Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
XXXXXXXXXX 992521
Attention: XXXXXXXXXX
XXXXXXXXXX, 1999
Dear Sirs:
Re: XXXXXXXXXX
Advance Income Tax Ruling #990779 dated XXXXXXXXXX, 1999
We are writing in response to your request of XXXXXXXXXX wherein you advised us of certain corrections to the facts and proposed transactions described in advance income tax ruling #990779 which was issued on XXXXXXXXXX, 1999 (the "Ruling Letter").
As requested, the following amendments are hereby made to the Ruling Letter:
1. The reference in subparagraph 2(b) of the Ruling Letter to "XXXXXXXXXX Class B preferred shares" is deleted and replaced by a reference to "XXXXXXXXXX Class B preferred shares".
2. The following is added as paragraph 14.1 of the Ruling Letter:
14.1 Amalco will, pursuant to the provisions of the BCA, offer to each of the holders of its common shares the option to convert all of the Amalco common shares held by such person into Class A preferred shares of Amalco.
Each of Landco and M&Pco will exercise this option to convert all of its Amalco common shares into Class A preferred shares of Amalco. No elections will be filed under subsection 85(1) of the Act in respect of any of the share conversions referred to herein. The Amalco shares received by each of Landco and M&Pco on the conversion described herein will have an aggregate fair market value equal to the fair market value of the Amalco common shares for which they were exchanged.
XXXXXXXXXX
3. In paragraphs 15(d) and 16(d) the reference to "Amalco common shares" is replaced by a reference to "Amalco Class A preferred shares".
4. The second subparagraph of paragraph 18 of the Ruling Letter is replaced by:
Amalco will redeem all of its Class A and Class B preferred shares held by each of Landco and M&Pco at their fair market value. The redemption amount will be paid by Amalco issuing to each of Landco and M&Pco a non-interest bearing demand promissory note (hereinafter referred to as the "Amalco Note-L" and the "Amalco Note-M") having a principal amount and fair market value equal to the fair market value of the Class A and Class B preferred shares of Amalco held by such corporation. Each of Landco and M&Pco will accept its respective Amalco Note as full payment of the redemption price of the Amalco shares so redeemed.
5. Paragraph (b) of Ruling A of the Ruling Letter is replaced by:
"(b) On the redemption by Amalco of its Class A and Class B preferred shares held by each of Landco and M&Pco as described in paragraph 18, Amalco will, by virtue of paragraph 84(3)(a), be deemed to have paid, and each of Landco and M&Pco will, by virtue of paragraph 84(3)(b), be deemed to have received, a taxable dividend at that time equal to the amount, if any, by which the amount paid to redeem such shares exceeds the PUC of those shares immediately before the redemption;"
Notwithstanding the above changes to the facts and proposed transactions described in the Ruling Letter, we confirm that, subject to the conditions set out therein, the rulings given in the Ruling Letter, as hereby amended, will continue to be binding on Revenue Canada in accordance with the practice outlined in Information Circular 70-6R3, dated December 30, 1996, provided that the proposed transactions described in the Ruling Letter are completed in the manner described therein by XXXXXXXXXX.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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