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Update gaar-examples-2.html
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@rbb000
rbb000 authored Jul 19, 2023
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Expand Up @@ -127,10 +127,11 @@ <h3>Transactions &ndash; Scenario 2 </h3>
<div><img src="https://test.canada.ca/cra/compliance/gaar_image2.jpg" class="img-responsive" alt="This is an image of before and after for this example" /></div>
<details>
<summary>Image description of before and after</summary>
<p>Text description - Think of it as you are explaining what's happening in each image before and after. </p>



<p><strong>The before image</strong></p>
<p>The before image depicts the following: an individual holds common shares and preferred shares of Canco. The common shares have a FMV of $850,000 and a nominal ACB. The preferred shares are shares on which a capital gain exemption was crystallized. Hence, the PUC of the preferred shares was at $1 and the FMV and the ACB was at $850,000. Circle number one shows the preferred shares being redeemed. The blue rectangle on the left shows that the capital loss is added to the ACB of the common shares held by the Individual. Circle number 2 illustrates the transfer of the common shares to Holdco. </p>
<p><strong>The after image</strong></p>
<p>The after image is the result of the transfer of the common shares to Holdco. The individual now holds common shares and preferred shares of Holdco. The common shares have a nominal ACB and FMV. The preferred shares have a FMV , PUC and ACB of $850,000. Holdco holds common shares in Canco. Circle number three shows the preferred shares held by the individual in Holdco being redeemed.</p>

</details>

<h3>Transactions &ndash; Scenario 3 </h3>
Expand All @@ -143,9 +144,10 @@ <h3>Transactions &ndash; Scenario 3 </h3>
<div><img src="https://test.canada.ca/cra/compliance/gaar_image3.jpg" class="img-responsive" alt="This is an image of before and after for this example" /></div>
<details>
<summary>Image description of before and after</summary>
<p>Text description - Think of it as you are explaining what's happening in each image before and after. </p>


<p><strong>The before image</strong></p>
<p>The before image depicts the following: Parent, a foreign corporation, holds shares of Forco. Parent holds common shares of Canco that have a FMV of $200M, an ACB and a PUC of $100M. Canco holds common shares of Subco that have a FMV of $2M, an ACB and PUC of $40M. Circle number one shows Canco selling its common shares of Subco to Forco at FMV.</p>
<p><strong>The after image</strong></p>
<p>The after image illustrates the result of the sale. Parent holds common shares of Canco. Parent holds shares of Forco which in turn holds common shares of Subco. Circle number two shows the horizontal amalgamation of Canco and Subco. The plus sign emphasizes that the tax attributes of the shares of the merged corporation are the sum of the tax attributes of the common shares of the merging corporations, resulting in a PUC of $140M. </p>

</details>

Expand All @@ -168,9 +170,10 @@ <h3>Transactions</h3>
<div><img src="https://test.canada.ca/cra/compliance/gaar_image4.jpg" class="img-responsive" alt="This is an image of before and after for this example" /></div>
<details>
<summary>Image description of before and after</summary>
<p>Text description - Think of it as you are explaining what's happening in each image before and after. </p>


<p><strong>The before image</strong></p>
<p>This before image depicts the following: Parentco, which owns shares of Canco, which in turn holds shares of FA. Circle number one shows FA distributing exempt dividends to Canco. Circle number 2 illustrates the continuance of FA (formerly known as Subco) to Canada. Parentco, owns shares of Canco, which in turn holds shares of Subco (formerly known as FA) that have a low FMV and a high ACB.</p>
<p><strong>The after image</strong></p>
<p>The after image depicts the result of the transactions. Circle number three shows Parentco subscribing to preferred shares of Subco (FMV=ACB). Circle number 4 shows Subco winding up: a capital loss is triggered on the common shares of Subco held by Canco.</p>

</details>

Expand All @@ -192,9 +195,10 @@ <h3>Transactions</h3>
<div><img src="https://test.canada.ca/cra/compliance/gaar_image5.jpg" class="img-responsive" alt="This is an image of before and after for this example" /></div>
<details>
<summary>Image description of before and after</summary>
<p>Text description - Think of it as you are explaining what's happening in each image before and after. </p>


<p><strong>The before image</strong></p>
<p>The before image depicts the following: circle number one shows an individual subscribing to common shares of Canco. The common shares have a high FMV and a high ACB. Circle number two shows that a high FMV/low PUC stock dividend is declared on the common shares of Canco.</p>
<p><strong>The after image</strong></p>
<p>The after image depicts the following: circle number three shows the sale by the individual of the common shares (that now have a low FMV and a high ACB) for a nominal amount to a non affiliated person. This triggers a capital loss. Finally, the image shows the individual still holding preferred shares of Canco resulting from the stock dividend that have a high FMV and a low PUC.</p>

</details>

Expand All @@ -218,9 +222,10 @@ <h3>Transactions &ndash; Scenario 1</h3>
<div><img src="https://test.canada.ca/cra/compliance/gaar_image6.jpg" class="img-responsive" alt="This is an image of before and after for this example" /></div>
<details>
<summary>Image description of before and after</summary>
<p>Text description - Think of it as you are explaining what's happening in each image before and after. </p>


<p><strong>The before image</strong></p>
<p>The before image depicts a trust approaching its 21 year anniversary (Old Trust) that has property with a high FMV and a low ACB.</p>
<p><strong>The after image</strong></p>
<p>The after image shows blue arrows depicting the distribution by Old Trust on a tax deferred basis of its property to one of its beneficiaries, Canco. Canco is owned by a newly established discretionary trust (New Trust) whose beneficiaries are the same as Old Trust. The red X shows that Old Trust ceases to exist. </p>

</details>

Expand All @@ -235,9 +240,10 @@ <h3>Transactions &ndash; Scenario 2</h3>
<div><img src="https://test.canada.ca/cra/compliance/gaar_image7.jpg" class="img-responsive" alt="This is an image of before and after for this example" /></div>
<details>
<summary>Image description of before and after</summary>
<p>Text description - Think of it as you are explaining what's happening in each image before and after. </p>


<p><strong>The before image</strong></p>
<p>The before image depicts the following : Old Trust, whose beneficiaries are non-residents and Canco, has property with a high FMV and a low ACB. A footnote indicates that the property is not a property described in subparagraph 128.1(4)(v)(i) to (iii) of the ITA. </p>
<p><strong>The after image</strong></p>
<p>The after image depicts the following: blue arrows show that property of Old Trust is distributed on a tax-deferred basis to Canco, a corporation held by non-resident beneficiaries of Old Trust. The red X shows that Old Trust ceases to exist.</p>

</details>

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