Subsection 84(1) - Deemed dividend
See Also
R. v. Golini, 2016 TCC 174
The sole individual shareholder (“Paul Sr.”) of an Ontario corporation (“Holdco”) received a loan from an accommodation party...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | a loan to a shareholder with recourse limited to an asset pledged by the corporation was a shareholder benefit | 589 |
| Tax Topics - General Concepts - Sham | sham doctrine did not apply to a "minor pretence" | 338 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | interest deduction on limited recourse loan | 305 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | use of corporate asset to create PUC was abuse of s. 84(1) | 250 |
Aylward v. The Queen, 97 DTC 1097 (TCC) (Informal Procedure)
The issuance to the taxpayer of shares having a paid-up capital of $350,000 did not give rise to a deemed dividend because they were in respect of...
Administrative Policy
2015 Ruling 2015-0584151R3 - Conversion of Contributed Surplus to PUC
Background.
The central management and control of ACo, which was originally incorporated under the Country A Corporate Act, shifted to Canada. In...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Paid-Up Capital | corporate PUC and capital surplus flowed through on a cross-border continuance | 108 |
2014 Ruling 2014-0533601R3 - Spin-off butterfly - subsection 55(2)
A spin-off butterfly reorganization by DC includes a preliminary step for distributing a small portion of DC's retained business from its...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) | matching of PUC of cross-shareholdings to match Part IV tax | 152 |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution | spin-off by CCPC under Plan of Arrangement of two businesses/matching of PUC of cross-shareholdings to match Part IV tax/leased property as business property | 978 |
| Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) | new common shares distinct on basis of right to interim financials | 97 |
S4-F3-C1 - Price Adjustment Clauses
Where the consideration received on the transfer of property to which a price adjustment clause that meets the conditions listed in ¶1.5 is in...
17 February 2003 External T.I. 2002-017645
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 net fair market value of all...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 85.1 - Subsection 85.1(2.1) | 105 |
12 August 1994 External T.I. 5-932594
Where an individual transfers his 5% shareholding in Opco, having a paid-up capital and ACB of $100,000 and a fair market value of $1 million, to...
23 September 1992 T.I. (Tax Window, No. 24, p. 1, ¶2190)
Where preferred shares having a low paid-up capital are transferred by the shareholder to the corporation in exchange for common shares having a...
92 C.R. - Q.27
Where convertible preference shares having a high stated capital and a low paid-up capital are converted into common shares having both a stated...
1992 June Hong Kong Seminar, Q. B.8 (May 1993 Access Letter, p. 226)
S.84(9) applies for purposes of s. 94(1).
1992 A.P.F.F. Annual Conference, Q. 1 (January - February 1993 Access Letter, p. 49)
Where an individual exchanges all the outstanding common shares of Opco, having a paid-up capital of $500,000 and a fair market value of $600,000,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 85 - Subsection 85(2.1) | 73 |
28 August 1991 Memorandum (Tax Window, No. 8, p. 6, ¶1435)
Where preferred shares having a stated capital of $2 million and a paid-up capital of $1 are converted into common shares having a stated capital...
81 C.R. - Q.6
Where consequences of receiving a s. 84(1) dividend as a result of the paid-up capital of shares issued on a s. 85(1) roll exceeding the fair...
Articles
Brussa, "Capital Reorganizations", 1991 Conference Report, c. 16.
Paragraph 84(1)(b)
Administrative Policy
7 October 2016 APFF Roundtable Q. 21, 2016-0655901C6 F - Section 7 and bonus paid in share
After noting that it considers that where a Canadian-controlled private corporation has agreed in writing “to award a bonus based on the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(3) - Paragraph 7(3)(a) | s. 7 can govern bonuses paid in shares where discretion ceases prior to the issuance | 266 |
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.1) | 7(1.1) applicable to non-discretionary bonus payable in shares | 178 |
Subsection 84(2) - Distribution on winding-up, etc.
