For foreign mergers occurring after September 15, 2016, will CRA accept elections of the new corporation and disposing predecessor foreign corporation for the tax deferred treatment of dispositions under proposed s. 87(8.5) prior to enactment of the legislation? CRA responded
That its longstanding position is to encourage the taxpayers to file under the proposed legislation so that, for foreign mergers prior to the enactment of Bill C-63, it would accept joint written elections. Whatever information taxpayers think would be required to justify such a transaction should be provided.
Will the CRA extend its position to exempt dispositions of shares from s. 116 notification procedures in para. 1.82 of S4-F7-C1, “Amalgamations of Canadian Corporations”, to share dispositions that are elected upon under proposed s. 87(8.4)(e)? CRA indicated
That, no, it is confining that position to s. 87(4).
Would CRA be prepared to issue clearance certificates in respect of a disposition of shares on the basis that the proceeds of disposition of the shares will be equal to their adjusted cost base to the disposing predecessor foreign corporation, and would the s. 116 notification be required to include the shares valuation? CRA responded
That for all the foreign mergers occurring after September 15, 2016, it will generally be prepared to issue a certificate of compliance under s. 116 for cases where the proceeds of disposition of the shares on the foreign merger are equal to the ACB of the predecessor foreign corporation. A valuation of the fair market value of the shares will not be required, but some backup for the ACB will be required.
The above response would also apply for s. 116 purposes in connection with valid joint elections that are filed in connection with partnership and trust interests.