CRA will not respect the Quebec corporate law labeling of Class A and B common shares (with the same rights) as being distinct

In 2004-0092561E5, CRA indicated that where Mr. X transfers common shares under s. 85 to the corporation in exchange for common and preferred shares of the corporation (in order to shift cost base over to the prefs), he will not have disposed of all of his common shares as he continues to have the same bundle of rights respecting common shares after this transaction.

CRA has now indicated that this position is not affected by the stipulation in the new Quebec Business Corporations Act that different classes of shares may have identical share provisions.  Accordingly, exchanging Class A common shares for Class B shares will not be considered to be a disposition if they have identical rights.

In light of the long-standing CRA position, it is common in s. 86 reorganization spin-off transactions for the "new" common shares issued on the s. 86 reorganization to have two votes per share.  See, for example, Fission and IMZ.

Neal Armstrong.  Summary of 11 October 2013 APFF Round Table Q. 13, 2013-0495821C6 F ("Subsection 85(1) and cost base isolation transactions") under s. 85(1).