19 May 2011 IFA Roundtable, 2011-0404521C6 - calculation of tax-free surplus balance -- summary under Paragraph 88(1)(d)

In the situation where the Canadian target holding a foreign affiliate (FA) is wound up into the Canadian acquisition company (resulting in a "bump" to the ACB of the shares of FA under s. 88(1)(d)) and those shares are then distributed by the acquisitionco to its foreign parent within a reasonable time of the acquisition of the Canadian target and before any dividends are received or deemed to be received by the Canadian target or the acquisitionco, the surplus balances of FA will be irrelevant. Accordingly, in these circumstances, CRA will not challenge the bump by raising the absence of a calculation of the TFSB balances of FA.