Section 84

Subsection 84(1) - Deemed dividend

See Also

R. v. Golini, 2016 TCC 174

The sole individual shareholder (“Paul Sr.”) of an Ontario corporation (“Holdco”) received a loan from an accommodation party...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) a loan to a shareholder with recourse limited to an asset pledged by the corporation was a shareholder benefit 589
Tax Topics - General Concepts - Sham sham doctrine did not apply to a "minor pretence" 338
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) interest deduction on limited recourse loan 305
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) use of corporate asset to create PUC was abuse of s. 84(1) 250

Aylward v. The Queen, 97 DTC 1097, [1997] 2 CTC 2748 (TCC)

The issuance to the taxpayer of shares having a paid-up capital of $350,000 did not give rise to a deemed dividend because they were in respect of...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Administrative Policy

2018 Ruling 2018-0780201R3 - Post-mortem pipeline

CRA provided rulings for a pipeline transaction in which the estate with a resident beneficiary sells a company (Opco) with apparently a real...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) hybrid post-mortem 164(6)/pipeline transactions with 10% per quarter redemptions following 12 months 396

2015 Ruling 2015-0584151R3 - Conversion of Contributed Surplus to PUC

Background.

The central management and control of ACo, which was originally incorporated under the Country A Corporate Act, shifted to Canada. In...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Paid-Up Capital corporate PUC and capital surplus flowed through on a cross-border continuance 108

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

A spin-off butterfly reorganization by DC includes a preliminary step for distributing a small portion of DC's retained business from its...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

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 55 - Subsection 55(1) - Distribution spin-off by CCPC under Plan of Arrangement of two businesses/matching of PUC of cross-shareholdings to match Part IV tax/leased property as business property 978
Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) new common shares distinct on basis of right to interim financials 97

17 February 2003 External T.I. 2002-0176455 - Amount Added to Paid-up Capital of Shares

Aco holds 30 common shares of Opco (30% of the common shares) having an ACB and PUC of $30 and an FMV of $300 (the net fair market value of all...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

12 August 1994 External T.I. 9325945 - PAID-UP CAPITAL

Where an individual transfers his 5% shareholding in Opco, having a paid-up capital and ACB of $100,000 and a fair market value of $1 million, to...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

23 September 1992 T.I. (Tax Window, No. 24, p. 1, ¶2190)

Where preferred shares having a low paid-up capital are transferred by the shareholder to the corporation in exchange for common shares having a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

92 C.R. - Q.27

Where convertible preference shares having a high stated capital and a low paid-up capital are converted into common shares having both a stated...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

1992 June Hong Kong Seminar, Q. B.8 (May 1993 Access Letter, p. 226)

S.84(9) applies for purposes of s. 94(1).

1992 A.P.F.F. Annual Conference, Q. 1 (January - February 1993 Access Letter, p. 49)

Where an individual exchanges all the outstanding common shares of Opco, having a paid-up capital of $500,000 and a fair market value of $600,000,...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 85 - Subsection 85(2.1) 73

28 August 1991 Memorandum (Tax Window, No. 8, p. 6, ¶1435)

Where preferred shares having a stated capital of $2 million and a paid-up capital of $1 are converted into common shares having a stated capital...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

81 C.R. - Q.6

Where consequences of receiving a s. 84(1) dividend as a result of the paid-up capital of shares issued on a s. 85(1) roll exceeding the fair...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Articles

Brussa, "Capital Reorganizations", 1991 Conference Report, c. 16.

Paragraph 84(1)(b)

Administrative Policy

7 October 2016 APFF Roundtable Q. 21, 2016-0655901C6 F - Section 7 and bonus paid in share

After noting that it considers that where a Canadian-controlled private corporation has agreed in writing “to award a bonus based on the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 7 - Subsection 7(3) - Paragraph 7(3)(a) s. 7 can govern bonuses paid in shares where discretion ceases prior to the issuance 266
Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.1) 7(1.1) applicable to non-discretionary bonus payable in shares 178

Paragraph 84(1)(c)

Articles

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

PUC-streaming under s. 84(1)(c) (pp. 6:45-46)

…CRA has not made any specific comments regarding the potential application of new section 55 to...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Subsection 84(2) - Distribution on winding-up, etc.

Commentary

Benefit of coming within s. 84(2)

Along with the exception described in draft ss. 84(4.1)(a) and (b), and a reorganization of capital described in...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Cases

Canada v. MacDonald, 2013 DTC 5091 [at 5982], 2013 FCA 110, rev'g 2012 TCC 123

In order to make use of available capital losses before emigrating to the United States, the taxpayer sold the shares of his former professional...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Canada v. Vaillancourt-Tremblay, 2010 DTC 5079 [at 6833], 2010 FCA 119

In order to convert their shares of a private company ("MHT") that held preferred shares of a Canadian public corporation ("Videotron") into...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Gilmour v. The Queen, 81 DTC 5322, [1981] CTC 401 (FCTD)

The taxpayer was the sole individual shareholder of a personal corporation ("LVG") which, in turn, owned approximately 1/3 of the common shares of...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
winding-up

Perrault v. The Queen, 78 DTC 6272, [1978] CTC 395 (FCA)

A substantial dividend was not paid on the "winding-up, discontinuance or reorganization" of a company's business because, following the payment...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
winding-up

David v. The Queen, 75 DTC 5136, [1975] CTC 197 (FCTD)

Approximately four months after the corporation of which the taxpayers (the "David group") were shareholders sold its principal business assets,...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
on

Smythe et al. v. Minister of National Revenue, 69 DTC 5361, [1969] CTC 558, [1970] S.C.R. 64

The taxpayers were shareholders of a company (the "old company") who effectively converted its assets to cash through a series of transactions:...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
winding-up

Merritt v. MNR (1941), 2 DTC 513 (Ex Ct), rev'd [1942] S.C.R. 269, 2 DTC 561

The Premier Trust Company ("Premier") acquired all the shares of the taxpayer and other shareholders of the Security Loan and Savings Company...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
winding-up

See Also

Succession Georges Robillard v. The Queen, 2022 TCC 13

The taxpayer, an estate which received shares of a portfolio company (“Holdco”) whose adjusted cost base had been stepped-up under s. 70(5),...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(6) s. 104(6) permitted the deduction of an amount initially treated as a capital distribution 182

Foix v. The Queen, 2021 CCI 52

The shareholders of a private Canadian company (“W4N”) exploiting a valuable item of softwarehad agreed in principle to sell W4N to a U.S....

