Subsection 55(1)

See Also

Daggett v. MNR, 93 DTC 14 (TCC)

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Distribution

See Also

Northern Hot Oil Services Ltd. v. The Queen, 97 DTC 12107 (TCC)

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Administrative Policy

2019 Ruling 2018-0758411R3 - Multi-wing split-up net asset butterfly

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Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) - Paragraph 186(1)(b) Pt. IV tax circularity avoided through winding-up dividend in subsequent year 144

2018 Ruling 2017-0733011R3 - Split-up Butterfly

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2018 Ruling 2017-0714411R3 - Butterfly Reorganization

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2017 Ruling 2017-0699201R3 - Cross-border Butterfly

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Permitted Exchange - Paragraph (b) cross-border butterfly including preliminary transfer of DC to foreing parent to come within “permitted exchange” 444
Tax Topics - Income Tax Act - Section 143.3 - Subsection 143.3(3) s. 143.3(3) inapplicable on a 4-party exchange 234
Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base full cost of property acquired under 4-party exchange 222
Tax Topics - Income Tax Act - Section 212.1 - Subsection 212.1(1.1) - Paragraph 212.1(1.1)(b) application on 4-party exchange 291

2017 Ruling 2016-0646891R3 - Pipeline and subsequent Split-up butterfly

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Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) pipeline coupled with split up butterfly in favour of TCs for grandchild residuary trusts 543
Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) - Paragraph 186(1)(b) circularity avoided through 2nd dividend arising on winding-up of DC 145

2017 Ruling 2016-0674681R3 - Sequential Split-Up Butterfly

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Tax Topics - Income Tax Act - Section 129 - Subsection 129(1) capital gain deliberately triggered to generate CDA and RDTOH addition and year end change granted to isolate dividend refund 543
Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.1) - Paragraph 55(3.1)(a) sale of securities for cash proceeds that are reinvested, and tendering shares for shares of offeror 58
Tax Topics - Income Tax Act - Section 249.1 - Subsection 249.1(7) CRA accommodates year end change so that dividend refund of full RDTOH balance is generated in Year 1 210

2016 Ruling 2015-0616291R3 - Cross-Border Butterfly

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Permitted Exchange two successive permitted exchanges contemplated 199

2013 Ruling 2012-0459781R3 - Cross border butterfly

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.2) - Paragraph 55(3.2)(h) 4-party exchange to avoid s. 55(3.2)(h) 115
Tax Topics - Income Tax Act - Section 212.1 - Subsection 212.1(1.1) - Paragraph 212.1(1.1)(b) PUC grind where shares issued in 4-party exchange 220

2015 Ruling 2014-0552871R3 - Split-Up Butterfly

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) post-butterfly sale of distributed shares by one TC to the other 63
Tax Topics - Income Tax Act - Section 20 - Subsection 20(24) deferred revenue treated as boot 53

2015 Ruling 2014-0558831R3 - No-type of property spin-off butterfly

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Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.4) replacement stock options issued by Spinco treated as boot 112
Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) new common shares with same attributes as old subject to rights of new special shares/pro rata PUC 164
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(d) proration of CEC preliminary to butterfly 156
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition splitting of fee for management of 2 divisions not a disposition of contract 145

8 June 2016 CTF Technical Seminar: Update on s. 55(2)

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) integration principle/expanded scope/no contemplated sale required/no blanket exemptons/policy similar to boot rules 348
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) safe income appropriately reduced by incentive reductions 29
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.5) significant reduction in value of nominal value share 84

27 April 2016 External T.I. 2016-0633101E5 F - Attribution of safe income

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) discretionary dividend will not reduce safe income attributable to the other class of discretionary dividend shares to the extent the dividend is taxable under s. 55(2) 346

2015 Ruling 2014-0548491R3 - Split-up XXXXXXXXXX Butterfly

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2015 Ruling 2013-0490651R3 - Single-wing Split-up Farm Butterfly

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2014 Ruling 2014-0533601R3 - Spin-off butterfly - subsection 55(2)

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) matching of PUC of cross-shareholdings to match Part IV tax 152
Tax Topics - Income Tax Act - Section 84 - Subsection 84(1) stated capital distribution effected by set-off 77
Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) new common shares distinct on basis of right to interim financials 97

2014 Ruling 2014-0530961R3 - Cross-Border Butterfly

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.1) - Paragraph 55(3.1)(b) - Subparagraph 55(3.1)(b)(i) pro rata allocation of Foreign Spinco debt 180
Tax Topics - Income Tax Act - Section 86.1 - Subsection 86.1(2) spin-off by U.S. pubco of U.S. spinco after Canadian butterfly 115

2014 Ruling 2013-0513211R3 - Butterfly Transaction

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Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) split-up CCPC butterfly was structured to avoid Part IV circularity 95

2014 Ruling 2013-0498651R3 - Single-Wing Split-up Butterfly

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2014 Ruling 2012-0446701R3 - Butterfly reorganization

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2014 Ruling 2012-0432441R3 - Butterfly reorganization

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2013 Ruling 2013-0491651R3 - Cross-Border Butterfly

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.1) - Paragraph 55(3.1)(a) preliminary LP acquisition, cross-border debt repayments and dividend: not part of series 230
Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.1) - Paragraph 55(3.1)(b) - Subparagraph 55(3.1)(b)(i) cross-border b/f with 3-party exchange, pro rata application of upper tier debt, cash-out of ineligible shareholders 501
Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) exchange for substantively identical common shares 124

2013 Ruling 2013-0502921R3 - Split-Up Butterfly - Farm

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Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) split-up b/f of farm CCPC with unresolved circularity issue 242

