Can a corporation ("Newco") which was incorporated solely for the purposes of facilitating the transfer of property between two other corporations, and which will be wound-up into another corporation ("Successorco") immediately after the transfer (i.e. Newco may exist for a very brief period as a separate entity), register and claim input tax credits on tax paid on the acquisition of such property? Revenue Canada stated:
Revenue Canada will allow, on an administrative basis, Newco to register and to be eligible for ITCs provided that no loss of revenue will result (i.e. the assets are ultimately destined for use exclusively in the course of the commercial activity of the ultimate owning corporation). As a result, if Corporation A (from which Newco acquires the property) used the assets exclusively in the course of its commercial activities and if Successorco will use the assets exclusively in the course of its commercial activities, we will permit Newco to register and then claim ITCs in respect of GST paid on the transfer of the assets from Corporation A to Newco. Should the ITC not be claimed by Newco prior to the wind-up, Successorco would be entitled to claim the ITC after the wind-up by virtue of the fact that paragraph 272(a) deems the other corporation (Successorco) to be a continuation of the particular corporation (Newco) for the purposes of applying the provisions of Part IX in respect of property or a service acquired by the other corporation as a consequence of the wind-up; however, it will be necessary for Newco to have been registered prior to the wind-up under section 272.
