Example

On July 31, 2016, a subsidiary corporation wound up and dissolved, and all its assets were distributed to its parent corporation.

Tax payable by the parent corporation and the subsidiary corporation

Tax year-end	Tax payable (parent)	Tax payable (subsidiary)
December 31, 2014	$14,000	$5,000
December 31, 2015	$12,000	$6,000
December 31, 2016*	$20,000	N/A

* For the current tax year ending on December 31, 2016, the estimated tax payable is $20,000.

Before the wind-up

For Regulation 5301(6), the instalment base amounts for the parent corporation's tax year that ends on December 31, 2016, would be:

• $12,000 for the first instalment base amount for the parent's 2016 tax year; and
• $14,000 for the second instalment base amount for the parent's 2016 tax year.

Seven instalment payments of $1,000 each ($12,000 ÷ 12) are due up to July 31, 2016.

After the wind-up

For Regulation 5301(6), the instalment base amounts for the parent corporation's tax year that ends on December 31, 2016, would be:

• $18,000 for the first instalment base amount for the parent's 2016 tax year; and
• $19,000 for the second instalment base amount for the parent's 2016 tax year.

The first instalment base amount of $18,000 is the total of the parent's normal first instalment base amount of $12,000 and the subsidiary's first instalment base amount of $6,000 for its 2016 tax year.

The second instalment base amount of $19,000 is the total of the parent's normal second instalment base amount of $14,000 and the subsidiary's second instalment base amount of $5,000 for its 2016 tax year.

Five instalment payments of $1,500 each ($18,000 ÷ 12) are due up to December 31, 2016.

2017 tax year

For the tax year ending on December 31, 2017, the estimated tax payable is $26,000.

For Regulation 5301(6), the instalment base amounts for the parent's tax year that ends on December 31, 2017, would be:

• $23,500 for the first instalment base amount for the parent's 2017 tax year; and
• $18,000 for the second instalment base amount for the parent's 2017 tax year.

The first instalment base amount of $23,500 is the total of the parent's normal first instalment base amount of $20,000 and the subsidiary's first instalment base amount of $6,000 for its 2016 tax year, multiplied by the number of complete months (7) in the parent's 2016 tax year before the winding-up distribution divided by 12. Calculate this amount as follows: ($6,000 × 7) ÷ 12 = $3,500.

The second instalment base amount of $18,000 is the total of the parent's normal first instalment base amount of $12,000 for its 2016 tax year and the subsidiary's first instalment base amount of $6,000 for its 2016 tax year.