The ASPA rules can have an unexpected impact on share purchase transactions

Where a target holds partnerships which have a different fiscal period end, and to which the adjusted stub period accrual (ASPA) rules apply, the application of the ASPA rules may result in the partnership income being recognized in hands of the target at times that are substantially different from the times at which such income was earned in the hands of the partnerships, including potentially in the second taxation year of the target following the acquisition of control. This should be taken into account in assessing the application of clauses in the Agreement of Purchase and Sale which allocate respective responsibilities for target taxes.

Neal Armstrong. Summary of Janette Pantry and Robyn Campbell, “Partnerships and ASPA on Acquisition of Control,” Canadian Tax Highlights, Vol. 24, No. 10, October 2016, p. 3 under s. 34.2(1) - adjusted stub period accrual.