See Also
H.T. Hoy Holdings Ltd. v. R., 97 DTC 1180, [1997] 2 CTC 2874 (TCC)
An arrangement under which the taxpayer maintained control of a company that it effectively had sold to a purchaser until all the taxpayer's...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | common goal but distinct interests | 121 |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(5) - Paragraph 251(5)(b) | 65 |
Administrative Policy
2021 Ruling 2020-0874961R3 - 55(3)(a) Internal Reorganization
Background
PC1, whose only undertaking was investing in marketable securities was held by Father (through voting common shares and super-voting...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) | rep that trust shareholder has not added arm's length beneficiaries, and s. 55(3)(a) accessed through father's voting control | 238 |
2018 Ruling 2018-0749491R3 - 55(3)(a) Reorganization
A DC which holds a rental property and an investment portfolio and is owned by Parent and his four children will spin off its investment portfolio...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) - Subparagraph 55(3)(a)(ii) | spin-off of investment portfolio (but not rental property) by DC to 4 children’s respective TCs which father controls with special voting shares | 574 |
| Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) - Paragraph 186(1)(b) | circularity avoided through intervening TC year end | 113 |
2017 Ruling 2016-0675881R3 - Paragraph 55(3)(a) Internal Reorganization
CRA has ruled on a s. 55(3)(a) split-up of a real estate rental corporation (Canco) whose common shares were held by Son Holdco and Daughter...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) | division of rental real estate company between holdcos for 2 children but with parents' holdco retaining voting control | 579 |
| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(e) | UCC on s. 55(3)(a) spin-off prorated based on relative capital cost rather than FMV | 174 |
| Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) - Paragraph 186(1)(b) | where circular RDTOH calculation arises on spin-off transaction, it is for the TSOs to sort out which corporations should bear Part IV tax | 249 |
14 August 2012 External T.I. 2012-0450041E5 F - subsection 55(4)
Parent holds all of the (controlling) special voting shares of Holdco as well as wholly-owning Parent Holdco which, in turn, owns more than half...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) - Subparagraph 55(3)(a)(ii) | s. 55(3)(a)(ii) exclusion avoided by distributing shares out of unrelated-person trust | 152 |
7 October 2011 Roundtable, 2011-0399401C6 - Butterfly, life insurance policies, grandfathering
If a butterfly split-up of a distributing corporation (DC) between the two corporations of the two children of a deceased parent had instead been...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution | CSV of life insurance policy was a cash asset - FMV excess could be an investment asset if no cash-out intention | 212 |
| 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 |
9 November 2010 External T.I. 2010-0380661E5 F - Internal Reorganization
Son Inc. and Daughter Inc. (wholly-owned by Son and Daughter) and Father Inc. (owned by Father, Son and Daughter and a family trust with them as...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) - Subparagraph 55(3)(a)(ii) | two siblingcos, although not related to each other, were related to dividend recipient on spin-off transaction | 278 |
2 November 2009 External T.I. 2009-0317541E5 F - Transfer to Corporations Owned by Brothers
A holds preferred shares of Corporation A directly (Class B shares with a redemption amount and ACB (reflecting a previous crystallization...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(5) - Paragraph 55(5)(e) - Subparagraph 55(5)(e)(ii) | s. 55(3)(a) exemption turned on s. 55(5)(e)(ii) | 398 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii) | interest on debt assumed by Holdco to acquire non-dividend-bearing prefs of Opco was non-deductible even though commons also acquired – but amalgamation cured | 264 |
27 April 2004 External T.I. 2004-0062091E5 F - 55(3)(a)
The children shareholders of two corporations (S1 and S2) that have been controlled for a number of years by their parents, transfer a portion of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.01) - Paragraph 55(3.01)(a) | s. 55(3)(a) exception applicable where spin-off from one parent-controlled corporation to another, notwithstanding the children shareholders are unrelated under s. 55(5)(e)(i) | 244 |
6 November 2002 External T.I. 2002-0170545 F - Section 55(3)(a) - Exception55(3)(a)
The only shareholders of A Inc. were Mr. A, who had de jure control, and his children, who held all the participating shares. A Inc. transferred...
Articles
Michael N. Kandev, Abraham Leitner, "Through the Looking Glass: Dividing up a Family Business in a Canada-US Cross-Border Context", Selected US Developments, 2011 Canadian Tax Journal, Vol 59, No. 4, p. 899
CRA has indicated that s. 55(4) should not apply where the parent retains control of the corporate group in order to continue being involved in...