Date: 10 June 1999
Canada’s Corporate Reorganization Tax Deferral Regime Extended – PricewaterhouseCoopers LLP
The Canadian Minister of Finance recently proposed to retroactively extend the corporate tax-deferral "rollover" provisions of the federal Income Tax Act to include the shares of foreign corporations.
Under the current rollover provisions in sections 85.1 and 87 of the Income Tax Act, a taxpayer who disposes of shares of one taxable Canadian corporation and receives shares of another, on a "share-for-share" exchange or a merger of such corporations, may defer the recognition of any gain or loss arising on the disposition. The gain or loss will ultimately be recognized when the shares received on the exchange are sold in a taxable transaction.
