The taxpayer was a foreign-controlled CRIC. Following the acquisition of control of its non-resident parent, it made a s. 111(4)(e) designation respecting its 100% shareholding of its FA. Would the resulting deemed reacquisition of those shares engage the foreign affiliate dumping rules? CRA responded:
[T]he subparagraph 111(4)(e)(ii) deemed reacquisition of the FA shares by the… CRIC would constitute an "investment in a subject corporation made by a CRIC" as described in paragraph 212.3(10)(a) and would not be an investment described in paragraph 212.3(18)(a) given that the CRIC would not be related to itself. … However…the amount of the deemed dividend would be equal to nil.
…The deemed disposition and reacquisition of shares pursuant to paragraph 111(4)(e) would neither constitute a transfer of any property by the CRIC for purposes of paragraph 212.3(2)(a) nor would it constitute any of the other amounts referred to in subsection 212.3(2)(a).