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
reorganization

Kvas v. The Queen, 2016 TCC 199

The general contracting company (“CIA”) of two brothers was dissolved in January of 2008 (the “Dissolution Date”) for failure to file...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
winding-up
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) involuntary dissolution did not render the corporation a transferor 195

Latham v. The Queen, 2015 DTC 1104 [at 617], 2015 TCC 75

The taxpayers ("John and Diane Latham") owned a corporation ("Farmers"), which rented out buildings to third parties, and to a related company. In...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Other locations for this summary
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) distribution to shareholder reimbursed him for loss as guarantor

Descarries v. The Queen, 2014 DTC 1143 [at 3412], 2014 TCC 75 (Informal Procedure)

The six taxpayers, who were siblings (or a step-daughter of their deceased father), held all the shares, having an aggregate fair market value...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) free to raise an interpretation not advanced by either party 83
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) use of outside basis to step up PUC abused s. 84.1 544

MacDonald v. The Queen, 2012 TCC 123, rev'd 2013 DTC 5091 [at 5982], 2013 FCA 110

In order to make use of available capital losses before emigrating to the United Statees, the taxpayer sold the shares of his former professional...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

McMullen v. The Queen, 2007 DTC 286, 2007 TCC 16

The taxpayer and an unrelated individual ("DeBruyn") accomplished a split-up of the business of a corporation ("DEL") of which they were equal...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) 270
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) 198
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) mutual benefit and same advisors insufficient to establish non-arm's length in structured sale transaction 257
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) arm's length: negotiation based on self-interest 257

Geransky v. The Queen, 2001 DTC 243 (TCC)

The taxpayer who owned a portion of the shares of a holding company ("GH") which, in turn, owned an operating company ("GBC") which was engaged in...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

James v. The Queen, 2000 DTC 2056 (TCC)

After the taxpayer's company was struck from the B.C. Register of Companies and dissolved for failure to file annual returns, the Minister...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

RMM Canadian Enterprises Inc. v. The Queen, 97 DTC 302, [1998] 1 C.T.C. 2300 (TCC)

A non-resident corporation ("EC") approached a business associate who, along with two other individuals, formed a Canadian corporation ("RMM") to...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

McNichol et al. v. The Queen, 97 DTC 111, [1997] 2 CTC 2088 (TCC)

The taxpayers sold their shares of a corporation ("Bec"), whose assets (following a sale of real estate) consisted largely of cash, to a corporate...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) 234
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) 3rd-party purchaser, of cash-rich company, that looked to its own interests dealt at arm's length 117

Kennedy v. MNR, 72 DTC 6357 (FCTD), aff'd 73 DTC 5359 (FCA)

A corporation of which the taxpayer was the sole shareholder purchased a property for use as the new site for its car dealership business, paid...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
reorganization

Administrative Policy

2021 Ruling 2021-0895631R3 - Post-mortem planning - Hybrid Pipeline

Background

At the time of the death of A, he held the shares (being Class A voting participating shares) of the Corporation (a portfolio...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.61) no stop-loss for s. 164(6) loss realized by estate before pipeline transactions 156

2021 Ruling 2021-0906111R3 - XXXXXXXXXX Post-mortem Pipeline

Background

Before his death, Father transferred his shares (i.e., 50.5% of the common shares) of ACo (which held a diverse portfolio of bonds,...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2021 Ruling 2020-0865901R3 F - Post-mortem Hybrid Pipeline

Background

At the time of the death of X, he held shares of Newco (whose only undertaking was to hold shares of Investments) and a portion of the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2020 Ruling 2020-0848081R3 F - Subsection 104(4) and pipeline transaction

Two discretionary inter vivos trusts, with an individual (“Father”) and his child (“Child”) as the beneficiaries (both resident in Canada)...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2021 Ruling 2019-0800431R3 - Alter Ego Post-mortem Pipeline and Bump Planning

Background

After he was placed in a long-term care facility, an individual (the “Deceased”) who had owned and been managing the investing...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 212.1 - Subsection 212.1(6) - Paragraph 212.1(6)(b) pipeline ruling for an alter ego trust includes a preliminary deletion of a non-resident beneficiary 233
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d.3) s. 88(1)(d.3) applied to securities held by investing corportions whose shares were stepped up in hands of alter ego trust and then transferred to and amalgamated under pipeline 202

2021 Ruling 2020-0874931R3 F - Post-mortem Pipeline

Background

At the time of his death, X held all of the shares of Investco (a portfolio holding company) other than non-voting common shares held...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251.2 - Subsection 251.2(2) - Paragraph 251.2(2)(a) replacement of an executor resulted in an acquisition of control of subsidiaries 34

7 October 2021 APFF Financial Strategies and Instruments Roundtable Q. 8, 2021-0899701C6 F - Post-mortem planning - Pipeline

In order to implement pipeline planning, the estate of an individual ("Estate") generally incorporates a new corporation ("Newco") to which it...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) pipeline transaction can be structured to access hard ACB 361

2021 Ruling 2020-0874851R3 - Post-mortem Hybrid Pipeline

Background

Immediately before her death, A held the common shares (being the only class of shares) of the Corporation, which held marketable...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2020 Ruling 2020-0860231R3 - Post-mortem planning

Background

On the death of the deceased, there was a deemed disposition at FMV of all the Class A common shares of Opco, which is a CCPC with a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d.3) bump applied to amalgamation occurring in a pipeline transaction 161

2020 Ruling 2019-0819191R3 F - Post-mortem planning - Pipeline

Background

The Corporation is a portfolio corporation, with ERDTOH and GRIP balances and no CDA, whose Class E and Class K non-voting...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2019 Ruling 2019-0835131R3 F - Post-mortem Pipeline

Background

The will of A provided for his shares of Holdco (which were not qualified small business corporation shares and for which no s....

