Words and Phrases - "accommodation party"

Does the Poulin decision affect CRA’s view of employee buyco arrangements? CRA responded that it could be established that the employee-shareholder and the employee-buyco are acting in concert without separate interests where, for example:

• the employee-buyco assumes no economic risks;
• the employee-buyco does not benefit from acquiring the Opco shares;
• the employee-buyco has no interest other than to enable the employee-shareholder to realize a capital gain and benefit from the capital gains deduction; or
• the employee-buyco has no role independent of the employee-shareholder or the operating corporation.

CRA went on to state that this position is consistent with its discussion at the 2012 Annual Conference.

CRA also indicated respecting the other transaction at issue in the case (the sale by Poulin to Turgeon) that the fact “that Mr. Poulin and Mr. Turgeon structured the transaction so that Mr. Poulin could benefit from the capital gains deduction did not mean that the parties acted in concert without separate interests.”