Cases
Canada v. MacDonald, 2013 DTC 5091 [at 5982], 2013 FCA 110, rev'g 2012 TCC 123
In order to make use of available capital losses before emigrating to the United States, the taxpayer sold the shares of his former professional...
Canada v. Vaillancourt-Tremblay, 2010 DTC 5079 [at 6833], 2010 FCA 119
In order to convert their shares of a private company ("MHT") that held preferred shares of a Canadian public corporation ("Videotron") into...
Gilmour v. The Queen, 81 DTC 5322, [1981] CTC 401 (FCTD)
The taxpayer was the sole individual shareholder of a personal corporation ("LVG") which, in turn, owned approximately 1/3 of the common shares of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 95 |
Perrault v. The Queen, 78 DTC 6272, [1978] CTC 395 (FCA)
A substantial dividend was not paid on the "winding-up, discontinuance or reorganization" of a company's business because, following the payment...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | 112 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) | 30 | |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | 44 |
David v. The Queen, 75 DTC 5136, [1975] CTC 197 (FCTD)
Approximately four months after the corporation of which the taxpayers (the "David group") were shareholders sold its principal business assets,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Evidence | 26 | |
| Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) | 54 |
Smythe et al. v. Minister of National Revenue, 69 DTC 5361, [1969] CTC 558, [1970] S.C.R. 64, 69 DTC 5361
The taxpayers were shareholders of a company (the "old company") who effectively converted its assets to cash through a series of transactions:...
Merritt v. MNR (1941), 2 DTC 513 (Ex Ct), rev'd [1942] S.C.R. 269, 2 DTC 561
The Security Loan and Savings Company ("Security") acquired all the shares of the taxpayer and other shareholders of the Premier Trust Company...
See Also
Kvas v. The Queen, 2016 TCC 199
The general contracting company (“CIA”) of two brothers was dissolved in January of 2008 (the “Dissolution Date”) for failure to file...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) | involuntary dissolution did not render the corporation a transferor | 195 |
Latham v. The Queen, 2015 DTC 1104 [at 617], 2015 TCC 75
The taxpayers ("John and Diane Latham") owned a corporation ("Farmers"), which rented out buildings to third parties, and to a related company. In...
| Other locations for this summary | |
|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | distribution to shareholder reimbursed him for loss as guarantor |
Descarries v. The Queen, 2014 DTC 1143 [at 3412], 2014 TCC 75 (Informal Procedure)
The six taxpayers, who were siblings (or a step-daughter of their deceased father), held all the shares, having an aggregate fair market value...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) | free to raise an interpretation not advanced by either party | 83 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | use of outside basis to step up PUC abused s. 84.1 | 543 |
MacDonald v. The Queen, 2012 TCC 123, rev'd 2013 DTC 5091 [at 5982], 2013 FCA 110
In order to make use of available capital losses before emigrating to the United Statees, the taxpayer sold the shares of his former professional...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit | 306 | |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | no abuse in surplus stripping if integration | 368 |
McMullen v. The Queen, 2007 DTC 286, 2007 TCC 16
The taxpayer and an unrelated individual ("DeBruyn") accomplished a split-up of the business of a corporation ("DEL") of which they were equal...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) | 270 | |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 198 | |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | mutual benefit and same advisors insufficient to establish non-arm's length in structured sale transaction | 258 |
| Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) | arm's length: negotiation based on self-interest | 257 |
Geransky v. The Queen, 2001 DTC 243 (TCC)
The taxpayer who owned a portion of the shares of a holding ("GH") which, in turn, owned an operating company ("GBC") which was engaged in a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 295 |
James v. The Queen, 2000 DTC 2056 (TCC)
After the taxpayer's company was struck from the B.C. Register of Companies and dissolved for failure to file annual returns, the Minister...
