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2003 Ruling 2003-000498C- Qualifying disposition from trust to Sub-- summary under Paragraph 107.4(3)(m) Summary Under Tax Topics- Income Tax Act- 101-110- Section 107.4- Subsection 107.4(3)- Paragraph 107.4(3)(m) no increase to ACB of subtrust units where dropdown to the subtrust for no consideration On a transfer by a mutual fund trust (the "Fund") of shares and notes of a subsidiary to a subsidiary trust (the "Trust") of the Fund for no consideration, no amount would be added pursuant to s. 107.4(3) by virtue of such disposition to the cost of the Trust units owned by the Fund. ...

NR4 acquired all the NR6 shares from NR1 at FMV in consideration for an interest-bearing note (Note1). ... " S. 95(2)(a)(ii)(D)(II) also was not available as "NR2 acquired Note1 in consideration for the issuance of Note2…[so that] the property acquired was not shares of another foreign affiliate" and, furthermore "NR2 did not acquire any property upon the contribution of Note1 to the capital of NR3. ... Upon further consideration, we are of the view that subclause 95(2)(a)(ii)(D)(II)...applies in the circumstances.... ...

14 March 2016 External T.I. 2016-0626781E5- Neuman Type Situation-- summary under Subsection 56(2) Summary Under Tax Topics- Income Tax Act- Section 56- Subsection 56(2) s. 56(2) likely non-applicable where spouse subscribes nominal consideration for Opco shares and receives a large discretionary dividend The only issued and outstanding share of Opco (which has retained earnings of $500,000) is 1 Class A common share, with a fair market value of $1,000,000 owned by Mr. ... A, for nominal consideration, 1 non-voting Class B preferred share, which is redeemable and retractable “for the fair market value for which it is issued” and entitled to discretionary dividends as and when declared. ... CRA responded: Consistent with… Neuman ….generally, subsection 56(2) will not apply to arrangements involving the payment of dividends by a corporation, provided that the applicable taxpayer does not have a pre-existing entitlement to the dividends and provided that proper consideration was given for the shares when issued. … While we have considered the application of subsection 245(2) in respect of the Neuman type income splitting arrangements in the past and have taken the position that GAAR does not apply, we have also specifically stated that this comment regarding the non-application of GAAR relates only to the Neuman case. ...

4 May 2016 External T.I. 2016-0634551E5- Ss 191(4) and PAC-- summary under Subsection 191(4) Summary Under Tax Topics- Income Tax Act- Section 191- Subsection 191(4) operation of a price adjustment clause to reduce preferred shares’ redemption amount to below the shares’ “specified amount” can result in full Part VI.1 tax The terms of taxable preferred shares specify an amount (not exceeding their issuance consideration) for which they are to be redeemed for the purposes of s. 191(4) and separately contain a price-adjustment clause (“PAC”) for the redemption price, based on the fair market value of the consideration for which they were issued (which did not include taxable preferred shares). ... On the other hand, if the PAC were to become operative to reduce the redemption amount to an amount that is less than the specified amount, the requirement in subsection 191(4), that the specified amount not exceed the fair market value of the consideration for which such shares were issued, would not be met. ...

19 September 2011 External T.I. 2011-0410411E5 F- Attribution- Transfers to Corporations-- summary under Subsection 74.4(2) Summary Under Tax Topics- Income Tax Act- Section 74.4- Subsection 74.4(2) s. 74.4(2) did not apply to the creation of a corporate asset protection structure Holdco's Active Shareholders set up a corporate asset protection structure and introduced certain key employees into the shareholding structure, through the following steps: (i) creation of a new family trust by each Active Shareholder involved in Holdco's business, whose spouse and minor children were the beneficiaries; (ii) Opco incorporated a new corporation ("Group Opco") for the protection of Opco's assets; (iii) Group Opco created a new corporation ("Opco 2") for Opco's day-to-day operations; (iv) Opco transferred all of its business assets (excluding excess cash and investments) to Group Opco, on as. 85(1) rollover basis in consideration for the assumption of liabilities, a promissory note and preferred rollover shares of its capital stock (i.e. non-voting, dividend-paying, redeemable, non-voting shares for an amount equal to the value of the consideration received on the issue of those shares); (v) Group Opco transferred to Opco 2, on a s. 85(1) rollover basis, its accounts receivable, inventory and goodwill in consideration for the assumption of accounts payable, and the issuance to Group Opco of a note and common shares.; (vi) The newly created family trusts and certain key employees subscribed for common shares of Group Opco for a nominal amount; (vii) Group Opco purchased for cancellation the common shares of its capital stock held by Opco for an amount equal to the subscription price for the latter; (viii Holdco and Opco amalgamate; (ix) each family trust shareholder of Holdco was wound-up and its assets (i.e. common shares of the capital stock of Holdco) were distributed to a holding corporation controlled by the Active Shareholder who had proceeded with a freeze of their interest in Holdco in favour of a family trust. ...

15 November 2016 External T.I. 2015-0597921E5- Subsection 138(11.94) election-- summary under Paragraph 138(11.5)(m) Summary Under Tax Topics- Income Tax Act- Section 138- Subsection 138(11.5)- Paragraph 138(11.5)(m) insurance assets transferred to a subsidiary in consideration for assuming obligations of the insurance business could qualify as “reinsurance premiums” In the context of a tax-deferred transfer of an insurance business carried on in Canada under s. 138(11.94), how are the terms “reinsurance premium” and “reinsurance commission” in s. 138(11.5)(m) interpreted? ... We note, however, that the term would not be limited to such assets and that it may apply more broadly to any amounts paid or payable to the transferee as consideration for the assumed obligations in respect of the transferred insurance business.... ... Further, paragraph 138(11.5)(m) of the Act refers to an amount that is paid or payable by the transferee to the transferor, whereas the definition under subsection 1408(1) of the Regulations generally refers to the excess of the premium paid by the policyholder for the policy over the consideration payable by the insurer in respect of the reinsurance or assumption of the risk. ...

23 April 2009 External T.I. 2008-0301241E5 F- Fiducie d'invest. à participation unitaire-75(2)-- summary under Subparagraph 53(2)(h)(i.1) Summary Under Tax Topics- Income Tax Act- Section 53- Subsection 53(2)- Paragraph 53(2)(h)- Subparagraph 53(2)(h)(i.1) CRA could extend IT-369R, para. 10 to avoid ACB reductions to unit trust units where s. 75(2) applies Units of a unit trust (“UT”) that does not qualify as a mutual fund trust (“MFT”) are issued for FMV monetary consideration to arm’s length subscribing unitholders, with the proceeds invested in real estate. ... In the event that subsection 75(2) were to apply in respect of monetary consideration received by the UT in consideration for the issuance of units to a taxpayer, the technical application of subparagraph 53(2)(h)(i.1) would involve the deduction of an amount against the ACB of the taxpayer's capital interest equal to the income designated under subsection 75(2) for a particular year that is otherwise payable to the taxpayer under the trust indenture. ...

CRA responded: [P]aragraph 148(7)(a) would apply to deem the proceeds of the disposition to Opco to equal $50,000 (the greatest of CSV ($500), consideration (nil) and ACB ($50,000)), resulting in a policy gain of nil. ... In cases where the FMV of the interest in the life insurance policy is greater than the ACB of that interest, subsection 148(7) provides for a transfer of the interest on a rollover basis (assuming that the consideration given for that interest and the CSV are equal to or less than the ACB). ... We have brought this situation to the attention of the Department of Finance for their consideration. ...

After noting that clause (iii)(B) of Paragraph N stipulates that “the disposing corporation receives no consideration for the share [of the issuing corporation] other than property that was, immediately before the merger, owned by the issuing corporation and that, on the merger, becomes property of the new corporation,” CRA stated: In our view, while Paragraph N would apply to the cancellation of the shares of FA3 held by FA2, because FA2 would receive no consideration for the shares of FA3, Paragraph N would not apply to the cancellation of the shares of FA2. ... In these circumstances, it is our view that the property of FA3 would be received by FA1 as consideration for the shares of FA2. ...

Could it look through Partnership A to take into consideration Partnership B’s properties when calculating its investment allowance u;nder s. 219(1)(l) (the “Allowance”)? CRA responded: Having given consideration to the purpose of the Branch Tax and noting that a non-resident corporation that is a member of a top-tier partnership would be subject to Branch Tax in respect of its share of taxable income earned through a lower-tier partnership, in our view, it is reasonable to consider that the corporation will also be considered to be a member of a lower-tier partnership for the purpose of subsection 808(4) of the Regulations. ... In the scenario you presented, the non-resident corporate partner may, when calculating its Allowance … “look through” Partnership A to take into consideration Partnership B’s properties. ...