2023 Ruling 2023-0973911R3 - Loss Consolidation Ruling -- summary under Subparagraph 20(1)(c)(i)

CRA ruled on a triangular loss-shifting transaction between Lossco and its subsidiary, Profitco, under which Lossco used a daylight loan to make an interest-bearing loan (pursuant to the “IB Note”) to Profitco, who subscribed for preferred shares of its sister, “Numberco,” who made a non-interest-bearing loan to Lossco. The Numberco preferred shares were to bear a cumulative dividend at a rate 1 b.p. above the rate of simple interest on the IB Note. Recourse under the IB Note was to be limited to the Numberco preferred shares.