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Alexandra MacLean indicated that Univar signifies that, in the context of a consideration of the general anti-avoidance rule, there can be an examination of what the taxpayer could have done versus what the taxpayer did do – but CRA is examining what limitations should be placed on this approach. ...

19 December 2018- 12:14am CRA provides a s. 84(2) ruling for a resource property spin-off by a public resource company Email this Content A public resource company effected a spin-off of one its properties by transferring it on a taxable basis to a wholly-owned Newco in consideration for Newco shares, and then distributing its Newco shares to its shareholders as a stated capital distribution. ...

The estate transferred its stepped-up preferred shares of an investments holding company (Holdco) to a Newco in consideration for shares of Newco – then one year after this, Newco will effect a reduction in the paid-up capital of such shares through the issuance of 8 promissory notes payable to the estate. ...

However, CRA stated that there likely will be an SDA where the plan also provides that members can elect to reduce or forego future bonus entitlements and accrued vacation pay entitlements for additional allocations (of equal amounts) to the member’s account (to be paid out at the earliest of termination of employment, retirement or death) – stating that these additional features “appear to be primarily motivated by tax deferral considerations.” ...

12 March 2019- 11:59pm CRA provides numerical speed limits on a pipeline for a company with a marketable securities “business” Email this Content CRA has provided the usual rulings for a pipeline transaction in which the estate sells a company with a “business” of investing and trading in marketable securities to a Newco for consideration comprising mostly a note, followed by an amalgamation of the two companies and the repayment by Amalco to the estate of the note over time. ...

25 March 2019- 12:46am Ipsen SA acquisition of Clementia Pharmaceuticals includes a significant contingent cash payment (CVR) Email this Content The cash consideration for the proposed acquisition of Clementia Pharmaceuticals (a Canadian-incorporated NASDAQ-listed clinical-stage biopharmaceutical company) by a Canadian Buyco subsidiary of Ipsen S.A. includes not only an up-front cash payment of US$25.00 per share (for an aggregate of US$1.04 billion) but also a deferred payment, on the achievement by the end of 2024 of FDA approval of a new drug application made by Clementia, in the form of a contingent value right ("CVR") of US$6.00 per Share. ...

2 July 2019- 11:59pm CRA finds that ss. 6(1)(a) and 148(7) applied simultaneously to the transfer of a life insurance policy by an employer to an arm’s length employee Email this Content As a result of an arm’s length employee no longer being considered to be a key employee, her employer transfers its “key person” permanent life insurance policy on her life to her for nominal consideration. ...

In addition, the usual Pt IV tax considerations should be addressed including that shares held by a trust will not qualify for the votes and value test in s. 186(4)(b). ...

17 March 2020- 11:37pm CRA indicates that adding a closely related party to ETA s. 156 elections does not require revocation of previous elections Email this Content CRA indicated that when the parties to a nil consideration (ETA s. 156) election (say, Company A and B) wish to add another member of the closely related group (Company C) as an electing party, it is not necessary to revoke the existing election, and it is sufficient for “Company C [to] simply file a new election naming Company A and B as closely related members.” ...

CRA ruled on the implementation by the estate of conventional pipeline transactions for Opco 2 (whereby it sells Opco 2 to a Newco formed by it in consideration for a note and, at a subsequent juncture, Opco 2 and Newco amalgamate to form Amalco, and Amalco starts progressively paying off the note). ...