The CRA has reversed a long-standing (and questionable) position on whether a deemed dividend arising under paragraph 84.1(1)(b) of the Income Tax Act (Canada) gives rise to a dividend refund in the purchaser corporation. The CRA apparently now accepts that…
Avoiding 84.1(2.1)
Jin Wen and Michelle Dickinson, “Are Shares Tainted Forever Under Subsection 84.1(2.1)?”, 8:4 Cdn Tax Focus (Nov 2018), discusses the rule in subsection 84(2.1), which grinds PUC as if a vendor had claimed the capital gain exemption but never does,…
Accommodation party
The Federal Court of Appeal has affirmed the Tax Court’s finding that an employee-controlled buyco acted as an “accommodation party” that allowed a key shareholder to use the capital gain exemption to strip out corporate surplus. As a result, section…