Section 88

Table of Contents

Subsection 88(1) - Winding-up

Cases

R. v. Mara Properties Ltd., 96 DTC 6309, [1996] 2 S.C.R. 161, [1996] 2 CTC 54

The taxpayer, which was in the business of developing and selling real estate, acquired, in an arm's length transaction and for a purchase price...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss land inventory retained character after wind-up 111

Hickman Motors Ltd. v. The Queen, 95 DTC 5575, [1995] 2 CTC 320 (FCA), rev'd 97 DTC 5363, [1997] 2 S.C.R. 336

Hugessen J.A. rejected the taxpayer's submission that s. 88(1) established that property that was depreciable property to a subsidiary was...

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Tory Estate v. M.N.R., 73 DTC 5354, [1973] CTC 434 (FCA), briefly aff'd 76 DTC 6312, [1976] CTC 415 (SCC)

The word "distributed" was held not to include a sale of accounts receivable for valuable consideration.

Words and Phrases
distribute

Administrative Policy

11 October 2019 APFF Roundtable Q. 6, 2019-0812651C6 F - CDA and wind-up of a subsidiary

In IT-126R2, the CRA states that it considers that where the formal dissolution of a corporation is not complete but there is substantial evidence...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(z.1) IT-126R2 applicable in determining when CDA of sub is added to parent’s CDA 206

2014 Ruling 2014-0530371R3 - Combination of credit unions

Proposed transactions

Acquireco and Targetco, both of which are widely-held credit unions, wish to combine their businesses to form a single...

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Locations of other summaries Wordcount
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 85.1 - Subsection 85.1(1) credit union share-for-share exchange/ cash redemption 52

18 November 2014 TEI Roundtable, Q. E.4

A corporation is wound up into its parent and dissolved at a time that it had a right to receive a refund of an overpayment. Although its right to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 164 - Subsection 164(1) refund re dissolved sub 330

26 November 2014 External T.I. 2014-0551641E5 F - Winding-up and subsection 42(1)

In accordance with IT-126R2, para. 5(b), a corporation is considered to have "been wound up" on the basis that it has been liquidated and the only...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 42 corporation permitted to claim litigation loss following effective time of winding-up 104
Tax Topics - Income Tax Act - Section 88 - Subsection 88(2) corporation permitted to claim a s. 42(1)(b) loss after (per IT-126R2) it has been wound up 140

7 July 2014 External T.I. 2014-0518561E5 F - Superficial loss

Brothers A and B, who each hold 50% of the shares of Opco, dispose of those shares to Holdco (wholly-owned by Brother A.) Opco is wound-up into...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Superficial Loss shares of Holdco as identical property to shares of Opco/transferred corporation wound-up but not dissolved within 30 days 333

2014 Ruling 2013-0505431R3 - XXXXXXXXXX

In connection with an extensive reorganization, a wholly-owned subsidiary of Pubco (Newco 2) will be wound-up into Pubco. Newco 2 will be...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) public trading in dividend recipient does not engage exclusion in s. 55(2)(a)(iv) 848
Tax Topics - Income Tax Act - Section 66.2 - Subsection 66.2(5) - Canadian development expense - Paragraph (e) transfer of royalty from partly-owned partnership 464
Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) s. 97(2) applicable to contribution (no equity consideration) 61

1996 Corporate Management Tax Conference Round Table, Q. 2 (C.T.O. "Wind-Up Bump Dividends")

Discussion of the effect on the "bump" of dividends paid by subsidiaries of the target corporation prior to the acquisition of control of the...

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29 August 1994 External T.I. 9336515 - ADJUSTED COST BASE BUMP

An estate is not considered to acquire property from the deceased because of a bequest or inheritance for purposes of s. 88(1)(d.2). S.88(1)(d.2)...

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

Where there is a wind-up of a wholly-owned subsidiary that also owns 25% of the shares of the parent corporation, s. 88(1)(a) will deem the shares...

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8 April 1994 External T.I. 9408415 - WIND-UP WITHOUT DISSOLUTION

Where a corporation has not been dissolved because it is involved in outstanding litigation, RC will accept that it has been wound up for purposes...

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18 February 1994 External T.I. 9402445 - WINDING UP OF CORPORATION WITHOUT SHARE CAPITAL

The winding-up of a corporation without share capital by its sole member will not be governed by s. 88(1). Instead, s. 69(5) will apply.

92 C.R. - Q.31

The cost amount of a capital property that is debt is determined for purposes of s. 88(1)(a)(iii) pursuant to paragraph (b), rather than paragraph...

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1992 A.P.F.F. Annual Conference, Q. 16 (January - February 1993 Access Letter, p. 56)

Because a licence of property or rights by a parent to its subsidiary is not extinguished until after the holder and the issuer of the license...

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28 April 1992 Memorandum 912857 (C.T.0. "Winding-Up of a Canadian Corporation")

Where a corporation that otherwise would be wound up is not dissolved but is kept in existence merely to hold legal title to real estate for the...

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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...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84 - Subsection 84(3) 32

21 June 1991 T.I. (Tax Window, No. 4, p. 10, ¶1312)

Where a corporation ("S Co.") has owned real estate as a capital property and its shares are acquired by a corporation which includes gains from...

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15 April 1991 T.I. (Tax Window, No. 2, p. 24, ¶1201)

An incorporated insurance broker will be able to claim a reserve under s. 32 on its winding-up provided that s. 88(1) applies.

25 February 1991 T.I. (Tax Window, Prelim. No. 3, p. 14, ¶1126)

A corporation will be considered to have been wound up where its assets have been distributed to the shareholders, provided the corporation has...

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27 December 1990 T.I. (Tax Window, Prelim. No. 2, p. 16, ¶1072)

Late s. 88(1)(d) designations are not permitted.

21 September 1990 T.I. (Tax Window, Prelim. No. 1, p. 11, ¶1004)

Where a taxpayer inherits the shares of an investment holding company ("Fatherco") from his father at a deemed cost equal to their fair market...

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June 1990 Meeting of Alberta Institute of Chartered Accountants (November 1990 Access Letter, ¶1499, Q. 2)

Dividends paid to a foreign parent by the subsidiary prior to its winding-up will not reduce the "bump" under s. 88(1)(d).

15 January 1990 T.I. (June 1990 Access Letter, ¶1265)

In response to a proposal that Corporation A, which was in the business of building apartment buildings for investment purposes, indirectly...

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90 C.R. - Q40

The cost amount of inventory for purposes of s. 88(1)(a)(iii) is the value of such property immediately before the winding-up determined in...

