Exceptions from Subsection 55(2) - CCH Canadian

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Application of Butterfly Denial Rules —Spin-off Butterfly ExampleShareholder(s)100% 100%TransfereeDCAsset 1Asset 2• Paragraph 55(3.1)(c) “Continuity of Assets” Rule for Transferee Corporation– Transferee is restricted from selling butterflied property• Paragraph 55(3.1)(d) “Continuity of Assets” Rule for Distributing Corporation– DC is restricted from selling non-butterflied property• Rules apply if more than 10% of fair market value of property of TC or DC is sold© 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 45
Application of Butterfly Denial Rules —Spin-off Butterfly ExampleShareholder(s)100% 100%TransfereeDCAsset 1Asset 2Exceptions to “Continuity of Asset” Rules• Dispositions in ordinary course of business– Not defined• On sequential butterflies• On an amalgamation with a related corporation• Rules do not apply to dispositions of cash or debt receivable© 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 46
Page 1 and 2: Understanding Section55 and Butterf
Page 3 and 4: Agenda• Overview of Subsection 55
Page 5 and 6: Overview of Subsection 55(2)• Ant
Page 7 and 8: Purpose of Subsection 55(2) —Exam
Page 9 and 10: Purpose of Subsection 55(2) —Exam
Page 11 and 12: Subsection 55(2) —Part of a Serie
Page 13 and 14: What Happens if Subsection 55(2) Ap
Page 15 and 16: First Exception: Income Earned or R
Page 17 and 18: Third Exception:Subsection 55(3)(a)
Page 19 and 20: Types of Butterflies© 2010 KPMG LL
Page 21 and 22: Types of Butterflies — Split-up v
Page 23 and 24: Spin-off Butterfly —AfterAB60%40%
Page 25 and 26: Spin-off Butterfly — Basics Steps
Page 27 and 28: Spin-off Butterfly — Basics Steps
Page 29 and 30: Full Split-up ("Double-wing") Butte
Page 31 and 32: Full Split-up Butterfly — Basic S
Page 33 and 34: Qualifying for the Exemption© 2010
Page 35 and 36: Distribution - Subsection 55(1) Def
Page 37 and 38: Pro Rata Test• Gross or Net Asset
Page 39 and 40: Look-Through Concept• Property de
Page 41 and 42: Butterfly Denial Rules© 2010 KPMG
Page 43 and 44: Application of Butterfly Denial Rul
Page 45: Application of Butterfly Denial Rul
Page 49 and 50: Public Company Spin-off Rules• Pu
Page 51 and 52: Related Issues• Part IV tax and R

Exceptions from Subsection 55(2) - CCH Canadian

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