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.
RE: 85.1 and IT-450
In the course of a share for share exchange pursuant to section 85.1 when the vendor receives shares for some of the exchanged shares and cash or other consideration for other exchanged shares, paragraph 5 of IT-450 indicates that 85.1(1) may be used in respect of the exchanged shares for which shares were received, provided the vendor can clearly identify which shares were exchanged for cash or other consideration and which were exchanged for shares.
Recently, the purchaser corporation in these situations has frequently been offering a combination of share and non-share consideration for each share of the target corporation. In advance rulings, provided the takeover offer clearly indicates that the share consideration will be exchanged for a specified fraction of each share tendered and that the non-share consideration will be given for the remaining specified fraction of each such share, we have ruled that 85.1(1) will apply to the exchange of the specified fraction of each share that is exchanged for share consideration. Two such rulings and certain other correspondence related to this decision are attached.
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