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5 September 89 T.I. (February 1990 Access Letter, ¶1110)

The cancellation, on an s. 88(1) winding-up of a wholly-owned subsidiary, of a licence of intellectual property by the parent to the subsidiary,...

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IT-488R "Winding-up of 90%-Owned Taxable Canadian Corporations"

IT-188R "Sale of Accounts Receivable"

An election under s. 22 is not available where debts are distributed to the parent on a winding-up under s. 88 because a sale does not take place.

IT-126R2, "Meaning of 'Winding-Up' ", March 20, 1995

4. Generally, the dissolution of a corporation is authorized by the applicable federal or provincial statute only where it can be shown that

(a) ...

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Articles

Boehmer, "Alternative to Butterfly Reorganization: Access to Investments of a Holding Company by Shareholders", Corporate Structures and Groups, Vol. IV, No. 3, p. 212

Description of considerations arising on the transfer of shares of a holding company to the operating company, followed by the winding-up of the...

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Roberts, Briggs, "Winding Up", The Taxation of Corporate Reorganizations, 1996 Canadian Tax Journal, Vol. 44, Nos. 2 and 3, pp. 533, 943.

Shafer, "Liquidation", 1991 Conference Report, c. 10.

Pister, "Paragraph 88(1)(d) Bump on the Winding-up of a Subsidiary", 1990 Canadian Tax Journal, pp. 148, 426.

Williamson, "Checklists: Corporate Reorganizations, Amalgamations (Section 87), and Wind-ups (Subsection 88(1))", 1987 Conference Report, c. 29.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1) 0

Paragraph 88(1)(b)

Administrative Policy

2021 Ruling 2020-0869161R3 - Loss Carryforwards and 88(1.1)

A new corporation (the Taxpayer) was formed to acquire most of the remaining assets of a corporation (Lossco) that, together with its parent...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1.1) accessing the losses under s. 88(1.1) of a Lossco with nominal assets 359

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

Will CRA invoke GAAR where paid up capital (“PUC”) is reduced in the following examples to nil in order to avoid a potential s. 88(1)(b) gain...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) avoidance of s. 88(1)(b) where insufficient safe income was abusive 393
Tax Topics - Income Tax Act - Section 84 - Subsection 84(3) no challenge of a reduction of PUC of shares of DC held by TC before redemption 222

6 October 2006 Roundtable, 2006-0196011C6 F - PUC Reduction Prior To Wind-Up

GAAR will not usually be applied to a pre-dissolution reduction of paid-up capital.

2003 APFF Round Table, Q.14 (No. 2003-003-0095)

Where an operating subsidiary previously had disposed of a depreciable property having a cost amount of $100,000 to its parent for the property's...

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Paragraph 88(1)(c)

See Also

Harvest Operations Corp v. A.G. (Canada), 2015 DTC 5067 [at 5904], 2015 ABQB 327

A last-minute requirement of a Target lender for its loan to be repaid on closing resulted in the purchase price being reduced by $35M and that...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Estoppel taxpayer estoppel when it claimed a tax benefit from its mistake rather than promptly seeking rectification 206
Tax Topics - General Concepts - Rectification & Rescission requested rectification order to fix bump did not match parties' specific plan at closing 614

Articles

Subparagraph 88(1)(c)(ii)

Administrative Policy

27 October 2006 External T.I. 2005-0157321E5 F - Winding-up of a wholly-owned corporation

Does the character of a property (here, eligible capital property) acquired by a parent corporation on the winding-up of a wholly-owned subsidiary...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Goodwill character of property usually regarded as retained in the hands of the parent 170

Subparagraph 88(1)(c)(iii)

Administrative Policy

20 April 2005 External T.I. 2005-0110421E5 F - ACB BUMP on an AMALGAMATION

Immediately prior to the amalgamation of Holdco with Opco, the only assets of Opco were woodlots. In finding that the cost of the land could not...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Depreciable Property land included in timber limit is depreciable property 127

Subparagraph 88(1)(c)(v)

Administrative Policy

31 October 2011 External T.I. 2011-0422981E5 F - Whether property is eligible for a bump

In 2000, an individual ("Parent") subscribed cash for common shares on the incorporation of "Parentco", with Parentco purchasing marketable...

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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 unavailable given previous non-arm's length acquisition 153
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d.2) properties not bumpable as not owned at subsidiary's formation by related person 401

Articles

Subparagraph 88(1)(c)(vi)

Administrative Policy

2014 Ruling 2013-0503611R3 - Post-Mortem Planning

Overview of transactions

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

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) pipeline following death of spouse for a spousal trust where company holds mostly marketable securities 585

17 February 2012 External T.I. 2011-0428561E5 - 88(1)(c)(vi) Bump Denial Rule

following the death of Ms. X, who was the second wife of her previously-deceased husband, Holdco is controlled by A and B (children of the first...

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31 October 2011 External T.I. 2011-0422981E5 F - Whether property is eligible for a bump

In 2000, an individual ("Parent") subscribes cash on the incorporation of "Parentco" with Parentco purchasing marketable securities a few hours...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(c) - Subparagraph 88(1)(c)(v) properties not bumpable as the subsidiary control was deemed by s. 88(1)(d.2) to be acquired at the same time as it acquired the properties 634
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d.2) properties not bumpable as not owned at subsidiary's formation by related person 401

19 March 2003 T.I.

For the purpose of clause 88(1)(c)(vi)(A) of the Act, the reference to the term 'acquire control' means the time that the parent actually acquired...

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17 November 2000 External T.I. 1999-0008585 - Winding-up

"The determination of whether a person is a 'specified person' for purposes of subclause 88(1)(c)(vi)(B)(I) of the Act is made at the time any...

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29 October 1998 External T.I. 9821355 - WINDING-UP "BUMP"

Where Target transferred a depreciable property to a newly incorporated wholly-owned subsidiary (Newco) in exchange for newly issued treasury...

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Articles

Peter Lee, Paul Stepak, "PE Investments in Canadian Companies", draft 2017 CTF Annual Conference paper

Potential unavailability of “bump and run” where management are expected to retain interest in company (p. 15)

Where Target is a 10(f)...

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Paul Stepak, Eric C. Xiao, "The 88(1)(d) Bump – An Update", 2013 Conference Report (Canadian Tax Foundation), pp.13:1-60

Sequencing of steps (p. 13:35)

The steps set out in the plan generally include the repayment of historic Target debt, the cash-out or rollover of...