RMM Canadian Enterprises Inc. v. The Queen, 97 DTC 302, [1998] 1 C.T.C. 2300 (TCC)
A non-resident corporation ("EC") approached a business associate who, along with two other individuals, formed a Canadian corporation ("RMM") to...
McNichol et al. v. The Queen, 97 DTC 111 (TCC)
The taxpayers sold their shares of a corporation ("Bec"), whose assets (following a sale of real estate) consisted largely of cash, to a corporate...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 222 | |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | 115 |
Kennedy v. MNR, 72 DTC 6357 (FCTD), aff'd 73 DTC 5359 (FCA)
A corporation of which the taxpayer was the sole shareholder purchased a property for use as the new site for its car dealership business, paid...
Administrative Policy
7 October 2016 APFF Roundtable Q. 12, 2016-0655911C6 F - Partial Leveraged Buy-Out and Monetization of ACB
A holds 50 common shares of Opco with a nominal adjusted cost base and paid-up capital and fair market value of $500,000, and B holds the other 50...
27 April 2016 External T.I. 2016-0625001E5 F - Surplus Stripping
An individual (Mr. X), and a corporation (Holdco) wholly owned by him are the beneficiaries of a Quebec discretionary trust (Trust) holding all...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | funnelling deemed dividend to holdco trust beneficiary and resulting PUC to individual beneficiary/shareholder was surplus stripping | 130 |
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(24) | distribution of s. 84(1) dividend effected with note issuance | 231 |
22 January 2016 External T.I. 2015-0617601E5 F - Pipeline followed by butterfly
An estate acquires the shares of Corporation 1 on a stepped-up basis under s. 70(5) and, in August 20X0, transfers the shares to Corporation 2...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.1) - Paragraph 55(3.1)(b) | where pipeline transaction followed by split-up butterfly, the opco also is a distributing corporation | 453 |
2015 Ruling 2015-0569891R3 - Ss. 164(6) carry-back and post-mortem pipeline
Background. All of the shares of Mr. A in A Co (which carried on a "business activity" of trading a portfolio) at the time of his death were...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 164 - Subsection 164(6) | redemption of Canco shares bequeathed to U.S. resident (coupled with s. 164(6) carryback) before pipeline strip of Canco | 143 |
2015 Ruling 2014-0548621R3 - Post Mortem Pipeline Planning
Background
On the death of B (the surviving spouse of A), B was deemed under s. 70(5)(a) to have disposed of the Class C common shares of the...
2014 Ruling 2014-0540861R3 F - Post-Mortem Planning
Background
At death, X was the sole shareholder of Investments (a CCPC, whose shares did not qualify as QSBCs), which held bank balances, shares...
2015 Ruling 2014-0563081R3 - Post-mortem pipeline
Current structure
All the shares of A Co (being Class A voting common shares and Class B non-voting common shares) are held by a spousal trust...
2015 Ruling 2014-0559481R3 F - Post Mortem Planning
Current structure
Since the death of A (who used Investmentco in his professional practice but had Investmentco accumulate investments,...
2015 Ruling 2014-0541261R3 F - Post-Mortem Planning
Current Holdco structure
Holdco is a portfolio investment company holding bank deposits, certificates of deposit, notes payable and preferred...
2014 Ruling 2014-0537161R3 - Reduction of stated capital
underline;">: Current structure. The Company is a listed public corporation carrying on the "Business" (comprising resource projects) directly and...
