Principal Issues: Is the proposed public company "no-types of property" spin-off exempt from the application of 55(2)?
Position: Not in these circumstances under current legislation.
Reasons: In the recent past the DC acquired another corporation that carried on a complementary business to that which it now sought to spin-off to a new public corporation. It is our view that this acquisition is described in paragraph 55(3.1)(a) with the result that 55(2) applies to the spin-off series of transactions. However, if legislation is enacted consistent with the November 26, 2004 Department of Finance comfort letter respecting the application of 55(3.1)(a), the taxpayers' series of transactions should not be subject to 55(2).