//www.bci.ca/">www.bci.ca): Non-capital losses of BCI are transferred to its affiliate, Bell Canada, pursuant to transactions under which a subsidiary of Bell Canada ("Bell Subco") borrows up to $17 billion on a day-light loan and uses the borrowed money to subscribe for preferred shares of a newly-incorporated subsidiary of BCI ("BCI Subco"), BCI Subco lends the money on a non-interest bearing basis to BCI, BCI lends the same funds on an interest-bearing basis (1 basis point lower than the dividend rate on the preferred shares) to Bell Subco, which pays off the day-light loan. BCI is paid for the loan by the parent of Bell making a capital contribution to a second newly incorporated subsidiary of BCI, with that subsidiary then being wound-up into BCI.
Ruling given that no inclusion in the income of the second subsidiary of BCI under s. 9 or 12(1)(x) in respect of the contribution of capital to it (and that no such inclusion in the income of BCI Subco in respect of periodic contributions of capital to it in order for it to fund dividend payments on the preferred shares).
Email this Content