10 October 2014 APFF Roundtable Q. 21, 2014-0538091C6 F - 2014 APFF Roundtable, Q. 21 - Impact of the Descarries Case
What is the CRA position on Descarries? After noting that the case was not appealed because in the result it was favourable and it was only an...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | Descarries failed to recognize scheme against indirect surplus stripping | 716 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) | will not impose double taxation under s. 84(2) and(3) | 42 |
2014 Ruling 2011-0415811R3 - Internal reorganization
underline;">: Current structure. Parent, a public corporation which previously had been spun-off by Subco 2 (also a public corporation, but with...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(e.2) | s. 85(1)(e.2) non-application to transfers at ACB to sisters in order to limit ACB shift | 676 |
2014 Ruling 2014-0526361R3 F - Post Mortem Pipeline
Background
Prior to the death of B (who had been predeceased by her spouse), the Class A common shares of Investmentco, which was a portfolio...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) | step up of PUC of freeze pref shares for purposes of pipeline transaction | 109 |
2014 Ruling 2013-0503611R3 - Post-Mortem Planning
Overview
A testamentary spousal trust (the "Spousal Trust") whose basis in pref shares of a portfolio investment company ("Holdco") was stepped...
| 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 of marketable securities (no ruling) occurring as part of post-mortem pipeline transactions | 256 |
2013 Ruling 2012-0470281R3 - Reduction of paid-up capital
Background
Pubco (which is a listed Canadian public corporation engaged in the commercialization of innovative products, and is reorganizing to...
2 April 2013 External T.I. 2013-0479651E5 F - Leveraged buy-out
X and Y each hold half of the common shares of Opco. X deals at arm's length with Y and Buyer. Buyer incorporates Holdco and subscribes...
18 June 2013 External T.I. 2012-0433261E5 F - 55(5)(f) and Surplus Stripping
Two Canadian-resident brothers (Messrs. A and B), who each hold a 50% block of the common shares of a small business corporation (Dividend Payor)...
2012 Ruling 2012-0464501R3 - Post-mortem planning
Background
X's Class A, B and C shares of Amalco (a Canadian private corporation that was not a small business corporation) passed on his death...
29 May 2012 CTF Prairie Tax Roundtable, 2012-0445341C6 - Meaning of business as used in subsection 84(2)
CRA would generally not differentiate between a corporation carrying on an active business and a corporation carrying on a business of earning...
2012 Ruling 2011-0425211R3 - Reduction of capital
Pubco holds foreign affiliates owning non-core foreign exploration properties through two Canadian holding companies (Canco 1 and Canco 2). After...
2012 Ruling 2012-0435291R3 - Public Corporation PUC Reduction
A CBCA Canadian public company (the "Corporation") transferred Canadian property, which represented substantially all of the assets used by it in...
2012 Ruling 2012-0432431R3 - Reduction of stated capital
Ruling that s. 84(2) will apply to the distribution by a resource public company of a resource subsidiary as a reduction of stated capital, in...
2012 Ruling 2012-0401811R3
At the time of death of Mr X, he held common and preferred shares of (and controlled) Holdco, which carried on an investing business and held a...
2 June 2011 STEPs Roundtable Q. 5, 2011-0401861C6 - 2011 STEP - Q.5 - Post-Mortem Planning and 84(2)
An estate engages in a "pipeline" strategy in which it disposes of its shares of ACo (having a stepped-up adjusted cost base under s. 70(5)) to a...
12 August 2010 External T.I. 2010-0370551E5 F - Tuck Under Transaction - Tremblay Decision
Given that the Tremblay decision contained a strong dissent based on the Smythe decision and given that the general anti-avoidance rule was not...
26 April 2006 Ruling 2004-0099201R3 F - GAAR Surplus Stripping
Mr. A is the sole shareholder of Aco, which generates an annual profit from its operations of more than $100,000. His Aco shares have a...
2004 Ruling 2004-007547
An indirect foreign subsidiary ("Forco 1") of a Canadian public company ("Opco 1" - likely, BCE Emergis Inc.) sold a foreign subsidiary of Forco...
2003 Ruling 2002-018027
U.S.-resident shareholders of a Canadian investment company ("Canco") sell their shares of Canco to an unrelated Canadian purchaser ("Holdco"),...