2014 Ruling 2013-0498951R3 - Split-up Butterfly

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2013 Ruling 2013-0490341R3 - No-type of property spin-off butterfly

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Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) post butterfly FX loan by TC to DC 242

2013 Ruling 2013-0475681R3 - Family holding butterfly transaction

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2013 Ruling 2012-0449611R3 - single-wing butterfly reorganization

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2012 Ruling 2012-0460811R3 - Public Company Spin-Off Butterfly

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2012 Ruling 2011-0425441R3 - Cross Border Butterfly

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.1) - Paragraph 55(3.1)(b) - Subparagraph 55(3.1)(b)(i) upper tier debt applied pro rata re 10% limitation 383

2012 Ruling 2011-0416001R3 - Split-up butterfly

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2012 Ruling 2012-0439381R3 - Cross-border spin-off butterfly

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2012 Ruling 2011-0431101R3 - Cross-border spin-off butterfly

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2012 Ruling 2011-0413661R3 - Butterfly

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7 October 2011 Roundtable, 2011-0399401C6 - Butterfly, life insurance policies, grandfathering

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.1) - Paragraph 55(3.1)(a) a policy loan under a life insurance policy to reduce its CSV would trigger s. 55(3.1)(a) 169
Tax Topics - Income Tax Act - Section 55 - Subsection 55(4) s. 55(4) inapplicable if the principal reason for parent’s control of DC was parent's economic interests 178

2009 Ruling 2008-0304371R3 - Single-Wing Butterfly

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Tax Topics - Income Tax Act - Section 20 - Subsection 20(24) portion of assets transferred to transferee corporation on butterfly treated as s. 20(24) payment 70

2008 Ruling 2007-0241221R3 - 55(3)(b) butterfly reorganization

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2008 Ruling 2007-0251681R3 - Butterfly and freeze of an estate

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2007 Ruling 2006-0215751R3 - Cross-border butterfly

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2006 Ruling 2006-0197501R3 - Multiple-wing Butterfly

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2006 Ruling 2006-0181061R3 - Butterfly Distribution - XXXXXXXXXX

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Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(e) UCC in butterfly is proportionate UCC 129

2004 Ruling 2003-004375 -

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2002 Ruling 2002-0140733 - XXXXXXXXXX - Sequential Butterfly

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2000 Ruling 2000-0040663 - Butterfly reorganization

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1999 Ruling 9902623 - BUTTERFLY REORGANIZATION

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30 November 1997 Ruling 9801803 - PUBLIC BUTTERFLY

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30 November 1997 Ruling 9800973 - BUTTERFLY RULING (SPIN-OFF)

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30 November 1995 Ruling 9632593 - DIVISIVE REORGANIZATION

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1996 Corporate Management Tax Conference Roundtable, Q. 16 (Canadian Tax Foundation), at 24:19

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Words and Phrases
reorganization

Robert J.L. Read, "Section 55: A Review of Current Issues," 1988 Conference Report (Canadian Tax Foundation), 18:1-28

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Articles

Christian Desjardins, Nik Diksic, "Cross-Border Butterflies in the Context of Public Spin-Off Transactions", 2015 CTF Annual Conference paper

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Permitted Exchange

Administrative Policy

2016 Ruling 2015-0616291R3 - Cross-Border Butterfly

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution 2 successive permitted exchanges in cross-border butterfly/deferred revenue not a liability/agreements between DC And TC re certain allocations so as to affect 3 types of property 1699

2012 Ruling 2011-0431101R3 - Cross-border spin-off butterfly

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Paragraph (b)

Administrative Policy

2017 Ruling 2017-0699201R3 - Cross-border Butterfly

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution cross-border butterfly with 4-party exchange and preceding distribution of DC to foreign parent to qualify as permitted exchange/rental property valued at nil/post-butterfly equaling cash payment 1140
Tax Topics - Income Tax Act - Section 143.3 - Subsection 143.3(3) s. 143.3(3) inapplicable on a 4-party exchange 234
Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base full cost of property acquired under 4-party exchange 222
Tax Topics - Income Tax Act - Section 212.1 - Subsection 212.1(1.1) - Paragraph 212.1(1.1)(b) application on 4-party exchange 291

8 October 2010 Roundtable, 2010-0373211C6 F - Butterfly Transaction - Permitted Exchange

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.1) - Paragraph 55(3.1)(b) issuance of shares by TC after the DC distribution without AOC of TC does not engage s. 55(3.1)(b) 212

Safe Income Determination Time

See Also

Les Placements E&R Simard Inc. v. The Queen, 97 DTC 1328 (TCC)

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Administrative Policy

2015 Ruling 2015-0589471R3 - Earnout

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Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(g) 5-year earnings based earnout for sale of Holdco common shares by Opco to key employee 841
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) s. 85(1) rollover available on dirty s. 85 exchange 92
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) utilization of safe income as earned through a contemplated succession of dividends of all the annual earnings 178
Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(a) transactions for using s. 7 rules on sale of non-treasury shares 212

15 November 2016 Roundtable, 2016-0672321C6 - Guidance on determination of safe income

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) annually recurring dividends are not a series of transactions for safe-income determination purposes/CRA provision of old returns/safe income reduced by contingent amounts 623

Articles

Doron Barkai, Alexander Demner, "Dealing with New Subsection 55(2): Issues and Strategies", 2016 Conference Report (Canadian Tax Foundation), 6:1–56

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Rick McLean, "Subsection 55(2): What Is the New Reality?", 2015 CTF Annual Conference paper

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