2021 Ruling 2020-0852541R3 F - Split-up XXXXXXXXXX Butterfly -- summary under Paragraph 186(1)(b)

In its closing comments on a proposed one-wing split-up butterfly in which a portion of the farm business of the “Transferor” was transferred to the new “Transferee” formed by one of the farming brothers, CRA indicated that the transactions may give rise to circular Part IV tax issues and that the Transferor and Transferee should consult their local TSO to determine which corporation should receive the dividend refund and which corporation would be subject to Part IV tax.