Principal Issues: (1) Whether the provisions of subsection 85(1) will apply to the transfers of property to be undertaken under the Proposed Transactions; (2) Whether subsection 74.4(2) will apply to the individual transferors having transferred property to the XXXXXXXXXX; (3) Whether subsection 84(3) will apply to the cancellation of the Newco XXXXXXXXXX Non-Voting Preference Shares in the course of the Wind-Up; (4) Whether the GAAR will apply to the Donation to deny the application of paragraph 38(a.1) and limit the inclusion to Holdco 3’s CDA.
Position: (1) Yes (2) No (3) No (4) No
Reasons: (1) The transferred property in each of the proposed transactions, which qualifies as an eligible property as that term is defined in paragraph 85(1.1)(a), was transferred to a taxable Canadian corporation; (2) None of the proposed transfers of property reduce the income of the individual transferor or benefit a designated person in respect of the individual; (3) No amount has been paid by Newco to Amalco XXXXXXXXXX to cancel the Newco XXXXXXXXXX Non-Voting Preference Shares.
