In 2012-0463611R3 (released September 18, 2013), the CRA ruled on a divisive reorganization of a particular foreign affiliate (FA 1) into two foreign affiliates (Newco and FA 1). The purpose was to consolidate existing loans (FA Loans) made by FA 1 into Newco, and leave FA 1 with its active business. This would permit more flexibility in terms of repatriating profits or capital from the foreign country in a tax-efficient manner. The division of FA 1 would be carried out under the foreign corporate law by simply creating Newco into which the FA Loans would be transferred, followed by adjustments to the capital of each company. The shareholders of Newco would be the existing shareholders of FA 1. The CRA opined (under recent amendments to the foreign affiliate rules) that the assignment of the FA Loans by FA 1 to Newco would be considered a pro rata distribution in respect of the shares of FA 1, such that the FMV of the FA Loans would be considered a dividend paid to the shareholders of FA 1 under s. 90(2). The FMV of the FA Loans similarly drove the proceeds of disposition realized by FA 1, the tax cost of the FA Loans to Newco, and the tax cost to the shareholders of their shares of Newco. Finally, the CRA helpfully ruled that the anti-avoidance rules in s. 95(6) and s. 245 would not apply, and further, that none of the “benefit” rules in s. 15, s. 56(2), or s. 246(1) would apply.