,canada ,rev5ue ,ag5cy #a ,9t]pret,n ,bullet9 ,numb]3 ,,it-#aae;,r#b ,subject3 ,9come ,tax ,act--,frac;nal ,9t]e/ 9 ,%>es ,date3 ,febru>y #bj1 #aiie ,ref];e3 ,subsec;n #ea7#a7 7al sec;n #dg & subsec;ns #ea7#b7 & 7#d7 (! ,9come ,tax ,act & subsec;n #bf7#h7 (! ,9come ,tax ,applic,n ,rules 7,,itar77 ,at ! ,canada ,cu/oms & ,rev5ue ,ag5cy 7,,ccra71 we issue 9come tax 9t]pret,n bullet9s 7,,it's7 9 ord] 6provide te*nical 9t]pret,ns & posi;ns reg>d+ c]ta9 provi.ns 3ta9$ 9 9come tax law4 ,due 6_! te*nical nature1 ,,it's >e us$ prim>ily 0\r /aff1 tax speciali/s1 & o!r 9dividuals :o h an 9t]e/ 9 tax matt]s4 ,= ^? r1d]s :o pref] a less te*nical explan,n (! law1 we (f] o!r public,ns1 s* z tax guides & pamphlets4 #a  ,,it-#aae;,r#b a#a ,:ile ! -;ts 9 a "picul> p>agraph 9 an ,,it may relate 6provi.ns (! law 9 =ce at ! "t !y 7 made1 s* -;ts >e n a sub/itute =! law4 ,! r1d] %d1 "!=e1 3sid] s* -;ts 9 li tax,n ye> 2+ 3sid]$1 tak+ 96a3.t ! e6ect ( any relevant am5d;ts 6^? provi.ns or relevant c\rt deci.ns o3urr+ af ! date on : ! -;ts 7 made4 ,subject 6! abv1 an 9t]pret,n or posi;n 3ta9$ 9 an ,,it g5],y applies z (! date on : x 0 publi%$1 un.s o!rwise specifi$4 ,if "! is a subsequ5t *ange 9 t 9t]pret,n or posi;n &! *ange is b5eficial 6taxpay]s1 x is usu,y e6ective = future assess;ts & reassess;ts4 ,if1 on ! o!r h&1 ! *ange is n fav\ra# 6taxpay]s1 x w norm,y 2 e6ective =! curr5t & subsequ5t tax,n ye>s or = transac;ns 5t]$ 96af ! date on : ! *ange is publi%$4 ,if y h any -;ts reg>d+ matt]s 4cuss$ 9 an ,,it1 pl1se s5d !m to3 #b  ,,it-#aae;,r#b b#a ,manag]1 ,te*nical ,public,ns & ,projects ,sec;n ,9come ,tax ,rul+s ,directorate ,policy & ,legisl,n ,bran* ,canada ,cu/oms & ,rev5ue ,ag5cy ,ottawa ,,on ,k#a;,a #j;,l#e ,3t5ts ,applic,n ,summ>y ,4cus.n & ,9t]pret,n ,3v]ti# ,prop]ties 7p>agraphs #a-d7 ,id5tical ,prop]ties 7p>agraph #e7 ,o!r ,bullet9s 7p>agraph #f7 ,explan,n ( ,*anges ,applic,n ,? bullet9 c.els & replaces ,9t]pret,n ,bullet9 ,,it-#aae;,r dat$ ,septemb] #ae1 #aige4 #c  ,summ>y c#a ,sec;n #ea sets \ ! rules 3c]n+ 3v]ti# prop]ty4 ,subsec;n #ea7#a7 p]mits a taxpay] 6ex*ange a 3v]ti# prop]ty issu$ 0a corpor,n = %>es (! corpor,n on ! basis (a tax-free rollov]4 ,a 3v]ti# prop]ty is capital prop]ty t is a %>e (! corpor,n1 or a bond1 deb5ture1 or note (! corpor,n t 3ta9s a 3v].n