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
XXXXXXXXXX 992361
XXXXXXXXXX
Attention: XXXXXXXXXX
XXXXXXXXXX,1999
Dear Sirs:
Re: XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Advance Income Tax Ruling 990013
We are writing in response to your letter of XXXXXXXXXX, wherein you advised us of the following modifications to the above-noted Advance Income Tax Ruling (the "Tax Ruling"), dated XXXXXXXXXX, 1999. All capitalized terms have the meaning assigned in the Tax Ruling.
1. The reference to XXXXXXXXXX% in Paragraph 17 of the Tax Ruling is amended to read XXXXXXXXXX%.
2. The following is added after the second sentence of paragraph 23:
XXXXXXXXXX.
3. The reference to the amount of the XXXXXXXXXX in Paragraph 23(d) should be XXXXXXXXXX.
4. Paragraph 63(a) is amended to read as follows:
(a) all of the common shares of Eco that DC1 owns (i.e., all of the XXXXXXXXXX% shareholding), all of its XXXXXXXXXX% interest in the Eco Partnership, all of the preferred shares of Z4 Inc. and all of the preferred shares of XXXXXXXXXX that DC1 owns;
5. Paragraph 79(a) is to be deleted and replaced with the following:
(a)
XXXXXXXXXX
6. The following is added at the end of Paragraph 80:
DC2 and XXXXXXXXXX will jointly elect, in prescribed form and within the time determined under subsection 85(6), for the provisions of subsection 85(1) to apply to the aforesaid exchange. The amount agreed upon in the joint election will be the aggregate ACB to DC2 of all of the XXXXXXXXXX common shares transferred to XXXXXXXXXX on the share exchange, which will not exceed the aggregate FMV of those common shares.
7. The reference in Paragraph 82 to section 25 of the BCA is amended to read section 26.
8. Paragraph 85(vi) and (viii) are amended to read as follows:
(vi) XXXXXXXXXX;
(viii) XXXXXXXXXX;
9. The following subparagraph is added to Paragraph 85 following subparagraph (xiv):
(xv) certain employee loans receivable totalling approximately $XXXXXXXXXX and certain funds (approximately $XXXXXXXXXX) held in a trust bank account that ultimately will be paid to an employee who will become employed by TC2.
10. Paragraph 97(a) is amended to read as follows:
(a) (i) assume a $XXXXXXXXXX liability owing by DC2 to an employee who will become an employee of TC2;
(ii) assume an obligation under a foreign exchange contract currently held by DC2; and
(iii) issue a demand, non-interest bearing, promissory note (the "Newco Note") to DC2 with a principal amount and FMV equal to an amount calculated by multiplying the total outstanding liabilities of DC2 immediately before the transfer of the Transferred Assets by the Business Proportion and then subtracting from the amount calculated the amounts described in (i) and (ii) above; and
11. Paragraph 99(a) is amended to read as follows:
(a) the agreed amount under subsection 85(1) in respect of the transfer of the XXXXXXXXXX Newco Common Shares to TC2 less the amount of the Newco Note and the FMV of any other non-share consideration received by DC2; and
12. The reference to XXXXXXXXXX Shares in the last line of Paragraph 108 should be a reference to XXXXXXXXXX Shares.
13.
XXXXXXXXXX
14.
XXXXXXXXXX
Supplemental Ruling
Ruling M of the Tax Ruling is deleted and replaced by the following:
M. Provided that the acquisition of the Existing B Shares described in paragraph 13 of our letter dated August 31, 1999 was not made in contemplation of the Proposed Transactions and provided that as part of the series of transactions or events that includes the Proposed Transactions, there is not:
(a) a disposition of property in the circumstances described in subparagraph 55(3.1)(b)(i);
(b) an acquisition of control in the circumstances described in subparagraph 55(3.1)(b)(ii);
(c) an acquisition of shares in the circumstances described in subparagraph 55(3.1)(b)(iii);
(d) an acquisition of property in the circumstances described in paragraph 55(3.1)(c); or
(e) an acquisition of property in the circumstances described in paragraph 55(3.1)(d),
which has not been described in the Tax Ruling, then by virtue of paragraph 55(3)(b), subsection 55(2) will not apply to the taxable dividends referred to in ruling F. For greater certainty, subsection 55(3.1) will not apply to preclude the application of paragraph 55(3)(b) to the transactions as proposed herein.
We acknowledge the forgoing modifications to Advance Ruling 990013 and confirm that, subject to the conditions set out therein and the Caveat below, the rulings given therein, 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 are completed in the manner described in Advance Ruling 990013, as amended herein, by XXXXXXXXXX.
Caveat
Nothing in this letter should be construed as implying that Revenue Canada, Customs, Excise and Taxation has agreed to or is expressing an opinion as to whether the acquisition of shares described in paragraph 13 above, was made in contemplation of, or as part of the series of transaction or events which includes the Proposed Transactions. Such a determination will be made upon audit.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch