Subsection 191(1) - Definitions
Private Holding Corporation
Administrative Policy
3 March 1992 T.I. (Tax Window, No. 17, p. 22, ¶1776)
A venture capital corporation would not meet the requirement that its only undertaking be "the investing of its funds" if it has a substantial...
Subsection 191(2) - Substantial interest
Administrative Policy
91 C.R. - Q.7
The beneficiary of a trust owning shares of a corporation is not itself considered to have a substantial interest.
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|---|---|---|
| Tax Topics - General Concepts - Ownership | 14 |
88 C.R. - Q.38
The determination of whether a shareholder has a substantial interest in a corporation is made before rather than after the redemption of the...
Subsection 191(3) - Idem [Substantial interest]
Administrative Policy
18 December 2013 External T.I. 2013-0511101E5 F - Substantial interest - Part VI.1
As a result of an estate freeze, X held non-voting and non-participating Class B shares of a Quebec CCPC (the "Corporation"). An inter vivos trust...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | no disposition of shares that became voting by operation of law (due to cancellation of voting shares) | 171 |
| Tax Topics - Income Tax Act - Section 249 - Subsection 249(4) | voting rights shifted to 2nd trust with same trustees: no control change | 179 |
| Tax Topics - Income Tax Act - Section 251.2 - Subsection 251.2(2) - Paragraph 251.2(2)(a) | no acquisition of control where votes pass from trust to an estate with the same individuals as executors | 187 |
Subsection 191(4) - Deemed dividends
See Also
Dangerfield v. Canada, 2004 DTC 6025, 2003 FCA 480
A court order that specified that child support was to commence on May 1, 1997 thereby established a "commencement day" for purposes of s. 56.1(4)...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 56.1 - Subsection 56.1(4) - Commencement Day | 56 | |
| Tax Topics - Statutory Interpretation - Resolving Ambiguity | 57 |
Henderson Estate v. M.N.R, 73 DTC 5471, [1973] CTC 636 (FCTD), aff'd 75 D.TC 5332, [1975] C.TC 485 (FCA)
Cattanach J. indicated that with respect to a share warrant, shares have been issued by the company, whereas no shares are issued on the granting...
Administrative Policy
4 May 2016 External T.I. 2016-0634551E5 - Ss 191(4) and PAC
The terms of taxable preferred shares specify an amount (not exceeding their issuance consideration) for which they are to be redeemed for the...
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| Tax Topics - General Concepts - Price Adjustment Clause | effectiveness of share price adjustment clause on previously redeemed preferred shares can trigger Part VI.1 tax | 56 |
28 January 2008 External T.I. 2007-0250831E5 F - Part IV.1 and VI.1 Taxes - Subsection 55(2)
Retractable preferred shares ("Rollover Preferred Shares") of a CCPC (“Subco”) held by a public corporation (“Pubco”) which had ceased to...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) - Subparagraph 55(3)(a)(i) | s. 55(3)(a)(i) exception does not apply to a redemption of a preferred share giving rise to a deemed dividend irrespective of conversion of that dividend to capital gain | 358 |
| Tax Topics - Income Tax Act - Section 191.1 - Subsection 191.1(1) - Paragraph 191.1(1)(a) | dividend subject to s. 55(2) can also be subject to Pt. VI.1 tax | 110 |
| Tax Topics - Income Tax Act - Section 187.2 | application of Pt. IV.1 tax to a deemed dividend is ousted to the extent s. 55(2) applies | 115 |
25 September 1991 Memorandum (Tax Window, No. 10, p. 5, ¶1480)
The conditions in s. 191(4) are not met unless the share terms specify a dollar amount for which the shares are to be redeemed.
15 May 1990 T.I. (October 1990 Access Letter, ¶1483)
Where an individual transfers shares of Opco to Holdco in consideration for retractable preferred shares whose redemption amount will be...
May 1990 Vancouver District Office Round Table (October 1990 Access Letter, ¶1445)
Where an asset with a fair market value of $100 is transferred to a corporation for a preferred share having a redemption amount of $100 plus any...
May 1990 Meeting of Toronto Chapter of I.C.A.O. (October 1990 Access Letter, ¶1445)
"The terms or conditions of the share or the agreement in respect of the share must specify an actual dollar amount for the purposes of...
89 C.R. - Q.20
"Unless the terms and conditions of the share or an agreement in respect of the share specified a different amount for the purposes of ss.191(4),...
88 C.R. - Q.37
Provided that the preferred shares received by minority common shareholders on an amalgamation squeeze-out specify in their terms a redemption...
Articles
Charles P. Marquette, "Hybrid Sale of Shares and Assets of a Business", Canadian Tax Journal, (2014) 62:3, 857 – 79.
CRA interpretation of specified amount (pp. 877-8)
[I]n a hybrid transaction in in which a redemption of the shares will trigger a deemed...
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| Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) | 520 |
Subsection 191(5) - Where s. (4) does not apply
Administrative Policy
2021 Ruling 2021-0904311R3 F - Butterfly Reorganization
CRA ruled on transactions under which the assets of a farming corporation (DC) owned by the two farmer brothers were split under a net asset...
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| Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution | butterfly transaction for a farming corp (DC) of two brothers coupled with an immediate gift of shares of DC and TC to their respective sons under s. 73(4.1) | 544 |
| Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) - Paragraph 186(1)(b) | circularity avoided through intervening taxation year end of transferee corp | 74 |
30 November 1995 Ruling 9609563 - SHORT-TERM PREFERRED SHARES AND TAXABLE PREFERRED SHARES
Although shares would be short-term preferred shares if the price paid to a shareholder therefor was in excess of the greater of the fair market...
Articles
John O’Connor, Eryn Fanjoy, "Substantial Issuer Bids: A Tax Update", Corporate Finance, Vol. XXIV, No 1 (Federated Press), p.1, 2021
Market price re setting specified amount in substantial issuer bids (“SIBs) (pp. 5-6)
It is interesting to examine Canadian market practice with...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxable Preferred Share - Paragraph (f) | 65 |