Ideas in this flowchart

• Tax treatment of the proposed spin-off and subsequent amalgamation
• Initial ownership structure
• An individual wholly owns Holdco
• Holdco owns 100% of Opco and 70% of Subco, while unrelated persons own the remaining 30%
• Proposed steps to spin off the 70% Subco shareholding
• The individual rolls a portion of his Holdco shares to Newco
• Holdco rolls its 70% Subco shareholding to Newco in exchange for Newco shares
• The cross-shareholdings are redeemed
• Because the unrelated persons’ 30% shareholding is unaffected, none of ss. 55(3)(a)(i) to (v) are engaged and the s. 55(3)(a) exemption applies
• Alternative final step: Newco and Subco amalgamate
• The amalgamation triggers s. 55(3)(a)(ii)
• By receiving shares of Amalco, the unrelated persons are effectively deemed under s. 55(3.01)(b) to have acquired a 30% interest in Newco