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

8 July 2020 CALU Roundtable Q. 6, 2020-0842241C6 - Post-mortem pipeline: Gradual repayment of note

After noting that in 2018-0767431R3, the amount of the pipeline note paid in any single quarter in the first post-amalgamation year was not to...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2020 Ruling 2020-0838951R3 F - Post-mortem Pipeline

Background

On the death of X, he and his two resident brothers (Leg1 and Leg2 – who were the legatees under his will of his shares of Holdco)...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2020 Ruling 2019-0832601R3 F - Post-mortem Pipeline

Background

Holdco is a portfolio company that holds cash, public company shares, shares of Opco (which are not liquid) and an interest in a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2020 Ruling 2019-0824211R3 F - Post-mortem Hybrid Pipeline

Background

On A’s death, A (a Canadian resident) held all the outstanding shares of Opco, being Class A common shares and Class E preferred...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 51 - Subsection 51(1) s. 51 applicable to exchange of common shares of Opco for common and preferred shares of Opco 39

2019 Ruling 2019-0809581R3 - Leveraged Buyout of Public Company

Background

Pubco, a public corporation with one class of shares (the “Pubco Shares”) and which (directly and through subsidiaries) had been...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2019 Ruling 2018-0789911R3 F - Post-mortem Pipeline

Background

On the death of A, he was deemed to have disposed of his shares of Realco (but with no capital gain resulting), and of his Class A and...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) deductibility of interest on loan used to redeem shares that had distributed accumulated profits 81

2019 Ruling 2019-0822951R3 F - Post-mortem Hybrid Pipeline

Background

On the death of Mr. X, he was deemed to have realized a capital gain on his Class A (common) shares of ACo (a CCPC portfolio company...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.61) s. 164(6) carryback of capital loss coupled with dividend to generate dividend refund 83

2019 Ruling 2019-0793281R3 F - Post-mortem Hybrid Pipeline

Background

On the death of Mr. X, he was deemed to have disposed at a capital gain of his shares of two holding companies (Corporation A and B)...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2018 Ruling 2018-0780201R3 - Post-mortem pipeline

Background

The Deceased held voting redeemable retractable Class A Special Shares of Opco (which the Deceased thereby controlled) and a Family...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84 - Subsection 84(1) use of CDA and s. 84(1) deemed dividend to generate s. 164(6) loss 110

2018 Ruling 2018-0767431R3 - Post-mortem pipeline

Background

On A’s death, he owned appreciated common and redeemable retractable preference shares and a non-interest-bearing demand promissory...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2018 Ruling 2018-0765411R3 F - Subsection 104(4) and Pipeline Transaction

Background

Trust1, which is a resident inter vivo trust (whose beneficiaries are family members consisting of Indvidual1, who apparently is...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2018 Ruling 2018-0777441R3 F - Post-mortem planning - Pipeline

Background

On the death of X, Class G non-voting preferred shares of Holdco passed on a rollover basis to X’s surviving spouse and on a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2018 Ruling 2017-0731971R3 - Reorganization and distribution on PUC reduction

Background

The Taxpayer, a listed public corporation, has CCEE, CCDE and no-capital loss pools, has two resource properties used in its first...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

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

Background

As a result of the death of A, the estate of A acquired A’s Class A common shares of Predecessor1, exchanged such shares for Class B...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution combined pipeline and split-up butterfly 144
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

29 May 2018 STEP Roundtable Q. 10, 2018-0748381C6 - Pipeline Ruling Requests

In the course of confirming that its position on pipeline transactions has not changed as a result of s. 246.1 being proposed, nor of it being...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2017 Ruling 2016-0629511R3 - Post-Mortem Planning and Extraction of "Hard ACB"

Background

A (a Canadian resident like the other persons mentioned), who is the residuary beneficiary of the estate of C (“Trust C”) and also...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(2) - Paragraph 84.1(2)(a.1) pipeline transfer of inherited shares for their "hard" ACB (excluding CGD and V-Day step-up by deceased) 117

2017 Ruling 2016-0670871R3 - Post-mortem pipeline

Background

On A’s death, he owned appreciated common and preference shares of PCo, which operated a business of dealing and investing in...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

4 November 2016 Memorandum 2016-063191

After describing the transactions in what was to become the Foix case, the Directorate stated inter alia (TaxInterpretations translation):

For...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

7 October 2016 APFF Roundtable Q. 12, 2016-0655911C6 F - Partial Leveraged Buy-Out and Monetization of ACB

A holds 50 common shares of Opco with a nominal adjusted cost base and paid-up capital and fair market value of $500,000, and B holds the other 50...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

27 April 2016 External T.I. 2016-0625001E5 F - Surplus Stripping

An individual (Mr. X), and a corporation (Holdco) wholly owned by him are the beneficiaries of a Quebec discretionary trust (Trust) holding all...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) funnelling deemed dividend to holdco trust beneficiary and resulting PUC to individual beneficiary/shareholder was surplus stripping 130
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(24) distribution of s. 84(1) dividend effected with note issuance 231

22 January 2016 External T.I. 2015-0617601E5 F - Pipeline followed by butterfly

An estate acquires the shares of Corporation 1 on a stepped-up basis under s. 70(5) and, in August 20X0, transfers the shares to Corporation 2...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.1) - Paragraph 55(3.1)(b) where pipeline transaction followed by split-up butterfly, the opco also is a distributing corporation 453

2015 Ruling 2015-0569891R3 - Ss. 164(6) carry-back and post-mortem pipeline

Background. All of the shares of Mr. A in A Co (which carried on a "business activity" of trading a portfolio) at the time of his death were...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 164 - Subsection 164(6) redemption of Canco shares bequeathed to U.S. resident (coupled with s. 164(6) carryback) before pipeline strip of Canco 143

2015 Ruling 2014-0548621R3 - Post Mortem Pipeline Planning

Background

On the death of B (the surviving spouse of A), B was deemed under s. 70(5)(a) to have disposed of the Class C common shares of the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2014 Ruling 2014-0540861R3 F - Post-Mortem Planning

Background

At death, X was the sole shareholder of Investments (a CCPC, whose shares did not qualify as QSBCs), which held bank balances, shares...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2015 Ruling 2014-0563081R3 - Post-mortem pipeline

Current structure

All the shares of A Co (being Class A voting common shares and Class B non-voting common shares) are held by a spousal trust...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2015 Ruling 2014-0559481R3 F - Post Mortem Planning

Current structure

Since the death of A (who used Investmentco in his professional practice but had Investmentco accumulate investments,...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2015 Ruling 2014-0541261R3 F - Post-Mortem Planning

Current Holdco structure

Holdco is a portfolio investment company holding bank deposits, certificates of deposit, notes payable and preferred...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2014 Ruling 2014-0537161R3 - Reduction of stated capital

underline;">: Current structure. The Company is a listed public corporation carrying on the "Business" (comprising resource projects) directly and...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

10 October 2014 APFF Roundtable Q. 21, 2014-0538091C6 F - 2014 APFF Roundtable, Q. 21 - Impact of the Descarries Case

What is the CRA position on Descarries? After noting that the case was not appealed because in the result it was favourable and it was only an...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
on
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) Descarries failed to recognize scheme against indirect surplus stripping 750
Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) will not impose double taxation under s. 84(2) and (3) 42

2014 Ruling 2011-0415811R3 - Internal reorganization

underline;">: Current structure. Parent, a public corporation which previously had been spun-off by Subco 2 (also a public corporation, but with...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(e.2) s. 85(1)(e.2) non-application to transfers at ACB to sisters in order to limit ACB shift 676

2014 Ruling 2014-0526361R3 F - Post Mortem Pipeline

Background

Prior to the death of B (who had been predeceased by her spouse), the Class A common shares of Investmentco, which was a portfolio...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) step up of PUC of freeze pref shares for purposes of pipeline transaction 109

2014 Ruling 2013-0503611R3 - Post-Mortem Planning

Overview

A testamentary spousal trust (the "Spousal Trust") whose basis in pref shares of a portfolio investment company ("Holdco") was stepped...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(c) - Subparagraph 88(1)(c)(vi) bump of marketable securities (no ruling) occurring as part of post-mortem pipeline transactions 256

2013 Ruling 2012-0470281R3 - Reduction of paid-up capital

Background

Pubco (which is a listed Canadian public corporation engaged in the commercialization of innovative products, and is reorganizing to...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2 April 2013 External T.I. 2013-0479651E5 F - Leveraged buy-out

X and Y each hold half of the common shares of Opco. X deals at arm's length with Y and Buyer. Buyer incorporates Holdco and subscribes $100,000...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

18 June 2013 External T.I. 2012-0433261E5 F - 55(5)(f) and Surplus Stripping

Two Canadian-resident brothers (Messrs. A and B), who each hold a 50% block of the common shares of a small business corporation (Dividend Payor)...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) deliberate engaging of s. 55(2) to convert annual taxable dividends into annual capital gains permitting annual capital dividends would engage s. 245(2) 149

2012 Ruling 2012-0464501R3 - Post-mortem planning

Background

X's Class A, B and C shares of Amalco (a Canadian private corporation that was not a small business corporation) passed on his death...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

29 May 2012 CTF Prairie Tax Roundtable, 2012-0445341C6 - Meaning of business as used in subsection 84(2)

CRA would generally not differentiate between a corporation carrying on an active business and a corporation carrying on a business of earning...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2012 Ruling 2011-0425211R3 - Reduction of capital

Pubco holds foreign affiliates owning non-core foreign exploration properties through two Canadian holding companies (Canco 1 and Canco 2). After...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2012 Ruling 2012-0435291R3 - Public Corporation PUC Reduction

A CBCA Canadian public company (the "Corporation") transferred Canadian property, which represented substantially all of the assets used by it in...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2012 Ruling 2012-0432431R3 - Reduction of stated capital

Ruling that s. 84(2) will apply to the distribution by a resource public company of a resource subsidiary as a reduction of stated capital, in...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2012 Ruling 2012-0401811R3

At the time of death of Mr X, he held common and preferred shares of (and controlled) Holdco, which carried on an investing business and held a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

21 September 2011 External T.I. 2010-0375361E5 F - Liquidation d'une coopérative agricole

Respecting the treatment of the winding up of an agricultural cooperative within the meaning of s. 135.1(1) pursuant to which the cooperative...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2 June 2011 STEPs Roundtable Q. 5, 2011-0401861C6 - 2011 STEP - Q.5 - Post-Mortem Planning and 84(2)

An estate engages in a "pipeline" strategy in which it disposes of its shares of ACo (having a stepped-up adjusted cost base under s. 70(5)) to a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

8 October 2010 Roundtable, 2010-0373291C6 F - Tuck-Under Transactions - Safe Income Extractions

Given the acceptance of a tuck-under transaction in Vaillancourt-Tremblay, does CRA still consider that s. 84(2) should not apply to such a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) Vaillancourt-Tremblay did not validate all tuck-under transactions 107
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) safe income can be extracted using tuck-under 63

12 August 2010 External T.I. 2010-0370551E5 F - Tuck Under Transaction - Tremblay Decision

A non-resident holds 40% of the common shares of Opco and all of the shares of Holdco (also a Canadian private corporation) which, in turn, holds...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

25 February 2010 External T.I. 2009-0352231E5 F - OBNL, profits, perte de statut, gain en capital

CRA , respecting the winding-up of a non-profit organization described in s. 149(1)(l):

If the association is a corporation with capital stock,...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(l) holding of surplus funds permissible only for funding a specific project 161

27 May 2008 External T.I. 2008-0269441E5 F - Withdrawn Ruling Request

In explaining why, in contrast to 2005-0134731R3 F (the "Advance Ruling"), the Directorate could not rule on the proposed transactions, it...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) GAAR applied to use of outside basis, created with the capital gains exemption, for an inter-sibling transfer 78

13 August 2007 External T.I. 2007-0224151E5 F - Surplus Stripping

CRA noted that the taxpayer’s request for rulings had been withdrawn for the reasons noted below in the summary (the text of the letter is...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

29 June 2006 External T.I. 2006-0170641E5 F - Distribution of Corporate Property

In two rulings on post-mortem pipeline transactions (2002-0154223 and 2005-0142111R3), CRA required that the subject corporation remain in...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

26 April 2006 Ruling 2004-0099201R3 F - GAAR Surplus Stripping

Mr. A is the sole shareholder of Aco, which generates an annual profit from its operations of more than $100,000. His Aco shares have a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2004 Ruling 2004-0075471R3 - Stated capital reduction by a public corporation

An indirect foreign subsidiary ("Forco 1") of a Canadian public company ("Opco 1" - likely, BCE Emergis Inc.) sold a foreign subsidiary of Forco...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2003 Ruling 2002-018027

U.S.-resident shareholders of a Canadian investment company ("Canco") sell their shares of Canco to an unrelated Canadian purchaser ("Holdco"),...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

10 October 2003 External T.I. 2003-0029955 F - Surplus Stripping Post-Geransky

After negotiations with a purchaser, who is interested in the assets of the business of Opco, it is agreed that the Opco shareholders will sell...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2000 Ruling 2000-0014443 - PUC Reduction

Ruling that a transfer by a Canadian public company in a taxable transaction of all the assets of a business to a Newco, followed by a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

30 November 1996 Ruling 9701523 - REDUCTION IN PUC OF PUBLIC CORP

Description of reorganization of a public corporation in which the paid-up capital of its issued and outstanding common shares are reduced through...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

22 June 1990 T.I. (November 1990 Access Letter, ¶1534)

Where Mr. A effectively wishes to withdraw cash from a corporation of which he is the sole shareholder and accomplishes this by selling the shares...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

88 C.R. - Q.34

The "amount or value" of the property distributed is reduced by liabilities assumed by the shareholder of the corporation.

Articles

Kenneth Keung, Balaji Katlai, "CRA Essentially Approves Surplus Stripping by Amalgamation", Canadian Tax Focus, Vol. 11, No. 3, August 2021, p. 1

Surplus stripping suggested by CRA position on extracting cash on an amalgamation (p.1)

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Éric Hamelin, "Post Mortem Pipeline: The CRA Relaxes Its Position", Tax for the Owner-Manager, Vol. 20, No. 3, July 2020, p. 6

Immediate receipt of cash on pipeline to fund s. 70(5) taxes, p. 6

[I]n … 2018-0789911R3 … the CRA relaxed its longstanding position and...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Charles P. Marquette, "Hybrid Sale of Shares and Assets of a Business", Canadian Tax Journal, (2014) 62:3, 857 – 79.

Description of hybrid transaction using external step-up in basis method (pp. 878-9)

[T[he hybrid form of transaction for a corporate business...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 191 - Subsection 191(4) 140

Perry Truster, "Turning Dividends into Capital Gains", Tax for the Owner-Manager, Volume 14, Number 1, January 2014, p. 7.

Sale of stock dividend shares for note which is repaid out of corporate surplus (p. 7)

[I]it is advantageous to convert distributions that would...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Steve Suarez, Firoz Ahmed, "Public Company Non-Butterfly Spinouts", 2003 Conference Report, c. 32.

Subsection 84(3) - Redemption, etc.

Cases

Canada v. Macmillan Bloedel Ltd., 99 DTC 5454, [1999] 3 CTC 652 (FCA)

The taxpayer redeemed U.S.-dollar denominated preferred shares at a time that the U.S. dollar had appreciated relative to the exchange rate at the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) loss on redemption of U.S.-dollar preferred shares 101

See Also

McClarty Family Trust v. The Queen, 2012 DTC 1123 [at 3122], 2012 TCC 80

A family holding company ("MPSI") paid a stock dividend of preferred shares, having nominal paid-up capital and a redemption amount of $48,000, on...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Gagnon v. The Queen, 2008 DTC 3111, 2006 TCC 194

The taxpayer originally signed an agreement for the sale of his half interest in a business (which was found to be held in a corporation) to his...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date person declared a shareholder retroactively 149

MacMillan Bloedel Ltd. v. The Queen, 97 DTC 1446 (TCC), aff'd 99 DTC 5154

The taxpayer was found to have realized a capital loss under s. 39(2) rather than to have paid a deemed dividend under s. 84(3) when it redeemed...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Lalonde v. MNR, 90 DTC 1313, [1990] 1 CTC 2427 (TCC)

