Holdco, which has a calendar taxation year-end, commences the winding-up of its wholly-owned subsidiary (Opco – which has a June 30 taxation year-end) on March 31, 2018 with an authorizing resolution, and the Opco assets and liabilities are distributed and assumed on that date. Opco is dissolved on April 15, 2019. When does the capital dividend account (CDA) of Opco get added to the CDA of Holdco? CRA responded:
[In] IT-126R2, the CRA states that it considers that where the formal dissolution of a corporation is not complete but there is substantial evidence that the corporation will be dissolved within a short period of time, for the purpose of subsections 88(1) and (2) the corporation is considered to have been wound up. …
… The determination of when a corporation is wound up for the purposes of subsections 88(1) and 88(2) requires consideration of all facts and circumstances relevant to a particular situation. In view of the fact that there is very little information in this statement, we are limited to providing the general comments above. It should be noted that the year-end date of Opco or Holdco is not relevant in determining when Holdco takes into account Opco's CDA components in the calculation of its CDA.