Safe Harbour

"S. 55(3.01)(b), deeming an amalgamated corporation to be a continuation of each predecessor for s. 55(3)(a) purposes, can potentially preclude access to the s. 55(3)(a) safe harbour.\n\nSuppose that a wholly owned Holdco of an individual owns 100% of Opco and 70% of Subco, with the remaining 30% held by unrelated persons. In order to spin-off the 70% shareholding:\n\nthe individual rolls a portion of his Holdco shares to a Newco;\n\nHoldco rolls its 70% shareholding to Newco in exchange for Newco shares; and\n\nthe cross-shareholdings are redeemed.\n\nGiven inter alia that the 30% shareholding of the unrelated persons is unaffected, none of ss. 55(3)(a)(i) to (v) are engaged, and the s. 55(3)(a) exemption applies."