Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Manitoba Bar Association/
Institute of Chartered Accountants of Manitoba
1993 Round Table
Question No 8
Section 84.1 - Tax-paid ACB strip
An individual resident in Canada owns shares that have a low paid-up capital but high adjusted cost base. The taxpayer sells those shares to a holding company and receives non-share consideration with a fair market value equal to the amount of the ACB of the shares. Please confirm that a deemed dividend will not result under section 84.1 as long as :
- • the shares (or shares for which the shares are substituted) were not owned by anyone at December 31, 1971 (i.e. they are "post-71" shares); and
- • neither the taxpayer nor any person with whom the taxpayer was not dealing at arm's length has claimed a deduction under section 110.6 in respect of a previous disposition of the shares (or shares for which the shares are substituted). Answer
Confirmed.
File : 7-923772
Prepared by : Marc Ton-That
January 12, 1993
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1993
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1993
Email this Content