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.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Loss carry-back on amalgamation
Position TAKEN:
-predecessor Subco can't carry back to predecessor Parentco
Reasons FOR POSITION TAKEN:
-wording of the legislation
-Department of Finance Technical Notes
DRAFT
Revenue Canada Round Table
Canadian Petroleum Tax Society
Calgary, Alberta
June 2, 1994
Question No. 14
SUBSIDIARY LOSSES ON AMALGAMATION
Subsection 87(2.11) of the Income Tax Act deems a new corporation (Amalco) formed on the amalgamation of a particular corporation (Parentco) and one or more of its subsidiary wholly-owned corporations to be a continuation of the particular corporation. Does this subsection permit a loss of a wholly-owned subsidiary incurred in the year ended immediately prior to amalgamation to be carried back and deducted against taxable income of the parent corporation in its year ended immediately prior to the amalgamation? Assume for this purpose that both the amalgamation and the losses are incurred in 1994.
Department's Position
Subject to the provisions of section 111, and applicable for amalgamations of a parent corporation and one or more of its wholly-owned subsidiaries occurring after 1989, subsection 87(2.11) of the Act will permit Amalco to carry back the non-capital losses of Amalco to the predecessor Parentco. It will not permit the carry-back of the non-capital losses of the predecessor subsidiary corporation to the predecessor Parentco.
Author:V. Plant
File:941036
Date:April 22, 1994
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