Subsection 85.1(1) - Share for share exchange
Administrative Policy
2021 Ruling 2020-0852951R3 - Public Spin-Off Butterfly
Parent, a listed corporation with a specified shareholder (and perhaps with two classes of multiple voting and single voting shares), wishes to...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.02) | spin-off of grandchild of public corporation to direct Newco subsidiary followed by spin-off to public shareholders | 562 |
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.4) | stock options replaced by stock options with lower exercise price on shares of shrunken post-spin-off corp | 131 |
| Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Public Corporation | election made for Newco that is spun-off by Pubco | 130 |
2014 Ruling 2014-0530371R3 - Combination of credit unions
CRA provided s. 85.1 rulings respecting "Acquireco" acquiring all of the shares of the members of a widely-held credit union under s. 85.1 in...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 137 - Subsection 137(4.1) | s. 137(4.1) inapplicable to Buyer of credit union who winds it up rather than becoming a member | 263 |
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) | "immediately before" referenced share ownership on completion of the preceding transaction in a same-day series | 266 |
S4-F5-C1 - Share for Share Exchange
Subsection 85.1(1) will not apply where:
a. the vendor acquires shares of the purchaser in exchange for other shares of the purchaser;
b. the...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 85.1 - Subsection 85.1(2.1) | 26 | |
| Tax Topics - Income Tax Application Rules - Subsection 26(26) | 104 |
25 August 1991 T.I. (Tax Window, No. 8, p. 16, ¶1412)
The fact that shares are divided into two blocks -one of which is exchanged for cash and the other which is exchanged for shares - in order to...
IT-450 "Share for Share Exchange"
7
...Where the vendor receives shares and cash or other consideration for each exchanged share, subsection 85.1(1) may be utilized for the...
Articles
Cobb, "Share-for-Share Exchanges: Section 85.1", The Taxation of Corporate Reorganizations, 1995 Canadian Tax Journal, Vol. 43, No. 6, p. 2230.
Smith, "Corporate Restructuring Issues: Public Corporations", 1990 Corporate Management Tax Conference Report, pp. 6:8-6:10: discussion of receipt of non-share consideration.
Subsection 85.1(2.1) - Computation of paid-up capital
Administrative Policy
S4-F5-C1 - Share for Share Exchange
1.16 Paragraph 85.1(2.1)(a) is applicable…even if the vendor has otherwise reported a gain or loss on the exchange.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 85.1 - Subsection 85.1(1) | 412 | |
| Tax Topics - Income Tax Application Rules - Subsection 26(26) | 104 |
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 gross and net fair market value...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 84 - Subsection 84(1) | no 84(1) application on tuck under | 112 |
Subsection 85.1(3) - Disposition of shares of foreign affiliate
Administrative Policy
2016 Ruling 2015-0571441R3 - Dutch Cooperative - 93.2 & 95(2)(c)
Ruling respecting the combined operation of s. 95(2)(c) (similar in this regard to s. 85.1(3)) and s. 93.2) on a joint contribution by the three...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(c) | rollover is available on joint drop-down of shares of a Dutch private limited liability company into a Dutch cooperative in consideration for respective credits to the membership accounts | 502 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation | Dutch cooperative whose articles limited member liability was a corp | 263 |
| Tax Topics - Income Tax Act - Section 93.2 - Subsection 93.2(2) | membership interest in Dutch cooperative ruled to be shares | 92 |
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Controlled Foreign Affiliate | non-resident subsidiaries CFAs of bottom-tier Cdn partnership and FAs of Canadian corporate partners | 130 |
26 May 2016 IFA Roundtable Q. 10, 2016-0642101C6 - 93.2 & 95(2)(c)
S. 95(2)(c) which, insofar as relevant to the question of how it dovetails with s. 93.2, is essentially identical to s. 85.1(3). Respecting the...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(c) | dropdown of shares made to an LLC as a contribution of capital deemed by s. 93.2(3) to be for "share” consideration | 154 |
| Tax Topics - Income Tax Act - Section 93.2 - Subsection 93.2(3) | s. 95(2)(c) rollover can apply on a dropdown of shares made to an LLC as a contribution of capital rather than for “share” consideration | 278 |
2016 Ruling 2016-0648991R3 - Internal spinoff reorganization of XXXXXXXXXX