privilege4 ,9 ! c\rse ( an ex*ange ( 3v]ti# prop]ty1 a taxpay] may 2 5titl$ 6rcv a frac;nal 9t]e/ 9 a %>e4 ,? bullet9 4cusses h[ a taxpay] may a3.t = ca% or o!r non-%>e 3sid],n rcvd 9 lieu (a frac;nal 9t]e/ 9 a %>e4 ,sec;n #dg d1ls ) id5tical prop]ties acquir$ af #aiga :ile subsec;n #bf7#h7 ( ,,itar 4cusses s* prop]ties acquir$ g5],y 2f #aigb4 8,id5tical prop]ties0 >e prop]ties t >e ! same 9 all mat]ial respects4 ,v>i\s transac;ns may result 9 a taxpay] hav+ a frac;nal %>e t is an 9t]e/ 9 id5tical prop]ties4 ,? bullet9 4cusses ! 4posi;n ( s* a frac;nal #d  ,,it-#aae;,r#b d#a %>e ": "s (! id5tical prop]ties 7 acquir$ 2f #aigb & o!rs af #aiga4 ,4cus.n & ,9t]pret,n ,3v]ti# ,prop]ties 7p>agraphs #a-d7 #a4 ,subject 6p>agraph #b 2l1 = ex*anges o3urr+1 & reorganiz,ns -m5c+1 af ,decemb] #ba1 #aiib1 subsec;n #ea7#a7 p]mits a taxpay] 6ex*ange 3v]ti# --------------------------------------#b prop]ty issu$ 0a corpor,n = %>es ( "o or m classes ( capital /ock (! same corpor,n on ! basis (a tax-free rollov]1 t is1 ! adju/$ co/ base (! 3v]ti# prop]ty 2comes ! adju/$ co/ base (! %>es rcvd4 ,no 3sid],n o!r ?an %>es (! corpor,n may 2 rcvd =! 3v]ti# prop]ty4 8,3v]ti# prop]ty0 is capital prop]ty (a taxpay] t is a %>e (a corpor,n1 or a bond1 deb5ture1 or note (a corpor,n t 3ta9s a 3v].n #e  ,,it-#aae;,r#b a#b privilege4 ,2f ,decemb] #bb1 #aiib1 a %>e1 6be a 3v]ti# prop]ty1 _h 63ta9 a 3v].n privilege4 ,subsec;n #bdh7#a7 def9es 8%>e0 9 "p1 6m1n 8a %>e or frac;n (a %>e (! capital /ock (a corpor,n04 ,not)/&+ ! 9clusive;s ( t def9i;n1 ? bullet9 4cusses 8%>es0 & 8frac;ns ( %>es0 z if !y 7 di6]5t4 #b4 ,subsec;n #ea7#b7 d5ies ! tax-free rollov] "u subsec;n #ea7#a7 & re/ricts any capital loss ":1 z a result (! ex*ange ( 3v]ti# prop]ty (a taxpay] = %>es t h a fair m>ket value t is less ?an t (! 3v]ti# prop]ty1 a b5efit has be5 3f]r$ on a p]son relat$ 6! taxpay]4 ,subsec;n #ea7#d71 : applies 6ex*anges o3urr+ & reorganiz,ns -m5c+ af ,decemb] #ba1 #aiib1 provides t subsec;ns #ea7#a7 & 7#b7 d n apply ": sec;n #hf or subsec;n #he7#a7 or 7#b7 apply4 #c4 ,! situ,n (t5 >ises 9 an ex*ange ( 3v]ti# prop]ty t a taxpay] 2comes 5titl$ 6a frac;n (a %>e 2c (! #f  ,,it-#aae;,r#b b#b "picul> 3v].n agree;t4 ,h["e1 mo/ corpor,ns w n issue ^! frac;nal %>es4 ,9 lieu (! frac;nal %>es1 ! agree;t w usu,y provide =! taxpay] 6rcv ca% or o!r non-%>e 3sid],n4 ,! applic,n ( subsec;n #ea7#a7 g5],y w n 2 d5i$ 9 ^! circum/.es1 not)/&+ t ! subsec;n requires t no 3sid],n o!r ?an %>es 2 rcvd =! 