Clause 256(7)(a)(i)(D) provides that control of a corporation is not acquired only because a particular person who acquired the shares from an estate that arose on and as a consequence of the death of an individual, if the estate acquired…
Post mortem pipeline gone wrong
In Robillard (Succession) c R, 2022 CCI 13, an estate completed a pipeline for a corporation within seven months of the death of its shareholder. The CRA applied 84(2) to the pipeline. The taxpayer appealed. The Court, after criticizing Canada…
84(2) catches a hybrid transaction
In Foix c R, 2021 CCI 52, W4N sold its key business assets to EMC, an American corporation. Before and after the asset sale, the shareholders of W4N sold its shares (directly and indirectly) to a Canadian subsidiary of EMC…
Pipeline Update
The CRA usually requires that an estate wait for at least a year to receive repayments from the note issued by Newco as part of a pipeline, and the repayments that begin at that time must be spread out over…
Pipeline and non-resident beneficiaries
New paragraph 212.1(6)(b) deems Newco to have paid dividends to non-resident beneficiaries of an estate that is implementing a pipeline so that Newco must pay withholding tax. The change is effective from budget day, 2018, even though nothing in the…
212.1 look-through and trusts
Section 212.1 of the Income Tax Act (Canada) is an anti-avoidance rule that applies in circumstances similar to those for section 84.1. With section 212.1, however, only PUC (and not ACB) is relevant as far as the subject shares are…
Pipeline and the 21-year rule
The CRA has issued a pipeline ruling where the ACB of the shares being used to extract funds from a corporation is derived from a deemed disposition pursuant to the 21-year rule. Eric Hamelin, “Pipeline Transactions and the 21-Year Rule”,…
Pipeline death watch?
Finance is not proceeding with the July, 2017, proposals to amend 84.1 and introduce new 246.1. Also, Finance has said that it will focus on developing the passive income proposals. Finance has also said, however, that it believes post-mortem gains…