Abstract
This article reviews the new Canadian foreign affiliate reorganization rules in the Income Tax Act (Canada) enacted on June 26, 2013, and considers the main transitional elections available to taxpayers (until June 2014) for retroactive application of these new rules. The focus is on the foreign affiliate merger rollover in paragraph 95(2)(d.1), the lower-tier foreign affiliate liquidation rollover in paragraph 95(2)(e), the top-tier foreign affiliate liquidation rollover in subsection 88(3), and new subsection 90(2) deeming most pro rata foreign affiliate distributions to be dividends, together with new Regulation 5901(2)(b) permitting dividends to be treated as pre-acquisition surplus.
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