CRA provides a hybrid double pipeline ruling with a choice between amalgamating or winding up

CRA has provided another ruling letter on a hybrid post-mortem pipeline transaction. At 24 pages long, it is roughly double the length of a typical letter, because the deceased held three investment corporations (Aco, Bco and Cco) rather than only one, and the transactions were somewhat intricate as a result.

• In the case of Aco, after engaging in preliminary transactions to access the capital dividend account, and NERDTOH, and ERDTOH accounts, of Aco, and to generate a capital loss for carryback under s. 164(6), the estate transfers its stepped-up common shares of Aco on an s. 85(1) rollover basis to a Newco in consideration for common shares and a promissory note of Newco.
• At the end of the transitional period (presumably one year), Aco and Newco can either amalgamate or Aco can be wound up under s. 88(1) into Newco. Thereafter, the amalgamated corporation or Newco, as the case may be (“Amalco”), commences the gradual repayment of the note (in light of the sentence below, at 25% per quarter).
• One year after such amalgamation or winding up, Amalco, in turn, is wound up pursuant to ss. 88(2) and 84(2) into the hands of the residuary beneficiaries of the estate, being two of the children.

Similar or simpler transactions will be undertaken in relation to Cco and Bco.

CRA presumably permitted a choice between amalgamation and winding-up since this did not bear on its rulings or analysis.

Neal Armstrong. Summary of 2025 Ruling 2025-1054291R3 under s. 84(2).