{"id":1188,"date":"2014-07-02T15:31:48","date_gmt":"2014-07-02T15:31:48","guid":{"rendered":"https:\/\/thor.ca\/\/blog\/?p=1188"},"modified":"2014-07-02T15:31:48","modified_gmt":"2014-07-02T15:31:48","slug":"cra-confirms-trap-on-rollover-of-foreign-affiliate-shares-held-through-a-partnership","status":"publish","type":"post","link":"https:\/\/www.thor.ca\/blog\/2014\/07\/cra-confirms-trap-on-rollover-of-foreign-affiliate-shares-held-through-a-partnership\/","title":{"rendered":"CRA confirms trap on rollover of foreign affiliate shares held through a partnership"},"content":{"rendered":"<p>When a Canadian company (Canco) receives a pre-acquisition surplus dividend (Pre-Acq Dividend) from a foreign affiliate (FA), s. 92(2) reduces Canco\u2019s tax basis (ACB) in the FA shares.\u00a0 However, this ACB adjustment does not apply if Canco holds FA through a partnership and the Pre-Acq Dividend is received by the partnership.\u00a0 Rather, the Pre-Acq dividend is accounted for: (1) under s. 92(5) and s. 92(6) as a deemed gain to Canco when the partnership sells the shares of FA; or (2) under s. 92(4) as additional proceeds to Canco when Canco sells its partnership interest.\u00a0 In <a href=\"http:\/\/thor.ca\/blog\/wp-content\/uploads\/2014\/07\/2014-0526751C6.pdf\">2014-0526751C6<\/a>, the CRA confirmed that these rules are automatically engaged even where the disposition (sale) of the FA shares (or the partnership interest) occurs under a <em>rollover<\/em> provision in an internal restructuring \u2013 such as under s. 85(1) or s. 85.1.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>When a Canadian company (Canco) receives a pre-acquisition surplus dividend (Pre-Acq Dividend) from a foreign affiliate (FA), s. 92(2) reduces Canco\u2019s tax basis (ACB) in the FA shares.\u00a0 However, this ACB adjustment does not apply if Canco holds FA through&hellip;<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-1188","post","type-post","status-publish","format-standard","hentry","category-corporate-tax"],"_links":{"self":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/1188","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/comments?post=1188"}],"version-history":[{"count":0,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/1188\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/media?parent=1188"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/categories?post=1188"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/tags?post=1188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}