CRA provided s. 55(3)(a) rulings respecting a spin-off by one Canadian subsidiary (CanSub1) of a public company (ParentCo) of CanSub1’s foreign...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) | spin-off from one sub of public company to another with no streaming of cost base and cross redemption of preferred shares | 519 |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Shares | shares did not lose capital property character on internal spin-off transfer with a view to their further dorp-down | 108 |
21 October 2013 Internal T.I. 2013-0505831I7 - Rollover and subsequent disposition of property
The taxpayer, a Canadian corporation, transferred all its voting and participating shares of Subco, a non-resident subsidiary wholly-owned...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(11) - Paragraph 69(11)(b) | s. 69(11)(b) inapplicable to s. 85.1(3) drop-down of CF1 to CF2 followed by sale of CF1 "exempted" by s. 2(3) | 259 |
2010 Ruling 2010-0373801R3 - Conversion from a BV to a DC
Proposed Transactions
Holdco (resident in Canada) transfers a portion of its shares of a Netherlands private limited liability company (“BV”)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(4) - Direct Equity Percentage | 46 | |
| Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) | exchange of shares in Netherlands BV for membership interests in Dutch coop qualified under s. 86 | 147 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Share | membership interest in Dutch coop a share | 139 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | conversion of Netherlands BV to Dutch co-op | 97 |
Articles
Tasso Lagios, Arda Minassian, "Foreign Accrual Property Income: Pitfalls for the Unwary", 1999 Conference Report, c. 3.
R. Ian Crosbie, "Canadian Income Tax Issues Relating to Cross-Border Share Exchange Transactions", 1997 Corporate Management Tax Conference Report, c. 12.
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|---|---|---|
| Tax Topics - Income Tax Act - Section 87 - Subsection 87(8) | 0 |
Schwartz, "Tax-Free Reorganizations of Foreign Affiliates", 1984 Canadian Tax Journal, November-December 1984, p. 1039.
Subsection 85.1(4) - Exception
Administrative Policy
25 October 1994 External T.I. 9414095 - TRANSFER OF SHARES OF FOREIGN AFFILIATE (HAA 6363)
S.85.1(4) will not apply where Canco, which owns 100% of USco, transfers its shares of USco for fair market value consideration to a U.S. holding...
Articles
Joint Committee, "August 2022 legislative proposals relating to the Income Tax Act and the Income Tax Regulations", 16 February 2023 Joint Committee Submission
Elimination of purpose test (p. 2)
- Given the breadth of the “series of transactions” concept, the proposed elimination of the purpose test...
David Bunn, Mark Dumalski, "Proposed Amendments to Subsection 85.1(4)", International Tax Highlights, Vol. 1, No. 2 November 2022, p. 6
Target of current s. 85.1(4) (p. 6)
- The current version of s. 85.1(4) avoids deferral of the capital gain that would otherwise be realized on the...
Subsection 85.1(5) - Foreign share for foreign share exchange
Administrative Policy
23 August 2016 External T.I. 2015-0614981E5 - Foreign Share for share Exchange
Shares of a foreign public company (“Foreign Target”) were exchanged by a Canadian partnership (“Vendor”) for treasury shares of another...
19 June 2000 Internal T.I. 2000-0027787 - OPTIONS, ROLLOVER
Where a U.S. public company of which the taxpayer's employer was a Canadian subsidiary merges with another corporation, s. 85.1(5) will not...
Articles
Ken Snider, "Share for Share Exchanges — Subsection 85.1(5) Revisited", International Tax (Wolters Kluwer CCH), No. 114, October 2020, p. 5
Potential deeming of shares of non-resident to be taxable Canadian property (TCP) (p.5)
Where the Exchanged Foreign Shares are taxable Canadian...
Christopher Steeves, "Foreign Share Exchanges and Foreign Spinoffs", The Taxation of Corporate Reorganizations, 2001 Canadian Tax Journal, Vol. 49, No. 4, p. 1066.
Subsection 85.1(7) - Application of subsection (8)
Articles
Mitchell, Sherman, "SIFT Update - Conversions and Normal Growth", Corporate Finance, 2009, p. 1678.
| Locations of other summaries | Wordcount | |
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| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(3) | 0 | |
| Tax Topics - Income Tax Act - Section 88.1 - Subsection 88.1(2) | 0 |
F. Brent Perry, "Income Trusts: Reorganiations and Planning for 2011", 2008 Conference Report.
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| Tax Topics - Income Tax Act - Section 88.1 - Subsection 88.1(2) | 0 |