The taxpayer established that he purchased the shares of a fellow shareholder as agent for the corporation rather than as principal. Accordingly,...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Belair v. MNR, 89 DTC. 429, [1989] 2 CTC 2186 (TCC)

In the face of inadequate evidence, Morgan J. found that if the corporation had agreed to purchase for cancellation 1/3 of the taxpayer's common...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Cabezuelo v. MNR, 83 DTC 769 (TCC)

The taxpayer received $25,000 in cash for shares plus a further balance payable over three years. After finding that these payments should be...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

McArdle Estate [No. 2] v. MNR, 62 DTC 402 (TAB)

The president (McArdle) of a private company had been issued “employee redeemable shares,” whose terms provided that they participated on a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
redeem
Locations of other summaries Wordcount
Tax Topics - General Concepts - Substance mistaken nomenclature ignored if inconsistent with governing intention 66

Administrative Policy

25 November 2021 CTF Roundtable Q. 1, 2021-0911841C6 - Indemnities and subsection 87(4)

There has been a triangular amalgamation under which a subsidiary of Parent amalgamated with Target and the Target shareholders received shares of...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 87 - Subsection 87(4) payment of damages, for breach of reps, by the parent following a triangular amalgamation would not preclude satisfaction of s. 87(4) 242
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1) damages paid for breach of rep following an amalgamation did not breach s. 87(1)(a) 144

27 November 2018 CTF Roundtable Q. 5, 2018-0780041C6 - GAAR on PUC reduction

Shareholders of DCco transfer shares of DCco having an aggregate PUC of $10,000 and an ACB of $1,000 and a FMV higher than $10,000 to TCco in...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(b) where Parent acquired the net tax equity in Subco at a bargain price (low share ACB), avoiding a s. 88(1)(b) gain on wind-up through reducing PUC is abusive 548
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) avoidance of s. 88(1)(b) where insufficient safe income was abusive 393

27 June 2018 External T.I. 2018-0745681E5 F - Wind-up of a partnership

A family farming partnership ("Partnership"), whose three partners equally owned the common shares of Opco, owned preferred shares of Opco, with a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) s. 98(5) inapplicable on simultaneous dissolving transfer of partnership interests 167
Tax Topics - Income Tax Act - Section 28 - Subsection 28(1) - Paragraph 28(1)(f) application of s. 28(1)(f) on partnership wind-up 203

26 May 2016 IFA Roundtable Q. 3, 2016-0642111C6 - PUC of Shares of a FC Reporter

CRA considered that a Canadian corporation which has the U.S. dollar as its elected functional currency nonetheless is required to keep track of...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 261 - Subsection 261(1) - Canadian Tax Results deemed dividend calculation for shareholder not part of Cdn tax results 323

2015 Ruling 2014-0532201R3 - Corporate reorganization

Towards the completion of an intricate internal reorganization for a privately-held Canadian corporate group, a newly-amalgamated corporation...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 38 - Paragraph 38(a.1) donation of pubco shares to foundation and immediate cash sale to affiliate 521
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts donation and sale-back of public company shares 84

S4-F7-C1 - Amalgamations of Canadian Corporations

1.5 …[S]ubsection 84(3) will not otherwise apply to deem a shareholder of a predecessor corporation to have received a dividend where the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 100 - Subsection 100(2.1) s. 100(2.1) applies to non-qualifying amalgamation 64
Tax Topics - Income Tax Act - Section 111 - Subsection 111(12) application following amalgamation 113
Tax Topics - Income Tax Act - Section 116 - Subsection 116(1) deemed tcp following amalgamation 167
Tax Topics - Income Tax Act - Section 13 - Subsection 13(5.1) continuity of s. 13(5.1) on amalgamation 132
Tax Topics - Income Tax Act - Section 165 - Subsection 165(1) Amalco can continue objection and receive refunds 157
Tax Topics - Income Tax Act - Section 169 Amalco can continue objection 103
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(n) reserve after amalgamation 62
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Shareholder shareholder need not hold shares 88
Tax Topics - Income Tax Act - Section 251 - Subsection 251(3.1) deemed non-arm's length relationship on amalgamation 172
Tax Topics - Income Tax Act - Section 256 - Subsection 256(7) - Paragraph 256(7)(b) related party, majority and 50% group exceptions 495
Tax Topics - Income Tax Act - Section 40 - Subsection 40(1) - Paragraph 40(1)(a) - Subparagraph 40(1)(a)(iii) reserve after amalgamation 62
Tax Topics - Income Tax Act - Section 66.7 - Subsection 66.7(7) successoring where non-wholly owned amalgamation 109
Tax Topics - Income Tax Act - Section 69 - Subsection 69(13) no disposition of predecessor property on general principles 113
Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.4) s. 87(5) not applicable 112
Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(3) non-87 amalgamation/no FX gain 165
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) election filing by Amalco 109
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1.1) s. 87(1.1) qualifies for all s. 87 purposes 66
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1.2) successoring where non-wholly owned amalgamation 109
Tax Topics - Income Tax Act - Section 87 - Subsection 87(10) deemed listing of temporary Amalco shares 120
Tax Topics - Income Tax Act - Section 87 - Subsection 87(11) gain if high PUC is sub shares 55
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1) presumptive satisfaction of s. 87(1)(a)/dissent and squeeze-outs onside 297
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(a) new corp/deemed year end coinciding or not with acquisition of control 758
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(b) Amalco must follow predecessor's valuation method subject to truer picture doctrine 64
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(c) reserve after amalgamation 113
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(d) cost amount carryover 149
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(e.1) s. 100(2.1) applies to non-qualifying amalgamation 64
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(o) no continuity rule for non-security options 139
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(q) pre-amalgamation services 106
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2.11) loss-carry back to parent 169
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2.1) dovetailing with s. 88(1.1) 44
Tax Topics - Income Tax Act - Section 87 - Subsection 87(3.1) 346
Tax Topics - Income Tax Act - Section 87 - Subsection 87(3) PUC shifts 189
Tax Topics - Income Tax Act - Section 87 - Subsection 87(4) fractional share cash/ACB or value shift/implied non-recognition for predecessor shares 281
Tax Topics - Income Tax Act - Section 87 - Subsection 87(7) dovetailing with s. 78 and 112(12) 191
Tax Topics - Income Tax Act - Section 87 - Subsection 87(9) allocation of s. 87(9)(c)(ii) excess as parent chooses 230
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d) late designation 122
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1.1) dovetailing with s. 87(2.1) 62
Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) partnership dissolution on amalgamation 137
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2.2) deemed non-arm's length relationship on amalgamation 467
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2) deemed non-arm's length relationship on amalgamation 371
Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(14) class continuity on non-arm's length amalgamation 327
Tax Topics - Income Tax Regulations - Regulation 8503 - Subsection 8503(3) - Paragraph 8503(3)(b) pre-amalgamation services 106
Tax Topics - Income Tax Act - Section 249 - Subsection 249(3) 136
Tax Topics - Income Tax Act - Section 22 - Subsection 22(1) 179

