Principal Issues: Changes to Ruling 2007-024945
Position: Ruling modified
Reasons: Changes do not affect validity of rulings given
XXXXXXXXXX 2009-031933
XXXXXXXXXX , 2009
Dear XXXXXXXXXX :
Re: XXXXXXXXXX
Supplemental Advance Income Tax Ruling
This is in reply to your emails ("Emails") of XXXXXXXXXX and is supplemental to our advance income tax ruling number 2007-024945 that was issued to the above-captioned taxpayer on XXXXXXXXXX , 2008 (the "Ruling"). Unless otherwise defined, all capitalized terms in this letter have the meanings assigned to them in the Ruling.
In your Emails, you have advised that Mrs. X owns XXXXXXXXXX DC Common Shares XXXXXXXXXX . Mrs. X acquired that XXXXXXXXXX DC Common Share from her husband XXXXXXXXXX ("Mr. X") when he passed away on XXXXXXXXXX . That share acquisition was a result of her joint ownership with Mr. X with respect to Mr. X's DC Common Share, which joint ownership was implemented when Mr. X was diagnosed with a XXXXXXXXXX
You stated that the request for the Ruling was made on XXXXXXXXXX and at that time there was no knowledge of Mr. X's imminent death and his deteriorating health. Also, Mr. X's death did not result in any changes to the Proposed Transactions, other than the fact that DC's shareholder, after the Proposed Transactions, will be solely Mrs. X as opposed to Mr. and Mrs. X. Consequently, you have submitted that Mrs. X's acquisition of Mr. X's DC Common Share would not form part of a series of transactions or events that includes the butterfly dividends arising on the Proposed Transactions.
Further, Paragraph 4 stated that no shares will be issued on the incorporation of each TC. However, you have advised that this condition cannot be met unless each TC is incorporated under the BCA 1.
Consequently, you have requested the following amendments to the Ruling:
(a) Replace the third subparagraph of Paragraph 1 with:
"The issued and outstanding capital of DC consists of XXXXXXXXXX common shares ("DC Common Shares") of which XXXXXXXXXX ("Mrs. X") owns XXXXXXXXXX and her XXXXXXXXXX adult children: XXXXXXXXXX (herein referred to individually as a "Child" and collectively as the "Children") each own 1.
(b) Remove the reference to "Mr." in Paragraphs 1 and 3.
(c) Change the phrase "the BCA 2" in Paragraph 4 to read "the BCA 1".
Confirmation
Provided that the preceding statements and the statements contained in the Ruling constitute a complete and accurate disclosure of all the relevant facts and proposed transactions and of the purposes of the Proposed Transactions, notwithstanding the above changes and the preceding statements, we hereby confirm that, subject to the conditions, limitations, qualifications and comments set out in the Ruling, the Ruling will continue to be binding on CRA. In addition, we confirm that Paragraphs 1, 3 and 4 are hereby amended in the manner that you have requested above.
Yours truly,
XXXXXXXXXX
Section Manager
for Division Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch