Exceptions from Subsection 55(2) - CCH Canadian

Pro Rata Test• Gross or Net Assets– Gross – sanctioned by the Act– Net – allowed administratively• Example – Two equal shareholders– The assets of DC are two properties of the same type: property A andproperty B:FMV of property A: $1,100FMV of property B: 1,000Total liabilities: (300)Net: $1,800– Assets cannot be split on a gross basis, but could be split on a net basis byassuming $200 of liabilities with property A and $100 of liabilities withproperty B so that each transferee receives $900 of net property.© 2010 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is aSwiss entity with which the independent member firms of the KPMG network are affiliated 36