29 October 2013 External T.I. 2013-0507881E5 - Price adjustment clause

A price adjustent clause in the share provisions for preferred shares issued by Opco to the taxpayer in Year 1 in consideration for the transfer...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date 330

3 July 2012 Internal T.I. 2012-0450821I7 F - Interaction of 84(3) and 69(1)(b)

A CCPC ("Opco"), whose voting common shares were owned by two individuals (B and R) and by a Canadian-controlled private corporation ("M Holdco")...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) s. 69(1)(b) adjustment generates capital gain even though larger share redemption proceeds in the 1st place would have been exempt 223

29 November 2011 Roundtable, 2011-0426361C6 F - Price adjustment clause and redemption of shares

Subsequent to an estate freeze, the freeze preferred shares were redeemed (in 2006). In 2011, it was determined that the redemption amount was...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date deemed dividend through operation of price adjustment clause arises in the adjustment rather than redemption year 63

21 November 2011 External T.I. 2011-0422191E5 F - Price adjustment clause and redemption of shares

if preferred shares with a redemption amount which is subject to a price adjustment clause are redeemed before there is an upward adjustment to...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date additional payment, pursuant to price adjustment clause, in year following shares; redemption is recognized then 54

23 July 2007 Internal T.I. 2007-0228601I7 F - Redemption of U.S. Denominated Shares

Parentco owned preferred shares of a subsidiary wholly-owned corporation (Holdco) denominated in U.S. dollars. Holdco purchased the preferred...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) s. 86 exchange of US-dollar denominated prefs does not affect patrimony of issuer 75

15 January 2007 Internal T.I. 2006-0216801I7 - Redemption of US $ Denominated Shares

Confirmation of a previous position that in light of the MacMillan Bloedel decision, CRA intends to assess any redemption of...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) s. 39(2) on USD pref redemption 22

28 October 2005 External T.I. 2005-0145891E5 F - Redemption of Shares - Balance of Purchase Price

On January 1, 2005, Canco purchases for cancellation 100 common shares, having a fair market value of $100,000, in consideration for paying...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2004 APFF Roundtable Q. 15, 2004-008682

Respecting the situation where a subsidiary purchases for cancellation a portion of the common shares in its capital held by its wholly-owning...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

31 December 2004 Internal T.I. 2004-0091781I7 - Redemption for Proceeds Less than FMV

In a situation where preferred shares were redeemed for an amount less than the fair market value, the Directorate stated that "where, in a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) s. 69 rather than s. 84(3) applies where FMV excess 135

10 October 2003 External T.I. 2003-0030005 F - $500,000 Deduction - Application of GAAR

A purchaser is interested in purchasing an operating subsidiary ("Opco") of a management corporation ("Managementco") and not Managementco....

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

1 November 2002 External T.I. 2002-0146775 - Share Sale by Employees Yields Cap. Gain

Where employees of Opco (who as a group, own 14% of its issued common shares) are terminated, they are required to sell their Opco common shares...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2002 Ruling 2002-0138993 - XXXXXXXXXX . - 95(2)(a)(ii)(D)

A foreign subsidiary ("Holdco") which is making a takeover bid for a public corporation in the same foreign jurisdiction ("Targetco'), acquires...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

10 August 2000 External T.I. 2000-0016875 - SAR DISPOSITION, SHARES

"Where an employee has income from employment under paragraph 7(1)(a) related to the disposition, by virtue of subsection 7(1.1), of shares and a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

26 October 1998 Internal T.I. 9803947 - REDEMPTION OF SHARES

Where shares held by a financial institution are redeemed, s. 84(3) will be considered to take precedence over s. 142.5(1), and s. 248(28) will...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

6 June 1997 Internal T.I. 9631867 - REDEMPTION OF SHARES HELD BY FINANCIAL INSTITUTIONS

S.142.5(1) takes precedence over s. 84(3). To the extent that an amount has been included in computing income under s. 142.5(1), such amount will...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

6 July 1995 External T.I. 9316465 F - Payment to Dissenting Shareholders on Amalgamation

In response to a proposal that a payment be made to a separated wife of a husband by her dissenting to the amalgamation of a corporation...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

12 August 1994 External T.I. 9415495 - AMALGAMATION/WIND-UP

Where there is a wind-up of a wholly-owned subsidiary that also owns shares of its parent, s. 84(3) will not apply to the subsidiary because the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

30 March 1994 External T.I. 9337225 - SHARES HELD AS INVENTORY

On the redemption of shares held as inventory, a deemed dividend will arise pursuant to s. 84(3) and, to the extent that the paid-up capital of...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

93 C.R. - Q. 56

Cash payments received from an amalgamated corporation for shares held by shareholders dissenting from the amalgamation will be proceeds of...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

3 September 1991 T.I. (Tax Window, No. 8, p. 21, ¶1436)

S.84(3) does not apply to deem a dividend to have been paid when shares of a corporation owned by its wholly-owned subsidiary are cancelled on the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) 32

3 July 1991 T.I. (Tax Window, No. 5, p. 13, ¶1334)

S.84(3) does not apply to an amalgamation to which s. 87 applies.

