Eligible spin-offs

Includes a simple numerical example. Also describes how a corporate shareholder which files electronically is to provide the required information, and states that a letter filed by a taxpayer with a paper return should contain:

◦ written notification that the shareholder is electing to defer tax relating to the distribution of spin-off shares from a U.S. (or other foreign) corporation, including a description of both the original and spin-off shares;

◦ the number, cost amount otherwise determined, and fair market value of the client's original shares, both immediately before the distribution and after the distribution; and

◦ the number and fair market value of the spin-off shares immediately after distribution.

//www.cra-arc.gc.ca/tx/bsnss/tpcs/frgncrp-eng.html">"Information for foreign corporations" 6 March 2012: Respecting the requirement in s. 86.1(2)(b) that the distribution consist only of shares, CRA states:

If the shares distributed in the course of the spin-off had rights to purchase other shares attached to them, the corporation should confirm that the rights plan was established for bona fide business purposes other than to obtain a tax benefit. It should also confirm that the rights did not have any significant value independent of the shares being spun-off at the time of the spin-off.