the commencement of the winding-up by filing a waiver of the normal reassesssment period for that year under s.p. 152(4)(a)(ii) ?
Position: (1) It could. (2) No. (3) No.
(4) Technically no. Final decision made on a case by case basis.
Reasons: