A wind-up is the process of dissolving a corporation and distributing its remaining property to shareholders. Where a subsidiary is wound up into its parent, section 88(1) of the Income Tax Act generally allows the subsidiary's property to flow up to the parent on a tax-deferred basis and permits the subsidiary's tax attributes to continue in the parent, subject to conditions.
A wind-up of a corporation into its individual shareholders is treated differently and can trigger deemed dividends and capital gains on the distributed property. Wind-ups are used to collapse redundant corporations, simplify a group after an acquisition, and combine a subsidiary's losses or cost base with the parent's. The choice between a wind-up and an amalgamation depends on the structure, the attributes involved, and the desired outcome.