CRA ruled on transactions for the transfer of losses by Lossco to Profitco, which entailed transactions to transfer Lossco losses to its new subsidiary, Newco 1, with Newco 2 then being sold to Profitco so that Profitco could access the Newco 2 losses through winding-it up pursuant to s. 88(1.1).
Profitco had made a functional currency election. The rulings included a ruling as to the application of s. 261(16)(a) to the wind-up of Newco into Profitco, including regarding Newco 2 being deemed to have elected Profitco’s tax reporting currency for its second short taxation year (of less than one day ending with its dissolution) and regarding the non-application of the avoidance rule in s. 261(18) and the stop-loss rule in s. 262(21).