3v]ti# prop]ty4 ,9 a4i;n1 if ! value (! ca% or o!r non-%>e 3sid],n rcvd 0a taxpay] 9 ? mann] does n exce$ 4#bjj1 ! taxpay] may ei calculate & report ! ga9 or loss on ! am.t rcvd 9 lieu (! frac;n (a %>e1 or ignore t calcul,n & reduce1 0! am.t rcvd1 ! adju/$ co/ base (! %>es rcvd4 ,": ! value (! non-%>e 3sid],n rcvd 0a taxpay] exce$s 4#bjj1 ! taxpay] m/ report ! ga9 or loss4 ,9 ei case1 subsec;n #ea7#a7 may 2 utiliz$ =! 3v]ti# prop]ty ex*ang$ = %>es4 #g  ,,it-#aae;,r#b c#b #d4 ,"o me?od ( calculat+ ! ga9 or loss on ! am.t rcvd 9 lieu (! frac;n (a %>e foll[s1 b any r1sona# me?od is a3epta#3 ,assump;ns3 7a7 ,a taxpay] holds #hj pref]r$ %>es1 t h a total adju/$ co/ base ( 4#gbj4 ,! %>es >e trad+ at 4#aa p] %>e at ! date (! 3v].n4 7b7 ,! pref]r$ %>es >e 3v]ti# 96-mon %>es on ! basis ( #.cb -mon %>es = "o pref]r$ %>e4 7c7 ,9 lieu ( issu+ frac;nal %>es1 ! corpor,n pays ca% bas$ on ! clos+ m>ket price (a -mon %>e 7: is 4#ce47 on ! "d 2f ! 3v].n4 ,?us ! taxpay]1 :o is 5titl$ 6#be.f -mon %>es 7#.cb multipli$ 0#hj71 rcvs #be -mon %>es & 4#ba 9 ca% 7#.f multipli$ 04#ce74 #h  ,,it-#aae;,r#b d#b ,calculat+ ! ga9 or loss on ! frac;n (! %>e3 ,proce$s 4#ba.jj ,less3 ,por;n (! ,adju/$ ,co/ ,base appli$ frac;n ( -mon %>e = : ca% rcvd divid$ 0total numb] ( -mon %>es receiva# on 3v].n 79clud+ any frac;n7 multipli$ 0adju/$ co/ base or #.f divid$ 0#be.f multipli$ 04#gbj equals #af.hh ,ga9 4#d.ab ,id5tical ,prop]ties 7p>agraph #e7 #e4 ,= calculat+ a ga9 or loss ": a taxpay] 4poses ( "s id5tical prop]ty [n$ on ,decemb] #ca1 #aiga & "s prop]ty acquir$ subsequ5tly1 ! adju/$ co/ base (! pre-#aigb prop]ty m/ 2 calculat$ "u subsec;n #bf7#h7 (! ,,itar &! adju/$ co/ base (! po/- #i  ,,it-#aae;,r#b e#b #aiga prop]ty is calculat$ "u sec;n #dg4 ,? cr1tes two sep>ate pools ( id5tical prop]ty4 ,4posi;ns >e deem$ 6be f ! pre-#aigb pool until ! pool is exhau/$4 ,h["e1 = simplic;y1 ": a taxpay] has a pre-#aigb &a po/-#aiga pool ( id5tical %>es &! po/-#aiga pool 3ta9s a frac;n (a %>e 7e4g41 a frac;n rcvd z a /ock divid5d71 ! 4posi;n (! frac;n may 2 3sid]$ 6be a 4posi;n f ! po/-#aiga pool1 ev5 ?