5 October 2012 APFF Roundtable Q. 8, 2012-0454161C6 F - Computation of CDA and Acquisition of Control -- summary under Paragraph (a)

Where Mr. A, who owns 50% of the shares of a CCPC ("Holdco") having net capital losses of $200,000, purchases the other 50% shareholding of Mr. B, thereby giving rise to an acquisition of control of Holdco, such net capital losses will still be taken into account in computing the CDA of Holdco following the acquisition of control (Tax Interpretations Translation):

[T]he fact that Holdco's net capital losses are not deductible in computing its taxable income for a taxation year ending after the acquisition of control, by virtue of paragraph 111(4)(a), has no impact on the calculation of the CDA of Holdco. In fact, the calculation of a corporation's CDA is a cumulative calculation and no particular adjustment is provided for in a situation similar to the one you submitted.

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