2003 APFF Roundtable Q. 1, 2003-0029955
After negotiations with a purchaser, who is interested in the assets of the business of Opco, it is agreed that the Opco shareholders will sell...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 43 |
2000 Ruling 2000-001444
Ruling that a transfer by a Canadian public company in a taxable transaction of all the assets of a business to a Newco, followed by a...
1997 Ruling 30970152
Description of reorganization of a public corporation in which the paid-up capital of its issued and outstanding common shares are reduced through...
22 June 1990 T.I. (November 1990 Access Letter, ¶1534)
Where Mr. A effectively wishes to withdraw cash from a corporation of which he is the sole shareholder and accomplishes this by selling the shares...
88 C.R. - Q.34
The "amount or value" of the property distributed is reduced by liabilities assumed by the shareholder of the corporation.
Articles
Charles P. Marquette, "Hybrid Sale of Shares and Assets of a Business", Canadian Tax Journal, (2014) 62:3, 857 – 79.
Description of hybrid transaction using external step-up in basis method (pp. 878-9)
[T[he hybrid form of transaction for a corporate business...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 191 - Subsection 191(4) | 140 |
Perry Truster, "Turning Dividends into Capital Gains", Tax for the Owner-Manager, Volume 14, Number 1, January 2014, p. 7.
Sale of stock dividend shares for note which is repaid out of corporate surplus (p. 7)
[I]it is advantageous to convert distributions that would...
Steve Suarez, Firoz Ahmed, "Public Company Non-Butterfly Spinouts", 2003 Conference Report, c. 32.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 110 - Subsection 110(1.8) | 0 | |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2) | 0 |
Subsection 84(3) - Redemption, etc.
Cases
Canada v. Macmillan Bloedel Ltd., 99 DTC 5454 (FCA)
The taxpayer redeemed U.S.-dollar denominated preferred shares at a time that the U.S. dollar had appreciated relative to the exchange rate at the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) | loss on redemption of U.S.-dollar preferred shares | 101 |
See Also
McClarty Family Trust v. The Queen, 2012 DTC 1123 [at 3122], 2012 TCC 80
A family holding company ("MPSI") paid a stock dividend of preferred shares, having nominal paid-up capital and a redemption amount of $48,000, on...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) | 358 |
Gagnon v. The Queen, 2008 DTC 3111, 2006 TCC 194
The taxpayer originally signed an agreement for the sale of his half interest in a business (which was found to be held in a corporation) to his...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Effective Date | person declared a shareholder retroactively | 143 |
MacMillan Bloedel Ltd. v. The Queen, 97 DTC 1446 (TCC)
The taxpayer was found to have realized a capital loss under s. 39(2) rather than to have paid a deemed dividend under s. 84(3) when it redeemed...
Lalonde v. MNR, 90 DTC 1313 (TCC)
The taxpayer established that he purchased the shares of a fellow shareholder as agent for the corporation rather than as principal. Accordingly,...
Belair v. MNR, 89 DTC. 429 (TCC)
In the face of inadequate evidence, Morgan J. found that if the corporation had agreed to purchase for cancellation 1/3 of the taxpayer's common...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Legal and other Professional Fees | 58 |
Administrative Policy
26 May 2016 IFA Roundtable Q. 3, 2016-0642111C6 - PUC of Shares of a FC Reporter
CRA considered that a Canadian corporation which has the U.S. dollar as its elected functional currency nonetheless is required to keep track of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(1) - Canadian Tax Results | deemed dividend calculation for shareholder not part of Cdn tax results | 323 |
2015 Ruling 2014-0532201R3 - Corporate reorganization
Towards the completion of an intricate internal reorganization for a privately-held Canadian corporate group, a newly-amalgamated corporation...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 38 - Paragraph 38(a.1) | donation of pubco shares to foundation and immediate cash sale to affiliate | 521 |
| Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts | donation and sale-back of public company shares | 84 |
29 October 2013 External T.I. 2013-0507881E5 - Price adjustment clause
A price adjustent clause in the share provisions for preferred shares issued by Opco to the taxpayer in Year 1 in consideration for the transfer...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Effective Date | 330 |
3 July 2012 Internal T.I. 2012-0450821I7 F - Interaction of 84(3) and 69(1)(b)
A CCPC ("Opco"), whose voting common shares were owned by two individuals (B and R) and by a Canadian-controlled private corporation ("Management...
