Subsection 93(1) - Election re disposition of share of foreign affiliate
Cases
Terrador Investments Ltd. v. R., 99 DTC 5358, [1999] 3 CTC 520 (FCA)
In connection with the liquidation of a U.S. corporation owned by the two Canadian corporate taxpayers, they received promissory notes owing by...
Administrative Policy
5 September 2018 Internal T.I. 2017-0698241I7 - Interpretation of subsection 93(4)
But for s. 94(3), a Canadian corporation (ACo) would have realized a capital loss of $1 million on the liquidation and dissolution of a...
14 March 1991 Memorandum (Tax Window, No. 1, p. 21, ¶1143)
RC permits only one election to be made with respect to a particular disposition of shares.
Forms
T2107 Election for a Disposition of Shares in a Foreign Affiliate
Instructions
- Separate elections must be made when a disposition of shares in a foreign affiliate involves shares of different classes or when...
Articles
Paul Dhesi, Korinna Fehrmann, "Integration Across Borders", Canadian Tax Journal, (2015) 63:4, 1049-72
Inefficiency of realization of capital gains by CFA of CCPC (p. 1062, 1064)
[T]he realization of capital gains at the CFA level...is rarely good...
Eric Lockwood, Maria Lopes, "Subsection 88(3): Deferring Gains on Liquidation and Dissolution", Canadian Tax Journal (2013) 61:1, 209-28, p. 209
They provide various examples indicating that a taxpayer (Canco) will realize a capital gain on the disposition of its shares of the disposing...
Hetel Kotecha, "The Subsection 93(1) Election - Strategy and Pitfalls", International Tax Planning, 2003, p. 792.
Ron Nobrega, "Technical Bill Amendments Affecting Foreign Affiliate Share Transfers", Taxation Law, Ontario Bar Association, Vol. XIII, No. 3, p. 1.
Schwartz, "Tax-Free Reorganizations of Foreign Affiliates", 1984 Canadian Tax Journal, November-December 1984, p. 1039.
Bradley, "Foreign Affiliates: A Technical Update", 1990 Conference Report, c. 43
Forms
T2107 "Election For A Disposition Of Shares In A Foreign Affiliate"
Separate elections have to be made when a disposition of shares in a foreign...
Subsection 93(1.1)
Paragraph 93(1.1)(b)
Articles
Tim Fraser, Jim Samuel, "The Preacquisition Surplus Election: More Than Meets the Eye?", Canadian Tax Journal (2021) 69:2, 595 - 627
Automatic s. 93(1.1) dividend if s. 40(3) gain (p. 599, f.n. 13)
- Ss. 93(1.1) and (1.11) generally provide that any s. 40(3) gain realized by a...
Subsection 93(1.3)
Articles
Tina Korovilas, Drew Morier, "Non-Corporate Vehicles in the Foreign Affiliate Context", 2018 Conference Report (Canadian Tax Foundation), 20:1 – 114
Unavailability of s. 93 regime where partnership interest disposed of (p. 20:49)
[S]ubsection 93(1.3) applies only where the shares disposed of...
Subsection 93(1.11)
Administrative Policy
2017 Ruling 2017-0693751R3 - Transfer of Shares of a Foreign Affiliate
See the diagram for the 2016-0630761R3 transactions.
A Canadian-resident corporation (ACo) wished to transfer its shares of a foreign subsidiary...
2016 Ruling 2016-0630761R3 - Transfer of Shares
Background
ACo wholly-owns BCo, which is a foreign corporation with its central management and control in Canada, and FA1, the fair market value...
Subsection 93(2)
Administrative Policy
22 December 2009 Internal T.I. 2009-0328141I7 F - 93(2) - Perte due à fluctuation de devises
The Taxpayer, a taxable Canadian corporation, used the proceeds of a U.S.-dollar loan to subscribe for shares of a wholly-owned foreign affiliate...
Subsection 93(2.01) - Loss limitation on disposition of share of foreign affiliate
Administrative Policy
5 September 2018 Internal T.I. 2017-0698241I7 - Interpretation of subsection 93(4)
But for s. 94(3), a Canadian corporation (ACo) would have realized a capital loss of $1 million on the liquidation and dissolution of a...
22 June 2016 Internal T.I. 2016-0632821I7 F - 93(2.01) & Capital Contribution
A wholly-owned foreign affiliate (“Luxco1”) of Canco held 1/3 of the shares of a corporation ("NRco") resident in a Treaty country. Another...
26 May 2016 IFA Roundtable Q. 7, 2016-0642121C6 - 93(2.01) & Capital Contribution
CRA considered that the s. 93(2.01) stop loss rule applied where Canco made a contribution of capital to a foreign subsidiary (FA2) of its shares...
15 August 2014 Internal T.I. 2014-0538591I7 - FX losses on CFA wind-up
A Canadian-resident corporation did not elect under s. 88(3.1) for the winding-up of its wholly-owned controlled foreign affiliate (CFA) to be a...
24 November 2013 CTF Roundtable, 2013-0508161C6 - Loss on disposition of shares
A shareholder having an accrued foreign exchange loss on common shares of an FA and an accrued foreign exchange gain on a related party debt used...
25 September 2013 Internal T.I. 2013-0476311I7 F - 93(2), 93(2.01) - Share substituted
Tower 1
Under a Tower structure (Structure 1) a taxable Canadian corporation (Parent), all of whose shares were held directly or indirectly by a...
23 May 2013 IFA Round Table Q. 3
What is the CRA's position on the application of the GAAR to a series of transactions undertaken for the purpose of avoiding the application of s....
10 May 2013 Internal T.I. 2012-0464901I7 - 93(2), 93(2.01) - Share substituted
Canco owns all the shares of Forco1, which it transfers to Forco2 for a promissory note payable in U.S. dollars, and then transfers the note to...
Articles
Didier Fréchette, Ryan Rabinovitch, "Current Issues Involving Foreign Exchange", 2015 CTF Annual Conference paper
Narrowness of 30-day rule/exclusion for related party debt (pp. 26:46)
Despite the promising comments made in the 2001 comfort letter, the loss...
Nikolakakis, "Foreign Exchange Fluctuations: Comprehensive Rules are Needed", Corporate Finance, Vol. V, No. 1, 1997.
Paragraph 93(2.01)(b)
Administrative Policy
22 December 2009 Internal T.I. 2009-0328141I7 F - 93(2) - Perte due à fluctuation de devises
The Taxpayer, a taxable Canadian corporation, used the proceeds of a U.S.-dollar loan to subscribe for shares of a wholly-owned foreign affiliate...
Subsection 93(2.1)
Articles
Didier Fréchette, Ryan Rabinovitch, "Current Issues Involving Foreign Exchange", 2015 CTF Annual Conference paper
Whether substitutions for s. 93(2.1) purposes are not limited to share-for-share transactions (p. 26:47)
The CRA has taken an expansive view of...
Subsection 93(4)
Administrative Policy
5 September 2018 Internal T.I. 2017-0698241I7 - Interpretation of subsection 93(4)
On a liquidation and dissolution (“L&D”) of FA1, it distributed to its parent (ACo) its shares of (wholly-owned) FA2 and FA3 and other...