Principal Issues: A) Mr. X is a policyholder of an interest in a life insurance policy which has no cash surrender value. Mr. X wants to transfer the policy to its wholly-owned corporation for no consideration. Whether the deemed proceeds of the disposition of the interest in the policy to Mr. X would be equal to the ACB pursuant to subsection 148(7) as proposed in the Legislative Proposals Relating to Income Tax, Sales Tax and Excise Duties released on July 29, 2016 and would take precedence over subsection 69(1)?

Principal Issues: Does the designated benefit eligible to be transferred to the surviving spouse's RRIF or RRSP under paragraph 60(l) have to be reduced by the RRIF minimum amount when the transfer occurs in a year that is different than the year of death?

Position: Yes

Reasons: This is the result of the element C in the formula of the eligible amount in subsection 146.3(6.11).

7 OCTOBER 2016 APFF FEDERAL ROUNDTABLE ON FINANCIAL STRAEGIES AND INSTRUMENTS - 2016 CONFERENCE

Question 2

Principal Issues: Whether subsection 15(1) could apply to the transfer (without consideration) by a corporation of its critical illness insurance policy to its sole shareholder?

Position: Yes in the situation described.

Reasons: No consideration paid by the shareholder.

7 October 2016 APFF Financial Strategies and Financial Instruments Roundtable - 2016 Conference

Question 1

Principal Issues: 1) Will section 7 and subsection 7(1.1) apply to the issuance of shares when those shares are issued as a payment of a bonus granted in accordance with an employment contract that provides for such a bonus when certain conditions are met?
2) If the employment contract provides the employee with the choice to receive the bonus in cash or in shares and the employee chooses to receive the bonus in shares, will our answer be the same?

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,