Will the CRA provide administrative relief in circumstances where the partnership interest or foreign affiliate shares are disposed of as part of an internal reorganization that, absent subsections 92(4) through (6), would occur on a tax-deferred basis? CRA stated:
[T]he amount of the increase to the proceeds of disposition under subsection 92(4) and the amount of the deemed gain determined under subsection 92(6)… are both calculated in relation to the amount of dividends from the pre-acquisition surplus of the foreign corporation that was held through the partnership. …In either circumstance, the application of these provisions results from a disposition of property, being the disposition of an interest in the partnership for purposes of subsection 92(4), or the disposition by the partnership of its shares of a foreign corporation for purposes of subsections 92(5) and (6).
After referring to 7 May 2014 Memo 2012-0433731I7 immediately above, CRA stated:
[W]e have taken this opportunity to consult with officials within the Compliance Programs Branch, and we confirm that there is no administrative relief available in the circumstances that you have described.