31 May 1990 T.I. (October 1990 Access Letter, ¶1469)

With respect to an argument that where a corporation purchases for cancellation only some of the shares of a given class and pays an amount...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

87 C.R. - Q.59

A shareholder dissenting pursuant to s. 184 of the CBCA who receives cash from the amalgamated corporation realizes proceeds of disposition rather...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

87 C.R. - Q.69

Where a share having a high stated capital and low paid-up capital is exchanged in a s. 86 reorganization for another share with a high stated...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

84 C.R. - Q.45

The calculation of the amount of the dividend arising on a purchase for cancellation will include the value of any type of consideration given for...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Articles

Didier Fréchette, Ryan Rabinovitch, "Current Issues Involving Foreign Exchange", 2015 CTF Annual Conference paper

Whether deemed dividend on redemption of USD preferred shares (pp. 26:35-39)

A Canadian-resident corporation issues preferred shares for US$100...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

R. Durand, I.M. Freedman, "Dealing with Paid-Up Capital", 1997 Corporate Management Tax Conference Report, c. 17.

Subsection 84(4)

Articles

Didier Fréchette, Ryan Rabinovitch, "Current Issues Involving Foreign Exchange", 2015 CTF Annual Conference paper

Whether deemed dividend on returns of capital of USD shares (p. 26:39-40)

[A] Canadian corporation issues a preferred share for US$100 per share...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Subsection 84(4.1) - Deemed dividend on reduction of paid-up capital

Articles

Judith Paris, "Paid-Up Capital and Return of Capital Public Corporations", Business Vehicles, Vol. VI, No. 2, 2000, p. 290.

Subsection 84(5) - Amount distributed or paid where a share

Administrative Policy

18 Aug. 89 T.I. (Jan. 90 Access Letter, ¶1082)

On the transfer by Mr. A of 1/2 of the common shares of Opco to Opco in exchange for preferred shares of Opco having 1/2 the paid-up capital of...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Subsection 84(6) - Where s. (2) or (3) does not apply

Administrative Policy

7 January 1998 External T.I. 9712655 - NORMAL COURSE ISSUER BID

A normal course issuer bid would not give rise to deemed dividends.

1997 Ruling 971084

The purchase by the issuer of common shares held by a majority holding company would not taint the application of s. 84(6) with respect to its...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 183.1 - Subsection 183.1(2) 33

90 C.R. - Q50

The reference to the "manner in which shares would normally be purchased by any member of the public in the open market" means that the shares...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Subsection 84(7)

Administrative Policy

4 January 2012 External T.I. 2011-0414731E5 F - Interaction between 84.1 and 83(2) ITA

Before concluding that the “CRA does not intend to adopt a permissive administrative position permitting a s. 83(2) election where there is a s....

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 83 - Subsection 83(2) no s. 83(2) election available for s. 84.1(1)(b) deemed dividend paid to non-shareholder 48

Subsection 84(9) - Shares disposed of on redemptions, etc.

Cases

EYEBALL NETWORKS INC. v. HER MAJESTY THE QUEEN, 2021 FCA 17

Pursuant to a conventional s. 55(3)(a) spin-off transaction, a company (“Oldco”) spun off one of its two businesses to a “Newco,” also...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) s. 160 did not apply to s. 55(3)(a) where each step involved a value-for-value exchange (including the cross-share redemptions) 565
Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) “series of transactions” requires at least one tax-driven transaction 284
Tax Topics - General Concepts - Effective Date price adjustment clause eliminated any possible value discrepancy between the FMV of the transferred property and the consideration therefor 118
Tax Topics - General Concepts - Fair Market Value - Other note supported only by pref, then note, of a sister had full FMV 132

See Also

Gaumond v. The Queen, 2014 DTC 1024 [at 98], 2014 TCC 339 (Informal Procedure)

The taxpayer renounced debt owing to him by his small business corporation pursuant to a bankruptcy proposal. Lamarre J found that, in the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 39 - Subsection 39(1) - Paragraph 39(1)(c) renounced debt is not disposed of to anyone/s. 50 not available where debt settled in year 277
Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) s. 50 not available where debt settled in year 108

Special Risks Holdings Inc. v. The Queen, 86 DTC 6035, [1986] 1 CTC 201 (FCA)

The taxpayer, following a modification in the capital structure of a company ("RMC") exchanged its voting shares of that company for non-voting...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) relationship enabling one party to dictate terms 148
Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) 166

Administrative Policy

20 February 1991 T.I. (Tax Window, No. 2, p. 8, ¶1182)

Where a corporation is wound up and the shares are cancelled as a result of the winding-up, s. 84(9) does not apply.

10 January 1990 T.I. (June 1990 Access Letter, ¶1257)

Under Canadian corporate law, the shares of a corporation which is being wound-up or liquidated are not disposed of "to a person" as a result of...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

IT-484R "Business Investment Losses"

Articles

Gregory M. Johnson, Wesley R. Novotny, "An Update on Flow-through Shares in the Energy Sector", 2016 Conference Report (Canadian Tax Foundation),12:1-39

Flow-through shares issued after announcement of long-form amalgamation may be prescribed shares (p. 12:20-21)

...On an amalgamation, it is...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.