Principal Issues: The situation is one where: Three children, X,Y and Z are the only beneficiaries of the Estate of Individual A, which owns all the shares of Corporation A, a Canadian-controlled private corporation. Corporation A has a capital dividend account (CDA) and a refundable dividend tax on hand (RDTOH), but owns no assets. On the other hand, X owns all the shares of Corporation X, a Canadian controlled private corporation. Corporation X intends to buy all the shares of Corporation A. After the amalgamation of Corporations A and X, the amalgamated corporation would pay a capital dividend to X. 1. Does subsection 83(2.1) apply in the particular situation? In the affirmative, does subsection 83(2.2) or 83(2.4) apply? 2.Would the answer be different if X, Y or Z owned directly the shares of Corporation A before the transfer to Corporation X? 3. Does subsection 129(1.2) apply in the particular situation
Position: 1. and 2. General comments.
Reasons: 1. and 2. Question of fact.
3. Conditions for the application of subsection 129(1.2) are met.
XXXXXXXXXX Lucie Allaire, avocate, CGA, D. Fisc.
Le 29 juin 2009