21 November 2011 External T.I. 2011-0422191E5 F - Price adjustment clause and redemption of shares
if preferred shares with a redemption amount which is subject to a price adjustment clause are redeemed before there is an upward adjustment to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Effective Date | 54 |
23 July 2007 Internal T.I. 2007-0228601I7
Where Parentco owns preferred shares of a subsidiary wholly-owned corporation (Subco) denominated in U.S. dollars and Subco purchases the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) | s. 86 exchange of US-dollar denominated prefs does not affect patrimony of issuer | 75 |
15 January 2007 Internal T.I. 2006-0216801I7 - Redemption of US $ Denominated Shares
Confirmation of a previous position that in light of the McMillan Bloedel decision, CRA intends to assess any redemption of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) | 22 |
2004 APFF Roundtable Q. 15, 2004-008682
Respecting the situation where a subsidiary purchases for cancellation a portion of the common shares in its capital held by its wholly-owning...
31 December 2004 Internal T.I. 2004-0091781I7
In a situation where preferred shares were redeemed for an amount less than the fair market value, the Directorate stated that "where, in a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) | 135 |
2003 APFF Roundtable Q. 4, 2003-0030005
A purchaser is interested in purchasing an operating subsidiary ("Opco") of a management corporation ("Managementco") and not Managementco....
1 November 2002 External T.I. 2002-014677
Where employees of Opco (who as a group, own 14% of its issued common shares) are terminated, they are required to sell their Opco common shares...
2002 Ruling 2002-0138993
A foreign subsidiary ("Holdco") which is making a takeover bid for a public corporation in the same foreign jurisdiction ("Targetco'), acquires...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(a) - Subparagraph 95(2)(a)(ii) - Clause 95(2)(a)(ii)(D) | 110 |
10 August 2000 External T.I. 2000-001687
"Where an employee has income from employment under paragraph 7(1)(a) related to the disposition, by virtue of subsection 7(1.1), of shares and a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) | 83 | |
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(3) - Paragraph 7(3)(a) | 36 |
26 October 1998 Memorandum 980394
Where shares held by a financial institution are redeemed, s. 84(3) will be considered to take precedence over s. 142.5(1), and s. 248(28) will...
6 June 1997 Internal T.I. 7-963186
S.142.5(1) takes precedence over s. 84(3). To the extent that an amount has been included in computing income under s. 142.5(1), such amount will...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 142.5 - Subsection 142.5(1) | 38 |
6 July 1995 External T.I. 5-931646
In response to a proposal that a payment be made to a separated wife of a husband by her dissenting to the amalgamation of a corporation...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 153 |
12 August 1994 External T.I. 5-941549
Where there is a wind-up of a wholly-owned subsidiary that also owns shares of its parent, s. 84(3) will not apply to the subsidiary because the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 87 - Subsection 87(1) | 89 | |
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) | 68 |
30 March 1994 T.I. 933722 (C.T.O. "Shares Held as Inventory")
On the redemption of shares held as inventory, a deemed dividend will arise pursuant to s. 84(3) and, to the extent that the paid-up capital of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Computation of Profit | 72 |
93 C.R. - Q. 56
Cash payments received from an amalgamated corporation for shares held by shareholders dissenting from the amalgamation will be proceeds of...
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) | 32 |
3 July 1991 T.I. (Tax Window, No. 5, p. 13, ¶1334)
S.84(3) does not apply to an amalgamation to which s. 87 applies.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(a) | 23 |
31 May 1990 T.I. (October 1990 Access Letter, ¶1469)
With respect to an argument that where a corporation purchases for cancellation only some of the shares of a given class and pays an amount...
