Respecting the application of s. 44.1 to an initial public offering of common shares (“Subscribed Shares”) by a Canadian-controlled private corporation, CRA stated, respecting the application of the replacement share definition:
it is necessary that the corporation issuing the Subscribed Shares to the individual who wishes to designate such shares as replacement shares be a CCPC at the time of their issuance to the individual. If that were the case, and to the extent that the Subscribed Shares were acquired within the time limits set out in the definition of "replacement share" in subsection 44.1(1) and the individual who acquired them designated them in proper form as replacement shares, we are of the view that the Subscribed Shares would represent replacement shares.