The Explanatory Notes to ss. 87(8.4) and (8.5) provide:
New subsections 87(8.4) and (8.5) allow taxpayers to elect for dispositions of taxable Canadian property (“TCP”) that is shares of a corporation or an interest in a partnership or trust to occur on a tax-deferred (“rollover”) basis, where the disposition results from a foreign merger that meets certain conditions. A disposition of property by a merging foreign corporation on a foreign merger otherwise occurs on a taxable basis; the combined effect of 87(8.4) and (8.5) is to provide tax-deferred rollover treatment in respect of a disposition of shares of a merging foreign corporation on a foreign merger, but not in respect of a disposition of property owned by the merging foreign corporations.
CRA confirmed that in order for this summary to be “technically accurate,” the italicized words should instead refer to ss. 87(4) and (8) (i.e., ss. 87(4) and (8) generally provide a rollover for shares held in a merging foreign predecessor corporation whereas ss. 87(8.4) and (8.5) provide a merger for certain assets held by it, namely, certain TCP shares or interests).