Mr. A transferred his shares of Opco with an ACB and PUC of $100 and $100,000, respectively, to Holdco on a s. 85(1) rollover basis in consideration for Holdco common shares with the same ACB and PUC. S. 84.1(1) did not apply to grind the PUC of such Holdco common shares given the high PUC of the transferred common shares. However, does s. 85(2.1) instead apply to grind such PUC?
According to the preamble of subsection 85(2.1), section 84.1 takes precedence over subsection 85(2.1) respecting a disposition of property to which section 84.1 applies. Thus, where, in a particular situation, the conditions for the application of subsection 84.1(1) are met with respect to the disposition of property, we are of the view that subsection 85(2.1) does not apply, regardless of the amount calculated in accordance with the formula in paragraph 84.1(1)(a), even if nil. Consequently, in the particular situation, subsection 85(2.1) would not apply to the disposition of the 100 common shares of the capital stock of Opco to Holdco by Mr. A.