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

Principal Issues: (1) Whether a power of attorney to find a prospective buyer for the shares of the capital stock of a corporation held by a departing shareholder is a right under subsection 256(1.4). (2) Whether an automatic redemption by a corporation of shares of its capital stock held by a departing shareholder is a right under subsection 256(1.4). (3) Whether an automatic redemption by a corporation of shares of its capital stock held by a departing shareholder is a right under paragraph 251(5)(b).

Principal Issues: Does clause (c)(ii)(A) of the definition of "total charitable gifts" in subsection 118.1(1) apply to a graduated rate estate ("GRE")?

Position: Yes

Reasons: A GRE or a former GRE is a trust

7 October 2016 APFF Roundtable

Question 6

Level of donations made: can they be reported in the future

Position: See document

Reasons: See document

October 2016 APFF Roundtable

QUESTION 5

5A ELECTRIC VEHICLES AND ELECTRICITY COST DEDUCTION