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3 January 2019- 1:26am CRA requires that a transfer of an FA with exempt earnings by FA Holdco to Can Subco occur at less than the shares’ FMV Email this Content A foreign affiliate (New FA) of a Canadian corporation (ACo) transferred all the shares of FA1 to a Canadian-resident subsidiary (BCo) of ACo in consideration for a note of BCo whose amount equalled the sum of the relevant cost base of the FA1 shares and the net surplus (being exempt surplus) of FA1 (such sum, the “Transfer Amount”). ...

Like other aspects of the financial services definition, this legislative drafting is conceptually confused and backwards as it focuses on the distribution by the investee being exempt rather than on explicitly exempting this distribution viewed as consideration for the capital provided by the investor. ...

Thereafter, Trust1 will engage in a pipeline transaction in which it will transfer its preferred shares of Opco1 to a new CCPC (Newco) in consideration for Newco preferred shares with full paid-up capital, at the same time as the other shareholders of Opco1 transfer their shares on a s. 85(1) rollover basis to Newco. ...

. … However, in finding that the government could now resile from its undertaking, he stated: Where political issues overtake a promise or undertaking given by government, and where contemporary considerations impel a different course, provided a bona fide decision is taken on genuine policy grounds not to adhere to the original undertaking, it will be difficult for a person who holds a legitimate expectation to enforce compliance with it. ...

20 March 2019- 12:54am CRA rules on hybrid post-mortem 164(6)/pipeline transactions Email this Content CRA has provided the usual rulings for a pipeline transaction in which the estate with a resident beneficiary sells a company (Opco) with apparently some sort of real estate business to a Newco for consideration consisting mostly of a note, followed by an amalgamation of the two companies and the repayment by Amalco to the estate of the note over time. ...

28 March 2019- 7:13pm CRA will only extend Daishowa beyond reforestation and reclamation obligations on a case-by-case basis Email this Content Daishowa found that reforestation obligations were an intrinsic factor that reduced the purchase value of the timber tenures rather than a "distinct existing liability" that was assumed by the purchaser as additional consideration for the purchase. ...

28 March 2019- 7:14pm Plains Midstream – Federal Court of Appeal finds that s. 16(1) can only apply to a debtor if it equally applies to the creditor Email this Content As part of a complex set of transactions, a predecessor of the taxpayer agreed to assume a $225M loan that was due in perhaps 43-years’ time and that was non-interest-bearing (except in the remote event of oil production from the Beaufort Sea) in consideration inter alia for the payment to it of $17.5 million by the debtor. ...

7 April 2019- 9:51pm Gillen – Federal Court of Appeal affirms finding that property was not used in a business for s. 110.6(14)(f)(ii) purposes when it was beneficially acquired and dropped-down on the same day Email this Content Webb JA affirmed a finding of D’Arcy J that the beneficial ownership of some applications to the Saskatchewan government for potash exploitation rights that had been acquired by a limited partnership had been immediately on-transferred by it to a wholly-owned corporation for share consideration (presumably on an s. 85(2) rollover basis), so that their fleeting beneficial ownership by the LP did not qualify them as being used in a Canadian active business, as required under the s. 110.6(14)(f)(ii) test. ...

Additional considerations arise in transfer-pricing disputes, where a Treaty mutual agreement procedure may be engaged. ...

CIBC argued that these fees were (1) consideration for intangible personal property (the Aeroplan Miles) that were supplied by Aeroplan, and (2) that such IPP was exempted from GST as being a supply of “gift certificates.” ...