Towards the completion of an intricate internal reorganization for a privately-held Canadian corporate group, a newly-amalgamated corporation (“Amalco”) will be wound-up into Newco. At the time of the winding-up, Amalco holds Newco Non-Voting Preference Shares.
CRA ruled that the cancellation of these shares upon their distribution to Newco on the wind-up will not give rise to a deemed dividend under s. 84(3).