\< ! pre-#aigb pool 0 n exhau/$ at t "t4 ,o!r ,bullet9s 7p>agraph #f7 #f4 ,de"p;tal practice appli$ 9 situ,ns 9volv+ frac;nal 9t]e/s 9 %>es is 4cuss$ 9 ! curr5t v].n ( ,,it-#dej1 ,%>e = ,%>e ,ex*ange & 9 ! curr5t v].n ( ,,it-#dgd1 ,amalgam,ns ( ,canadian ,corpor,ns4 #aj  ,explan,n ( ,*anges #c ,9troduc;n ,! purpose (! ,explan,n ( ,*anges is 6give ! r1sons =! revi.ns 6an 9t]pret,n bullet94 ,x \tl9es revi.ns t we h made z a result ( *anges 6! law1 z well z *anges reflect+ new or revis$ de"p;tal 9t]pret,ns4 ,ov]view ,? bullet9 describes h[ a %>ehold] may tr1t a frac;nal 9t]e/ 9 %>es ": ! %>ehold] is 5titl$ 6rcv a frac;n (a %>e z a result ( an ex*ange ( 3v]ti# prop]ty1 or ": ! %>ehold] has two pools ( id5tical prop]ty & 4poses (a frac;n (a %>e f "o ( ^? pools4 ,? bullet9 reflects am5d;ts 6! ,9come ,tax ,act result+ f ,s4,c4 #aihj-ha-hb-hc1 c4#dh 7=m]ly ,bill ;,c- #ed71 & ,s4,c4 #aihe1 c4#de 7=m]ly ,bill ;,c-#gb7 & ,s4,c4 #aiid1 c4#ba #aa  ,,it-#aae;,r#b a#c 7=m]ly ,bill ;,c-#bg7 & makes 9cid5tal *anges 6improve cl>;y4 ,bill ;,c-#ei1 giv5 f/ r1d+ 9 ! ,h\se ( ,-mons on ,novemb] #bd1 #aiid1 does n a6ect any?+ t is sd 9 ? bullet94 ,legislative & ,o!r ,*anges ,p>agraph #a4 ,af ,may #f1 #aigd1 sec;n #ea p]mitt$ a taxpay] 6ex*ange 3v]ti# prop]ty (a corpor,n 96%>es (! same corpor,n1 provid$ t ! =m] prop]ty 3ta9$ a 3v].n privilege &! taxpay] rcvd no 3sid],n except = %>es or frac;ns ( %>es4 ,! p>agraph reflects ! foll[+ *anges 6sec;n #ea3 --,bill ;,c-#gb p]mits ! taxpay] 6rcv %>es ( "o or m classes (! capital /ock (! corpor,n 9 ex*ange =! 3v]ti# prop]ty2 & --,bill ;,c-#bg1 applica# af ,decemb] #ba1 #aiib1 p]mits a %>e 6be tr1t$ z a 3v]ti# prop]ty ev5 #ab  ,,it-#aae;,r#b b#c ?\< "! is no 3v].n privilege atta*$ 6! %>e4 ,new p>agraph #b describes two provi.ns : d5y ! op],n ( subsec;n #ea7#a73 --,bill ;,c-#ed a4$ subsec;n #ea7#b7 6d5y ! tax-free rollov] "u subsec;n #ea7#a7 ": a b5efit wd 2 3f]r$ on a p]son relat$ 6! taxpay] ^: %>es >e 2+ ex*ang$2 & --,bill ;,c-#bg1 applica# 6ex*anges o3urr+ & reorganiz,ns -m5c+ af ,decemb] #ba1 #aiib1 a4$ subsec;n #ea7#d7 : provides t subsec;n #ea7#a7 or 7#b7 wd n apply ": sec;n #hf or subsec;ns #he7#a7 or 7#b7 appli$4 ,p>agraph #c 7=m] p>agraph #b7 has be5 exp&$ 6describe :y ! ,de"p;t has tak5 ! posi;n t x has 9 t p>agraph4 ,p>agraph #f id5tifies o!r bullet9s t 4cuss frac;nal 9t]e/s 9 %>es4 #ac