CRA confirms its position that the lossco in a loss shift should have an independent source of income

CRA has quoted with approval its statement in Income Tax Technical News No. 30 dated May 21, 2004 that in a transaction to shift losses from a parent company to its subsidiary, the parent should have "other assets … that can generate sufficient income to pay the dividends on the preferred shares held by the subsidiary."

Neal Armstrong.  Summary of 16 June 2014 T.I. 2013-0515431E5 under s. 111(1)(a).