I have a current situation on the section 86 share exchange and change of control of a Canadian corporation.
Mr. A is the sole shareholder who owns 100 common A voting shares in his corporation which has a fiscal year end on December 31 since incorporation.
On September 30, 2023, Mr. A and his corporation entered into a section 86 agreement to exchange his 100 common A voting shares for 100 newly issued redeemable preferred shares with a redemption value of $100,000.
On the same day, the corporation issued 100 common B voting shares to Mr. A’s Son at $1.00 each, who became the only person in control of the corporation afterward.
The question is : will it deemed to be a change of control for tax purpose and the corporation and has to cut off the book on September 30, 2023 and prepare an additonalT2 tax return for September 30, 2023?
Any advice will be greatly appreciated
