Did the amendments to s. 84.1 pursuant to Bill C-208 (did not contain a coming into force provision) apply to dispositions of shares that occurred in the 2021 taxation year but prior to the day of Royal Assent (June 29, 2021)? As a preliminary matter, CRA noted:
It is our understanding that the purpose of the amendments to section 84.1 is to facilitate intergenerational transfers of certain businesses by ensuring that such transfers are not subject to section 84.1. The amendments to section 84.1 contained in Bill C-208 further this purpose by deeming the individual disposing of the subject shares and the purchaser corporation to be dealing at arm’s length if, among other things, the purchaser corporation is controlled by one or more children or grandchildren of the individual who are 18 years of age or older and the subject shares are “qualified small business corporation shares” or “shares of the capital stock of a family farm or fishing corporation” (each as defined in subsection 110.6(1) of the Act).
Turning to the question, CRA noted the presumption in Gustavson Drilling [1977] 1 S.C.R. 271 that “statutes are not to be construed as having retrospective operation unless such a construction is expressly or by necessary implication required by the language,” and found that there was no such “necessary implication” in the Bill, stating in this regard:
[W]e are not aware of any reason why the tax consequences relating to a disposition of subject shares that occurs prior to the coming into force of Bill C-208 and within the 2021 tax year should not be determined with respect to the statutory provisions in force at the time of the disposition.
Accordingly, the amendments “apply only to dispositions that occur on or after … June 29, 2021.”