Principal Issues: Whether our position with respect to Employee Buycos, as stated at the CRA Panel held at the 2012 CTF Annual Conference, has changed as a result of the Tax Court of Canada decision in Poulin et al.

Position: No.

Principal Issues: Does income that is attributed or allocated to another taxpayer, under certain specified provisions of the Act, need to be reimbursed to the taxpayer?

Position: No.

Reasons: These provisions neither require such a reimbursement nor do they provide rules that specify the treatment of such a reimbursement.

7 OCTOBER 2016 APFF FEDERAL ROUNDTABLE - 2016 CONFERENCE

Question 19

Income Allocation Rules and Income Payment

Principal Issues: Can a non-resident individual holding shares of a Canadian corporation that have been deemed to be disposed of upon the individual's emigration from Canada but that are not taxable Canadian properties throughout the period from emigration to actual disposition benefit from the credit under section 119 in respect of Part XIII paid on dividends from the corporation?

Position: No

Principal Issues: 1. Does the CRA consider that a deferred gain resulting from the application of subsection 261(10) can be realized in the year ending immediately before an acquisition of control if an election pursuant to paragraph 111(4)(e) is made with respect to a pre-transition debt? 2. If so, do subsections 40(10)/(11) apply with respect to the pre-transition debt such that the same gain is not realized again when the debt is repaid?

Position: 1. No. 2. No.

PRINCIPAL ISSUES: In a particular situation, there is a class of preferred shares that are non-voting, non-participating, with a redemption value equal to the adjusted cost base and having the right to discretionary dividends. In that particular situation, there is an assumption that the declaration of any discretionary dividend on the preferred shares do not result in an increase of the capital gain on the preferred shares immediately before the dividend. The question is whether subsection 55(2) would apply in that particular situation.

Principal Issues: 1.Whether a trust that ceases to be resident in Canada can make an election under subsection 220(4.5)? 2. Whether the Minister can, pursuant to subsection 220(4.54), extend the time for making such election and for furnishing and accepting security under that subsection?

Position: 1. Yes. 2. Yes, if the Minister considers it just and equitable to do so.

Reasons: Application of the Act.

XXXXXXXXXX 2015-060805

Sylvain Grégoire

October 18, 2016

Mr. XXXXXXXXXX,

Principal Issues: Whether subsection 84(2) and/or 245(2) would apply in a situation involving a partial leveraged Buy-out.

Position: General comments provided.

Reasons: Based on jurisprudence and previous positions.

APFF 2016

Question 12

Partial sale of an operating company and monetization of ACB (subsection 84(2))

Principal Issues: Is the asset recorded as a capital property as a result of a lease of an asset considered used principally in an active business carried on in Canada for the purpose of the definitions of « qualified small business corporation share » (« QSBCS ») in subsection 110.6(1) and of « small business corporation » (« SBC ») in subsection 248(1)?

Position: No

Principal Issues: Whether the condition under subparagraph 110.6(1.3)(a)(i) is met when a child acquires a land from his estate’s father during the seizin by the estate?

Position: If the estate is a personal trust as defined under subsection 248(1) the condition under subparagraph 110.6(1.3)(a)(i) may be satisfied for the child.

Reasons: Previous positions and wording of the Act.

7 October 2016 APFF

QUESTION 10

Principal Issues: Does the CRA position in paragraph 22 of Interpretation Bulletin IT-268R4 apply to a person who is a shareholder but not an employee?

Position: No

Reasons: The CRA is not ready to expand the position taken in this interpretation bulletin to other situations. Where the shareholder is not an employee of the corporation, the CRA is of the view that the residence is used by the shareholder and not for the business operation.

7 October 2016 APFF Roundtable Questions