Can losses be used by a parent corporation in the year commencing after the commencement of the winding-up of its subsidiary, where the legal dissolution of the subsidiary takes place in that same year? CRA responded:
[T]he subsidiary corporation has been legally dissolved in the year that the parent seeks to deduct its subsidiary’s losses [and]...therefore it has been wound up… . Consequently, the losses of the subsidiary may be deducted by the parent in the year commencing after the commencement of the winding-up of the subsidiary, provided the other conditions of those subsections have been met. ...
[Consider] the following example… .
A wholly-owned subsidiary has losses for its taxation years ending on June 30, 2013 and June 30, 2014. Its parent, which has a December 31 year end, seeks to deduct those losses as soon as possible. The subsidiary commenced its winding-up on June 15, 2014, and it formally dissolved on October 22, 2015. The parent may deduct the subsidiary’s June 30, 2013 and June 30, 2014 losses in its December 31, 2015 year end, which is the same year in which the dissolution of the subsidiary occurred.