Principal Issues: Minor changes to ruling
Position: Rulings will continue to be binding
Reasons: Changes do not have an impact on rulings given
XXXXXXXXXX 2005-012804
XXXXXXXXXX, 2005
Dear XXXXXXXXXX:
Re: XXXXXXXXXX,
XXXXXXXXXX,
XXXXXXXXXX,
XXXXXXXXXX
Supplementary Advance Income Tax Ruling
We are writing in response to your e-mail of XXXXXXXXXX, and this letter is supplemental to our advance income tax ruling number 2004-010546 dated XXXXXXXXXX, 2005 (the "Ruling").
As a result of your letter, the following changes will be made to the Ruling:
1. Insert the following Paragraph after Paragraph 23:
"23A. Prior to the implementation of the Proposed Transactions, each of W, X, Y and Z (each of whom owns a XXXXXXXXXX% beneficial interest in the leasehold interest in the Land and the Development) will sell their respective interests to the Mr. A Family Trust, Mr. B Family Trust, and Mr. C Family Trust in equal shares. That is, each of the Mr. A Family Trust, Mr. B Family Trust, and Mr. C Family Trust will acquire one third of the beneficial interest in the leasehold interests held by each of W, X, Y, and Z. The purchase price will be the fair market value of the proportionate leasehold interest and will be paid by (i) each of the purchasers assuming each vendor's share of the outstanding mortgage with the Creditor and (ii) each of the purchaser's issuing promissory notes in favour of the vendors for the balance. This purchase and sale transaction is expected to close on or about XXXXXXXXXX and prior to the implementation of the Proposed Transactions."
2. Add the following subparagraph immediately after subparagraph 24(m):
"(n) Canco, the Sublandlord will agree not to extend or renew the term of the groundlease, nor will it enter into any agreement or exercise any right it may have at any time during the term of the Headsublease under which it is entitled to acquire the fee simple title to the Development, without the written consent of the Subtenant."
3. Add the following Paragraph immediately after Paragraph 26:
"26A. Pursuant to Paragraph 26 of the Ruling, Canco and the Trust have agreed on a prorating of the Headsublease Base Rent or any prepayment of such Headsublease Base Rent in the event any Subtenant does not agree to provide a conditional surrender of its subleasehold interest. In the event of a prepayment, such amount may also be paid on an installment basis as agreed to by Canco and the Trust."
Notwithstanding the above changes, we hereby confirm that, subject to the conditions set out in the Ruling, the rulings given therein will continue to be binding on the CRA provided the Canco contracts with the Trust in respect of the Headsublease described in Paragraph 24 are entered into on or before XXXXXXXXXX and any prepayment by the Trust of Headsublease Base Rent (as described in subparagraph (f) of Paragraph 24) is made on or before XXXXXXXXXX.
If we can be of any further assistance, please contact the writer.
Yours truly,
XXXXXXXXXX
Manager
Corporate Financing Section
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate