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The same considerations would be relevant for the variant Situation. The initial factors here might be the timing of the transaction (when was HC introduced into the structure), the non-tax reasons for the structure, and any other judicial doctrines, provisions or treaties which might be relevant. ...

A and B, who were the sole shareholders of Opco, each holding 50% of the common shares, each sold 1/3 of their shares to C, for FMV consideration. ...

8 October 2010 Roundtable, 2010-0373191C6 F- Computation of safe income-- summary under Paragraph 55(2.1)(c) Summary Under Tax Topics- Income Tax Act- Section 55- Subsection 55(2.1)- Paragraph 55(2.1)(c) where interest in partnership holding Subco with safe income is rolled into Holdco for prefs, dividends from Subco do not change consolidated SIOH of prefs – or increase commons’ SIOH The partnership interest (in “SENC,” which holds all the shares of Subco, to which safe income is attributable) of an individual (X) was transferred under s. 85(1) at its adjusted cost base rather than its higher FMV to an unrelated holding corporation ("Holdco") in consideration for Class B preferred shares of Holdco. ...

The analysis should be carried out for each year and the adjustments should take into consideration any changes in the shareholdings. d. ...