5 May 2010 External T.I. 2010-0359791E5 F - Significant increase - redemption of shares -- summary under Subsection 86(1)

An estate freeze was implemented for the benefit of X’s child under which X’s Holdco and a third-party Holdco exchanged 60% and 40% of the Opco Class A common shares for 60% and 40% of a newly-created class of preferred shares and X’s child and the third-party Holdco subscribed $60 and $40 for Class A common shares. CRA in the course of addressing s. 55(3)(a) issues accepted that this constituted a s. 86(1) capital reorganization.