87 C.R. - Q.59
A shareholder dissenting pursuant to s. 184 of the CBCA who receives cash from the amalgamated corporation realizes proceeds of disposition rather...
87 C.R. - Q.69
Where a share having a high stated capital and low paid-up capital is exchanged in a s. 86 reorganization for another share with a high stated...
84 C.R. - Q.45
The calculation of the amount of the dividend arising on a purchase for cancellation will include the value of any type of consideration given for...
Articles
Didier Fréchette, Ryan Rabinovitch, "Current Issues Involving Foreign Exchange", 2015 CTF Annual Conference paper
Whether deemed dividend on redemption of USD preferred shares (pp. 30-33)
A Canadian-resident corporation issues preferred shares for US$100 per...
R. Durand, I.M. Freedman, "Dealing with Paid-Up Capital", 1997 Corporate Management Tax Conference Report, c. 17.
Subsection 84(4)
Articles
Didier Fréchette, Ryan Rabinovitch, "Current Issues Involving Foreign Exchange", 2015 CTF Annual Conference paper
Whether deemed dividend on returns of capital of USD shares (p. 33)
[A] Canadian corporation issues a preferred share for US$100 per share at a...
Subsection 84(4.1) - Deemed dividend on reduction of paid-up capital
Articles
Judith Paris, "Paid-Up Capital and Return of Capital Public Corporations", Business Vehicles, Vol. VI, No. 2, 2000, p. 290.
Subsection 84(5) - Amount distributed or paid where a share
Administrative Policy
18 Aug. 89 T.I. (Jan. 90 Access Letter, ¶1082)
On the transfer by Mr. A of 1/2 of the common shares of Opco to Opco in exchange for preferred shares of Opco having 1/2 the paid-up capital of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(2.1) | 67 | |
| Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) | 43 |
Subsection 84(6) - Where s. (2) or (3) does not apply
Administrative Policy
7 January 1998 T.I. 971265
A normal course issuer bid would not give rise to deemed dividends.
1997 Ruling 971084
The purchase by the issuer of common shares held by a majority holding company would not taint the application of s. 84(6) with respect to its...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 183.1 - Subsection 183.1(2) | 33 |
90 C.R. - Q50
The reference to the "manner in which shares would normally be purchased by any member of the public in the open market" means that the shares...
Subsection 84(9) - Shares disposed of on redemptions, etc.
See Also
Gaumond v. The Queen, 2014 DTC 1024 [at 98], 2014 TCC 339 (Informal Procedure)
The taxpayer renounced debt owing to him by his small business corporation pursuant to a bankruptcy proposal. Lamarre J found that, in the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(1) - Paragraph 39(1)(c) | renounced debt is not disposed of to anyone/s. 50 not available where debt settled in year | 277 |
| Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) | s. 50 not available where debt settled in year | 108 |
Special Risks Holdings Inc. v. The Queen, 86 DTC 6035, [1986] 1 CTC 201 (FCA)
The taxpayer, following a modification in the capital structure of a company ("RMC") exchanged its voting shares of that company for non-voting...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | relationship enabling one party to dictate terms | 144 |
| Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) | 160 |
Administrative Policy
20 February 1991 T.I. (Tax Window, No. 2, p. 8, ¶1182)
Where a corporation is wound up and the shares are cancelled as a result of the winding-up, s. 84(9) does not apply.
10 January 1990 T.I. (June 1990 Access Letter, ¶1257)
Under Canadian corporate law, the shares of a corporation which is being wound-up or liquidated are not disposed of "to a person" as a result of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(e) | 52 |
IT-484R "Business Investment Losses"
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(1) - Paragraph 39(1)(c) | 0 |
Commentary
Benefit of coming within s. 84(2)
Along with the exception described in draft ss. 84(4.1)(a) and (b), and a reorganization of capital described in...