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Brian R. Carr, Julie A. Colden, "The Bump Denial Rules Revisited", Canadian Tax Journal (2014) 62:1, 273-99.

Purpose of bump denial rules (p. 276)

…Generally, the bump denial rules were introduced into the Act to prevent so-called back-door...

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Steve Suarez, "Canada's 88(1)(d) Tax Cost Bump: A Guide for Foreign Purchasers", Tax Notes International, December 9, 2013, p. 935

Policy of bump denial rules (p. 946)

The policy behind the bump denial rule is deceptively simple: The parent should not be able to buy and wind...

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Mark Jadd, Richard Lewin, "Anatomy of a Deal: Income Tax Issues Facing a Non-Resident Purchaser of a Public Canadian Corporation", International Tax (CCH), October 2006, No. 30 p. 9.

Nathan Boidman, "Unwinding or Otherwise Dealing With 'Sandwich' Structures Resulting From an International Merger or Acquisition", Tax Notes International, 10 May 2004, p. 601: Discussion of restrictions on bump where a Canadian corporation has been acquired by a foreign acquiror.

Clause 88(1)(c)(vi)(B)

Subclause 88(1)(c)(vi)(B)(II)

Administrative Policy

28 November 2010 CTF Annual Roundtable Q. 19, 2010-0386041C6 - Deemed ownership of shares

Is the reference to "all of the shares" in s. 88(1)(c)(vi)(B)(II) a reference only to shares of a subsidiary that is subsequently wound-up into...

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Articles

Paul Stepak, Eric C. Xiao, "The 88(1)(d) Bump – An Update", 2013 Conference Report (Canadian Tax Foundation), pp.13:1-60

Cash calls on private equity investors who also are prohibited persons (pp. 13:38-39)

Figure 9

Private equity (PE) buyers can raise challenging...

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Brian R. Carr, Julie A. Colden, "The Bump Denial Rules Revisited", Canadian Tax Journal (2014) 62:1, 273-99.

Overview of aggregation rule (p. 283)

In addition, the bump will be denied if distributed property or substituted property is acquired as part of...

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Subclause 88(1)(c)(vi)(B)(III)

Administrative Policy

2013 Ruling 2011-0397081R3 - Bump Transaction

Buyer

Buyer is a listed non-resident corporation, and owns all but the exchangeable shares of a Canadian public corporation ("BuyerSub"). ...

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Articles

Paragraph 88(1)(c.2)

Subparagraph 88(1)(c.2)(i)

Articles

Paul Stepak, Eric C. Xiao, "The 88(1)(d) Bump – An Update", 2013 Conference Report (Canadian Tax Foundation), pp.13:1-60

Parent relatedness to mooted specifed person from moment of its incorporation if not a shelf corp. (p. 13:22-23)

[A]t the time the parent is...

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Brian R. Carr, Julie A. Colden, "The Bump Denial Rules Revisited", Canadian Tax Journal (2014) 62:1, 273-99.

Related status before incorporator's share issuance (p. 297)

The joint [CBA/CICA] committee noted in its submission that there are deficiencies in...

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Steve Suarez, "Canada's 88(1)(d) Tax Cost Bump: A Guide for Foreign Purchasers", Tax Notes International, December 9, 2013, p. 935

Examples of prohibited persons (pp. 947-8)

The most useful way to illustrate the wide range of potential prohibited persons is by using the...

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Subparagraph 88(1)(c.2)(ii)

Subparagraph 88(1)(c.2)(iii)

Clause 88(1)(c.2)(iii)(A)

Articles

Paul Stepak, Eric C. Xiao, "The 88(1)(d) Bump – An Update", 2013 Conference Report (Canadian Tax Foundation), pp.13:1-60

Meaning of "significant" in s. 88(1)(c.2)(iii)(A) (pp. 13:46-48)

[F]oreign Parent owns Interco, which owns Bidco. Bidco has acquired a toehold...

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Clause 88(1)(c.2)(iii)(A.2)

Articles

Paul Stepak, Eric C. Xiao, "The 88(1)(d) Bump – An Update", 2013 Conference Report (Canadian Tax Foundation), pp.13:1-60

Remedying under s. 88(1)(d)(c.2)(iii)(A.2) of pre-winding-up agreement for sale of bumped shares

[P]rior to the [s. 88(1)(d)(c.2)(iii)(A.2)]...

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Paragraph 88(1)(c.3)

Subparagraph 88(1)(c.3)(i)

Administrative Policy

2012 Ruling 2012-0451421R3 - Purchase of Target and bump

Ruling that Parent guarantees of the amended notes of Target will not constitute substituted property as described in s. 88(1)(c.3). See detailed...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(18) - Paragraph 212.3(18)(c) deemed investment on amalgamation of subsidiary 833
Tax Topics - Income Tax Act - Section 88 - Subsection 88(4) - Paragraph 88(4)(b) Target Amalco 2 formed post-AOC and pre-bump (occurring on amalgamation of Target Amalco 2 with Bidco) is a continuation its predecessors for s. 88(1)(c) midamble purposes/prepackaging transactions before formation of Target Amalco 2/Target asset buyers agree not to purchase Target shares 995

31 January 2000 External T.I. 1999-0010965 - EARNOUT CLAUSES AND INELIGIBLE PROPERTY

"Where an earn-out or any similar type of agreement is clearly for the sole purpose of providing a mechanism to determine the fair market value...

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Articles

Warren Pashkowich, Daniel Bellefontaine, "Participation-Based Payments: What Are They and How are They Taxed", 2017 Conference Report (Canadian Tax Foundation), 9:1-25

Potential treatment of earnout as substituted property (p. 9: 12)

[T]here can be a denial of the bump where property distributed on the...

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Ian Crosbie, "Recent Transactions of Interest, Part I", 2015 CTF Annual Conference paper

Application of substituted property rules where consideration paid to target (Kodiak) shareholders was over 10% of shares of U.S. acquiror...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(2) 689

Paul Stepak, Eric C. Xiao, "The 88(1)(d) Bump – An Update", 2013 Conference Report (Canadian Tax Foundation), pp.13:1-60

10% attributable property test applied only during the series of transactions (p. 13:12-13)

[W]hen read in a textual, contextual and purposive...

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Brian R. Carr, Julie A. Colden, "The Bump Denial Rules Revisited", Canadian Tax Journal (2014) 62:1, 273-99.

Upstream equity or debt as substituted property (p. 280)

Any upstream equity interests (such as shares of the parent or other upper-tier...

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Steve Suarez, "Canada's 88(1)(d) Tax Cost Bump: A Guide for Foreign Purchasers", Tax Notes International, December 9, 2013, p. 935

10%-plus properties as prohibited property (p. 951)

2. Property Deriving More Than 10 Percent of Its FMV From Distributed Property Post-AOC...

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Carrie Smit, "Amendments to 'Bump' Rules May Permit Foreign Shares as Deal Consideration", International Tax, No. 68, February 2013, p.1

… where a foreign purchaser ("Forco") sets up a Canadian acquisition corporation ("Bidco") to acquire a Canadian target company ("Canco"), and...

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Subparagraph 88(1)(c.3)(ii)

Administrative Policy

31 January 2000 External T.I. 1999-0010965 - EARNOUT CLAUSES AND INELIGIBLE PROPERTY

"Where an earn-out or any similar type of agreement is clearly for the sole purpose of providing a mechanism to determine the fair market value...

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7 August 1998 External T.I. 9727435 - BUMP-REVERSE TAKEOVER

Respecting the acquisition by a public company (Aco) of shares of another public company (Bco) in a reverse takeover, CRA stated that "the shares...

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Income Tax Technical News, No. 9, 10 February 1997

The words "wholly or partly attributable to" in subparagraph 88(1)(c.3)(i) are very broad and would apply, for example, to a share or interest in...

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Articles

Firoz Ahmed, "Substituted Property for Purposes of the Section 88(1)(d) Bump", Canadian Current Tax, Vol. 7, No. 7, April 1997, p. 70

Where a public corporation ("Smallco") makes a successful takeover bid for another corporation ("Bigco"), RC is prepared to rule that shares of...

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Paragraph 88(1)(c.4)

Articles

Angelo Nikolakakis, Alain Léonard, "The Acquisition of Canadian Corporations by Non-Residents: Canadian Income Tax Considerations Affecting Acquisition Strategies and Structure, Financing Issues, and Repatriation of Profits", 2005 Conference Report (Canadian Tax Foundation), 21:1-61, at 21:24-25:

Policy for exclusion of shares or debt of foreign corporations (p. 280)

Why is it that shares of a non-resident Bidder should not constitute...

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Subparagraph 88(1)(c.4)(ii)

Articles

Paul Stepak, Eric C. Xiao, "The 88(1)(d) Bump – An Update", 2013 Conference Report (Canadian Tax Foundation), pp.13:1-60

Is debt of Target non-specified property after it is amalgamated with Bidco? (pp. 13:16-19)

On a literal reading of old paragraph 88(1)(c.3),...

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Brian R. Carr, Julie A. Colden, "The Bump Denial Rules Revisited", Canadian Tax Journal (2014) 62:1, 273-99.

Dissent payment rights under a plan of arrangemnt as indebtedness (p. 292)

If the plan of arrangement ultimately receives shareholder approval,...

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Paul Stepak, J. Scott Wilkie, "Relieving and Clarifying Changes to Canadian Bump Rules", Corporate Finance, Volume XVIII, No. 3, 2012, p. 2130 at 2132:

  • Indebtedness issued for money is specified property – this rule now confirms, from and after 2001, that indebtedness issued solely for...

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Paragraph 88(1)(c.9)

Articles

Paul Stepak, Eric C. Xiao, "The 88(1)(d) Bump – An Update", 2013 Conference Report (Canadian Tax Foundation), pp.13:1-60

Options granted by virtue of employment not part of series (p. 13:29)

[A] stock option granted to an employee by Bidco or Bidco's Canadian parent...

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Brian R. Carr, Julie A. Colden, "The Bump Denial Rules Revisited", Canadian Tax Journal (2014) 62:1, 273-99.

No relief under s. 88(1)(c.9) for conventional option exchange (pp. 294-5)

Technically, however, the proposed amendment provides no relief if an...

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Paul Stepak, J. Scott Wilkie, "Relieving and Clarifying Changes to Canadian Bump Rules", Corporate Finance, Volume XVIII, No. 3, 2012, p. 2130 at 2132:

  • References to a share in the definition of specified property includes a right to acquire a share – this rule now confirms, from and after...

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Paragraph 88(1)(d)

Cases

Canada v. Oxford Properties Group Inc., 2018 FCA 30

When Oxford Properties was sold to an OMERS subsidiary, the purchaser first negotiated that Oxford would drop various properties down into LPs on...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) using the s. 88(1)(d) bump on newly-formed rental property LPs to avoid indirect recapture income under s. 100(1) was abusive 975
Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) - Paragraph 98(3)(c) s. 98(3)(c) bump is intended to avoid gain realization where there has been no economic gain 267
Tax Topics - Income Tax Act - Section 69 - Subsection 69(11) 3-year time limitation in s. 69(11) did not establish safe harbor for avoidance of recapture on sale after that period 382
Tax Topics - Income Tax Act - Section 100 - Subsection 100(1) purpose is to ensure that latent recapture will be recognized on sale to tax exempt 254
Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) object includes ultimate taxation of the deferred gain 234
Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) GAAR question as to determining a provision’s object was subject to correctness standard 169
Tax Topics - Statutory Interpretation - Hansard, explanatory notes, etc. statement that amendment was for “clarification” was self-serving 209
Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 45(2) determination of whether amendment merely clarified requires review of pre-amendment state of law 146
Tax Topics - Income Tax Act - Section 245 - Subsection 245(2) consequential s. 245(2) adjustment must be scaled to the abuse 391

See Also

Oxford Properties Group Inc. v. The Queen, 2016 TCC 204, rev'd 2018 FCA 30

A corporation (“BPC”), which was mostly owned by a Canadian pension fund (“OMERS”), obtained the agreement of a predecessor of the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) no abuse in using 88(1)(d) bump to avoid s. 100 after 3-year s. 69(11) period 557
Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) subsequent sale part of series as it utilized the benefit of previous LP packaging transactions 383
Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) purpose not to tax underlying recapture on subsequent LP unit sale 431
Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 45(2) subsequent amendment shed light on scope of previous version 107
Tax Topics - Income Tax Act - Section 100 - Subsection 100(1) S. 100 operates only on outside basis gain 290
Tax Topics - Income Tax Act - Section 69 - Subsection 69(11) Parliament provided safe harbour for sales after 3 years 204
Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) - Paragraph 98(3)(c) purpose: to preserve high outside basis through push down 293

Slate Management Corporation v Canada (Attorney General), 2016 ONSC 4216

A purchaser used a newly-formed AcquisitionCo to acquire a Target, and asked for and received a computation from its accounting firm of the amount...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Rectification & Rescission a generalized intent to achieve a s. 88(1)(d) bump was a sufficient basis to rectify in order to redo an amalgamation 202

Administrative Policy

30 May 2019 Internal T.I. 2019-0806761I7 - Late filing of 88(1)(d) designation

A non-resident corporation formed a Canadian “Acquireco,” which acquired all the shares of a public corporation, and then vertically...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(b) - Subparagraph 152(4)(b)(iii) late designation policy coordinated with extended reassessment period 242

14 March 2016 Internal T.I. 2015-0609671I7 - Earnout, Amalgamation, Cost of Shares and ECE

Pursuant to a share purchase agreement, Acquisitionco (a newly-formed Canadian subsidiary of another corporation) purchased all the outstanding...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 14 - Subsection 14(5) - Eligible Capital Expenditure payments made by Amalco in satisfaction of earnout obligation for acquisition of one precedessor by the other were not ECE 224
Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base earnout payments an addition to cost of shares which had since disappeared 90
Tax Topics - General Concepts - Purpose/Intention attribution of predecessor's intention to Amalco 140
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) position on interest deductibility following target amalgamation is based on policy and ITA scheme rather than technical 350

30 March 2016 External T.I. 2016-0629701E5 F - bump-up 88(1)(d)

Mr. A holds all the shares of Corporation A, whose only property which is capital property with an ACB of $100,000. Corporation B, which is an...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate land developer accesses capital property status of land held in acquired subsidiary 64

S4-F7-C1 - Amalgamations of Canadian Corporations

1.39 …[T]he designation of any bump amount must normally be made in the new corporation's Part I income tax return for its first tax year....

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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 84 - Subsection 84(3) no deemed dividend to dissenter on amalgamation 87
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(1.1) 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

21 November 2011 External T.I. 2011-0416881E5 F - Late-filed designation - paragraph 88(1)(d)

CRA generally allows a late-filed designation under s. 88(1)(d) to the extent that (1) the parent corporation agrees to allocate the excess...

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19 May 2011 IFA Roundtable, 2011-0404521C6 - calculation of tax-free surplus balance

In the situation where the Canadian target is wound up within a reasonable period of time of its acquisition by the acquisition company and the...

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7 January 2009 External T.I. 2008-0286111E5 F - 88(1)d) and 87(11)-Late-filed designation

Regarding its position regarding a late designation under ss. 88(1)(d) and 87(11), CRA stated:

... CRA ... allow[s] on an administrative basis, a...

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2006 Ruling 2006-0178571R3 - Purchase of Target and Bump

Bump ruling provided respecting transactions which apparently involved the transfer of assets on a rollover basis by the target (Mergeco), with...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1) amalgamation with parent as survivor (forward triangular "D" merger) 588

23 October 1995 External T.I. 9513425 - ARM'S LENGTH TEST

Where Acquisitionco, subsequent to its acquisition of Targetco and prior to the winding-up of Targetco and its child and grandchild subsidiaries...

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1994 A.P.F.F. Round Table, Q. 14

Section 8 of Supplement 12 IC88-2 (respecting the incorporation by Target Corporation of its three businesses prior to the purchaser of Target...

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10 February 1993 T.I. (Tax Window, No. 28, p. 12, ¶2405)

No late election can be made under s. 88(1)(d).

26 August 1992, T.I. (Tax Window, No. 23, p. 13, ¶2168)

S.88(1)(d) merely requires that a property be a capital property to the subsidiary at the time the parent last acquired control of the subsidiary...

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21 May 1991 T.I. (Tax Window, No. 3, p. 9, ¶1260)

The parenthetical words ("other than a corporation acquired by [the parent] from a person with whom it was dealing at arm's length") at the end of...

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Articles

K.A. Siobhan Monaghan, "Safe Income and the Elusive Subsection 88(1) 'Bump' - and other Problems in a Series", Corporate Structures and Groups, Vol. V, No. 3, 1999, p. 274.

Mark D. Brender, "Interaction of the Mark-to-Market Rules with Step-Up Transactions", Corporate Structures and Groups, Vol. V, No. 2, 1998, p. 256.

M. Ton-That, "Changes to the 'Bump' Rules: Transactions Where It Can Now Be Denied", Corporate Structures and Groups, Vol. V, No. 1, 1998, p. 244.

Subparagraph 88(1)(d)(i)

Administrative Policy

28 January 2016 External T.I. 2015-0617771E5 F - Bump calculation

Is the balance of the “future income tax liabilities” (being an accounting provision which was not deducted in computing income) presented in...

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Words and Phrases
debt

Subparagraph 88(1)(d)(ii)

Administrative Policy

23 April 2013 External T.I. 2012-0461741E5 - Calculation of bump limit under 88(1)(d)

At the date of acquisition of control of the subsidiary by the parent, it owns 3,000 shares of a public corporation with a cost of $10,000 (for an...

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Articles

Subparagraph 88(1)(d)(ii.1)

Paragraph 88(1)(d.2)

Administrative Policy

31 October 2011 External T.I. 2011-0422981E5 F - Whether property is eligible for a bump

In 2000, an individual ("Parent") subscribed cash for common shares on the incorporation of "Parentco", with Parentco purchasing marketable...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(c) - Subparagraph 88(1)(c)(v) properties not bumpable as the subsidiary control was deemed by s. 88(1)(d.2) to be acquired at the same time as it acquired the properties 634
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(c) - Subparagraph 88(1)(c)(vi) bump unavailable given previous non-arm's length acquisition 153

17 July 1995 External T.I. 9505095 - MEANING OF "BECAUSE OF A BEQUEST OR INHERITANCE"

Where the shares of a Canadian corporation are held by the estate of the deceased shareholder until probate, then distributed to the beneficiary,...

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Paragraph 88(1)(d.3)

Administrative Policy

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

Around when he was placed in a long-term care facility, the “Deceased” transferred his shares of two companies with investing businesses (Aco...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) pipeline for alter ego trust with preliminary elimination of NR beneficiary and application of s. 88(1)(d.3) 367
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

2020 Ruling 2020-0860231R3 - Post-mortem planning

CRA ruled on pipeline transactions respecting common shares of Opco which the deceased held on death, in which:

  • the estate transfers its common...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) redemption of shares stepped up with CGD, giving rise to s. 164(6) carryback, and pipeline followed by s. 88(1)(d) bump, having regard to s. 88(1)(d.2) and (d.3) 516

Articles

Brian Nichols, "Post-Mortem Tax Planning Using Paragraph 88(1)(d) Bumps", Tax Topics, No. 1609, 9 January 2003, p. 1.

In order to take advantage of the "reset" effect of paragraph 88(1)(d.3), care must be taken to ensure that a child does not obtain de jure...

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Rhonda Rudick, "Bump Denial Rules: Time of Acquisition of Control in the Context of Post-Mortem Estate Planning", Corporate Structures and Groups (Federated Press), Vol. VII, No. 1, 2001, p. 355.

Son already had s. 186(2) control of Opco

[A]n individual (father) dies on October 1, 2001 and leaves all of his assets to his son, who is also...

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Paragraph 88(1)(e)

Articles

Kevin Yip, "Recent Legislation Affecting Partnerships and Foreign Affiliates – Subsection 88(1) and Section 100", Canadian Tax Journal, (2013) 61:1, 229-256, at 245

After noting that s. 88(1)(e) can apply even if no ineligible property was transferred on a rollover basis, as s. 88(1)(e)(ii) only requires that...

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Paragraph 88(1)(e.2)

Administrative Policy

30 November 1995 Ruling 9611983 - APPLICABILITY OF WITHOLDING EXEMPTION UPON WINDING UP

Favourable ruling that the exemption in s. 212(1)(b)(vii) continued following a wind-up of the debtor corporation under s. 88(1).

Paragraph 88(1)(e.3)

Administrative Policy

2018 Ruling 2017-0711071R3 - Use of subsidiary losses & ITCs after wind-up

A foreign-owned Canadian-resident corporation (“Taxpayer”) used a subsidiary LP to acquire the sole business of a “Lossco” that was in...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1.1) - Paragraph 88(1.1)(b) streamed losses of empty-shell Lossco flowed through on its dissolution as Lossco LP business had been acquired years earlier through sub LP 352

Subsection 88(1.1) - Non-capital losses, etc., of subsidiary

See Also

S.T.B. Holdings Ltd. v. The Queen, 2011 DTC 1118 [at 650], 2011 TCC 144, aff'd 2002 DTC 7450, 2002 FCA 386

The taxpayer purchased the shares of an unrelated corporation ("Newport") with substantial non-capital losses and wound up Newport into itself,...

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Administrative Policy

2021 Ruling 2020-0869161R3 - Loss Carryforwards and 88(1.1)

Background

Lossco and its parent (Parentco, also a taxable Canadian corporation) filed for insolvency protection under the CCAA. After receiving...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(b) pre-wind-up PUC reduction to no less than the subsidiary's asset cost amount 184

2017 Ruling 2017-0711911R3 - loss consolidation ruling

A parent company (Aco), whose only source of taxable income was foreign accrual property income from a non-resident subsidiary but which had...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) transfer of losses from parent with losses after FAPI to successive new losscos, which then are wound-up into profitco 402

17 February 2016 External T.I. 2015-0618211E5 - Subsections 88(1.1) and 88(1.2)

Can losses be used by a parent corporation in the year commencing after the commencement of the winding-up of its subsidiary, where the legal...

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S4-F7-C1 - Amalgamations of Canadian Corporations

1.54 Where a predecessor corporation's losses have been carried forward to the new corporation under the provisions of subsection 87(2.1), it is...

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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 84 - Subsection 84(3) no deemed dividend to dissenter on amalgamation 87
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 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

2014 Ruling 2013-0511991R3 - Loss consolidation

Lossco, which is a specified financial institution with non-capital losses, is a subsidiary of non-resident parent, and serves as the holding...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) losses transferred to Newco which is wound-up into profitco, s. 88(1.1) loss transfer not effective until articles of dissolution, provincial GAAR ruling, cashless un-wind 418

2013 Ruling 2013-0496351R3 - Loss Consolidation

Opco, which has non-capital losses, wishes to transfer its non-capital losses to Profitco, a sister. Accordingly, Opco will effectively transfer...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) value of losses transferred to new Lossco reflected in Lossco sale price 553

5 October 2012 APFF Roundtable, 2012-0454061C6 F - Transfer of a Lossco to a related corporation

Example 1

Son claims an ABIL under s. 50(1) with respect to his share investment in a wholly-owned corporation (Lossco), which had ceased active...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Fair Market Value - Shares non-capital losses of corporation taken into account in valuing its shares 162
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) related but not affiliated transfer of Lossco shares to father's or brother's company 267
Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) lossco with no assets or liabilities cannot be insolvent 417

30 May 2012 External T.I. 2012-0447961E5 - Winding-up-Carryover of Non-Capital Losses

Parentco winds up its wholly-owned subsidiary (Subco) on May 1, 2012, with the certificate of dissolution of Subco being issued on October 31,...

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19 March 2001 External T.I. 2001-0067105 - Meaning of winding-up

The policy of the CCRA that a corporation is considered to have been wound up when there is substantial evidence that it will be dissolved within...

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22 November 1996 External T.I. 9628845 - REVIVAL OF A DISSOLVED CORPORATION-IMPACT ON LOSSES

Because a revival under s. 241(5) of the Business Corporations Act (Ontario) has retroactive effect, the non-capital losses will be restored upon...

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31 October 1994 External T.I. 9420595 - NON-CAPITAL LOSSES

Where two wholly-owned subsidiaries are amalgamated with each other and then wound-up into the parent, the non-capital losses of the subsidiaries...

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Halifax Round Table, February 1994, Q. 2

If the parent commences to carry on the business of the subsidiary, and the subsidiary ceases to carry on that business, prior to the time that...

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92 C.R. - Q.18

RC implicitly assumed that s. 88(1.1) was available where the subsidiary had abandoned its business, and used all remaining assets to pay down...

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30 July 1992 T.I. 921653 (March 1993 Access Letter, p. 72, ¶C82-110)

The application of s. 80 to the parent in its second taxation year ending after the commencement of the winding-up will reduce the non-capital...

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6 February 1992 T.I. (Tax Window, No. 16, p. 20, ¶1736)

The fact that a corporation has been dissolved by the order of the Director under s. 241(4) of the Business Corporations Act (Ontario) does not...

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23 September 1991 Memorandum (Tax Window, No. 9, p. 5, ¶1469)

The phrase "that business" in s. 88(1.1)(e) refers to the particular business of the subsidiary in which the loss was incurred and not other...

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IT-302R3 "Losses of a Corporation - The Effect on Their Deductibility of Changes in Control, Amalgamation and Winding-up" 1 January 1995.

Commencement of winding-up

29. ...[G]enerally, the commencement of winding-up is evidenced by a resolution of shareholders authorizing or...

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Paragraph 88(1.1)(b)

Administrative Policy

2018 Ruling 2017-0711071R3 - Use of subsidiary losses & ITCs after wind-up

Acquisition of Lossco business

Subsequently to a CCAA filing by Lossco and members of its group, Taxpayer (a wholly-owned subsidiary of a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(e.3) purchaser could acquire Lossco’s business through a sub LP and then acquire Lossco, accessing s. 88(1)(e.3) 152

Paragraph 88(1.1)(e)

Administrative Policy

7 October 2011 APFF Roundtable, 2010-0371941C6 F - Application de l'article 80 - fusion/liquidation

A subsidiary that sustained losses and then was subject to an acquisition of control, is then wound up into the parent corporation following which...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Relevant loss balance NCL of acquired subsidiary preserved for debt forgiveness purposes on amalgamation but lost (if business ceased) on wind-up 138

16 August 2011 Internal T.I. 2011-0401721I7 F - Loss Utilization

Before finding that the non-capital losses of an acquired corporation (whose only sources of income were inter-affiliate loan and subsidiary...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 111 - Subsection 111(5) - Paragraph 111(5)(a) holding company whose only sources of income were inter-affiliate loan and subsidiary shares had losses from property rather than business 103

Paragraph 88(1.1)(f)

Administrative Policy

17 February 1993 External T.I. 9226895 F - Pertes - liquidation

A subsidiary realized losses in its two taxation years preceding its winding-up. Its winding-up commenced in a taxation year of its parent...

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Subsection 88(1.5) - Parent continuation of subsidiary

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

Possibility that s. 88(1.5) does not apply following the winding-up distribution and before the dissolution (p. 12:19)

...[N]o subsequent issues...

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Mike J. Hegedus, Andrew Bateman, "A Closer Look at Subsection 88(1.5) of the Income Tax Act", Resource Sector Taxation, Vol. VIII, No. 3, 2011, p. 591.

Subsection 88(1.7) - Interpretation

Administrative Policy

21 November 2011 External T.I. 2011-0418971E5 - subsection 88(1.7)

Acquisitionco acquires all the shares of Pubco, which are widely held, at the time that a wholly-owned subsidiary of Pubco (Subco) holds the Asset...

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Subsection 88(2) - Winding-up of Canadian corporation

See Also

Re Martin and F.P. Bourgault Industries Air Seeder Division Ltd. (1987), 45 DLR (4th) 296 (Sask. C.A.)

The appellant, which manufactured air seeders in one plant, and cultivators in its other plant, transferred its cultivator division, which...

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85956 Holdings Ltd. v. Fayerman Bros. Ltd., [1985] 2 WWR 647 (Sask QB)

A sale by a wholesale-retail merchant of all its inventories would destroy its business, and accordingly would constitute "a sale, lease or...

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Administrative Policy

26 November 2014 External T.I. 2014-0551641E5 F - Winding-up and subsection 42(1)

A corporation was to be liquidated as described in s. 88(2) and to be dissolved upon receipt of provincial and federal notices of assessment for...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 42 corporation permitted to claim litigation loss following effective time of winding-up 104
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) effective time of winding-up not delayed by potential litigation liability 104

10 December 2013 External T.I. 2013-0480771E5 F - Winding-Up of a Corporation

The correspondent queried the accuracy of the statement in the T2 Guide that on a s. 88(2) winding-up, s. 88(2)(a)(iv) indicates that the taxation...

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2013 Ruling 2012-0443081R3 - Distribution of pre-72 Capital Surplus on Hand

Current situation

ACo, which is a Canadian-controlled private corporation (with an RDTOH balance) owned by cousins (an unrelated group), owns...

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Articles

O'Connor, "Revisiting Pre-1972 Capital Surplus on Hand (the More Things Change, the More They Stay the Same)", Personal Tax Planning, 1996 Canadian Tax Journal, Vol. 44, No. 2, p. 501.

Paragraph 88(2)(a)

Articles

Derek T. Dalsin, "ECP-Related CDA Dividend “In the Course of a Winding Up” Pre-2017", Canadian Tax Highlights, Vol. 27, No. 8, August 2019, p. 1

No increase to CDA balance from eligible capital amount until year end (p. 1)

[I]n order for a capital dividend account (CDA) to arise out of a...

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Paragraph 88(2)(b)

Administrative Policy

2020 Ruling 2020-0840631R3 F - Purpose Test in Subsection 55(2)

Following the death of the father, his preferred shares of a CCPC (“Opco”), that held only cash as a result of having sold all its marketable...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) no application of s. 55(2) because ss. 88(2)(b) and 84(2) dividends did not significantly reduce capital gains 321

Subparagraph 88(2)(b)(i)

Administrative Policy

6 October 2017 APFF Roundtable Q. 4, 2017-0709021C6 F - CDA and Winding-up of a corporation

Where, at the moment of a winding-up described in s. 88(2), the corporation holds portfolio investments or other assets whose fair market value...

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Subparagraph 88(2)(b)(ii)

Administrative Policy

2021 Ruling 2020-0863171R3 - Gross basis split-up Butterfly

CRA ruled on a butterfly split-up of a rental property company (which was considered to carry on an active business because it had more than five...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution CRA rules on gross asset butterfly with preliminary safe income dividend to increase ACB to exceed pre-1972 CSOH 614
Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) - Paragraph 186(1)(b) request to TSO for short taxation year to avoid dividend circularity on split-up butterfly 233

Subsection 88(2.1)

Administrative Policy

15 October 1991 T.I. (Tax Window, No. 11, p. 8, ¶1525)

In determining the actual cost to a corporation of land owned by it on December 31, 1971 and disposed of after 1978, damages received by it in...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base 46

Subsection 88(3) - Liquidation and dissolution of foreign affiliate

See Also

Dauphin Plains Credit Union Ltd. v. Xyloid Industries Ltd., 80 DTC 6123, [1980] CTC 247, [1980] 1 S.C.R. 1182

The appellant was a secured debentureholder who, following default by the debtor (“Xyloid”), obtained a court order for the appointment of a...

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Words and Phrases
liquidation winding-up

Administrative Policy

16 May 2018 IFA Roundtable Q. 5, 2018-0745501C6 - Meaning of “merged or combined” in 40(3.5)(c)(i)

Canco sold all the shares of FA to Canco’s wholly-owned subsidiary (Subco) and realized a capital loss that was suspended under s. 40(3.4). In...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.5) - Paragraph 40(3.5)(c) - Subparagraph 40(3.5)(c)(i) suspended loss on the sale of CFA to Subco was not de-suspended on s. 88(3) wind-up of CFA 208

17 July 2014 External T.I. 2014-0536331E5 - Foreign affiliate liquidation and dissolution

Can property that is deemed to have been disposed of by paragraph 88(3)(b) be "excluded property" of the affiliate at the relevant time? In...

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14 August 2008 External T.I. 2004-0104691E5 - Conversion of a LLC to a LP

where a Delaware LLC governed by the Delaware Limited Liability Company Act is converted into a limited partnership pursuant to s. 17-217 of the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation Del. LP a partnership notwithstanding separate legal personality 168
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition LLC conversion to Delaware LP 54

26 October 2007 External T.I. 2005-0137641E5 - Dissolution of Foreign Affiliate

A loan is made by a controlled foreign affiliate of a taxpayer to the taxpayer immediately before the dissolution of the affiliate. Does the loan...

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IT-126R2, "Meaning of 'Winding-Up' ", March 20, 1995

8. The phrase "on the winding-up", as used in subsection 88(1) for a corporation or in subsection 84(2) for a corporation's business, means that...

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Articles

Patrick Marley, "Foreign Affiliate Mergers and Liquidations - Navigating Proposed Changes", Canadian Current Tax, Vol. 16, No. 12, September 2006, p. 125.

Dale S. Meister, "Foreign Affiliate Update", Canadian Petroleum Tax Journal, Vol. 19, No. 1

Includes summaries of comfort letters and CRA 2006 IFA pronouncements.

Paragraph 88(3)(d)

Administrative Policy

3 February 2016 External T.I. 2014-0548111E5 - U.S. tax paid in respect of an LLC's income

Mr. A, Canadian resident and citizen, was a members of an LLC carrying on a U.S. active business and which was treated as a partnership for Code...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Non-Business-Income Tax LLC tax paid by Cdn member not re business 169
Tax Topics - Income Tax Act - Section 20 - Subsection 20(11) only income was taxable capital gains 136
Tax Topics - Income Tax Act - Section 20 - Subsection 20(12) s. 20(14) deduction for US operating-income taxes imposed on Cdn LLC member even where his only Cdn income from LLC is taxable capital gain 439
Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) FTC for US operating-income taxes imposed on Cdn LLC member even where his only Cdn income from LLC is taxable capital gain 331
Tax Topics - Treaties - Income Tax Conventions - Article 24 Treaty sourcing rule does not trench on domestic FTC 215

9 January 2003 Internal T.I. 2002-0178147 - Dissolution of foreign Affiliate

Canco owns 100% of the shares of FA1 having an adjusted cost base of $10. FA1 holds cash of $50 and 100% of the shares of FA2 having an ACB of...

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16 January 1998 External T.I. 9722935 - DISTRIBUTIONS FROM U.S. CORPORATION

In the course of a general response as to the consequences of winding-up a U.S. corporation, CRA stated:

…[S]ubject to subsections 88(3) and...

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Subsection 88(3.1)

Articles

Michael Kandev, Olivia Khazam, "Was there a ‘Liquidation and Dissolution’? A (Corporate) Existential Question", International Tax (Wolters Kluwer CCH), No. 118, June 2021, pp. 8-9

Commercial understanding of “liquidation” and “dissolution” (p. 8)

I]t is reasonably clear that the terms "liquidation" and "dissolution"...

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Subsection 88(3.3) - Suppression election

Articles

Geoffrey S. Turner, "June 2014 Election Deadlines for Retroactive Application of New Foreign Affiliate Reorganization Rules", CCH International Tax, No. 74, February 2014, p. 1.

Suppression election addresses excess of inside over outside basis (p. 6)

Importantly, new subsection 88(3.3) provides for a "suppression...

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Eric Lockwood, Maria Lopes, "Subsection 88(3): Deferring Gains on Liquidation and Dissolution", Canadian Tax Journal (2013) 61:1, 209-28, p. 209

They use the facts in the example below (set out at p. 215) to illustrate in various scenarios that a taxpayer (Canco) will realize a capital gain...

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Subsection 88(3.4) - Conditions for subsection (3.3) election

Commentary

S. 88(3.4)(b) essentially provides that a suppression election is invalid if the "claimed amounts" (in aggregate, the amount by which the taxpayer...

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Articles

Clara Pham, Alex Feness, "CFA Suppression Election: Potential Risks", Canadian Tax Focus, Vol. 3, No. 3, August 2013, p. 2

Basic illustration of operation of s. 88(3) where suppression election needed

…assume that Canco 1 owns all the shares in CFA 2, which owns...

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Subsection 88(4) - Amalgamation deemed not to be acquisition of control

Paragraph 88(4)(b)

Commentary

S. 88(4)(b) provides that an amalgamated corporation is deemed to be the same corporation as, and a continuation of, its predecessor for purposes...

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Administrative Policy

2012 Ruling 2012-0451421R3 - Purchase of Target and bump

After giving effect to preliminary transactions relating to the Bidco structure:

  • a non-resident public company (Parent) is the sole shareholder...

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2008 Ruling 2007-0240271R3 - Purchase and bump

Plan of Arrangement

Under a Plan of Arrangement:

  • Rights under rights plans of Target were cancelled and Target stock options, RSUs and DSUs were...

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18 December 2002 External T.I. 2002-0130715 - Availability of Bump After Amalgamation

Over 2/3 of the shares of Target (a Canadian public company) are acquired by a taxable Canadian corporation ("TCC") and its subsidiary ("Parent")...

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2001 Ruling 2001-0110363 - XXXXXXXXXX

Completed bid

Pubco and its wholly-owned subsidiary Acquisitionco acquired all the shares of Target in consideration for Pubco shares (with Pubco...

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8 March 1990 T.I. (August 1990 Access Letter, ¶1375)

Where Holdings (a private Canadian corporation which deals at arm's length with Target) incorporates a wholly-owned subsidiary ("Acquisition"),...

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Articles

Paul Stepak, Eric C. Xiao, "The 88(1)(d) Bump – An Update", 2013 Conference Report (Canadian Tax Foundation), pp.13:1-60

Is debt of Target non-specified property after it is amalgamated with Bidco? (pp. 13:16-18)

On a literal reading of old paragraph 88(1)(c.3),...

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