A Canadian corporate group is applying for the same loss consolidation rulings on an annual basis

The same Canadian corporate group has been applying on an annual basis for rulings on transactions to indirectly shift losses from a holding company with interest expenses (Lossco) to a subsidiary (Opco) which has listed preference shares and does not wish to incur debt. Accordingly, each year Lossco uses the typical triangular loss-shifting techniques to transfer losses to a newco subsidiary (Aco), and then transfers Aco to Opco to be wound-up into Opco under s. 88(1.1). The Additional Information states that it is anticipated that the same exercise "will be undertaken at the beginning of each future taxation year of Lossco."

Ruling applications like this, where there is no uncertainty as to the Directorate’s response, are becoming somewhat less common. Eight months ago, Mickey Sarazin noted that the inventory of rulings has decreased from around 500 about 10 years ago to about 120 now.

Neal Armstrong. Summary of 2015 Ruling 2014-0563151R3 under s. 111(1)(a).