31 August 2005 Internal T.I. 2005-0134831I7 F - Capital Gains Exemption Strip -- summary under Subsection 40(3.6)

S. 84.1 did not apply to individuals transferring preferred shares – whose ACB previously had been stepped up by them under s. 110.6(2.1) - to common shares under s. 40(3.6)(b) (upon the redemption of those preferred shares in their hands), with those common shares then exchanged by them for inter alia high-PUC preferred shares of new Holdcos, which were then redeemed in their hands for cash. The Directorate indicated that although s. 84.1 did not “technically” apply to these transactions, transactions such as these would be referred to the GAAR Committee.