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.
Principal Issues: Additional facts - replacement of phantom stock plan with a stock option plan - add provision to contemplate that stock price has decreased after phantom stock were issued.
Position: No impact on rulings provided.
Reasons: New stock option plan allows for strike price to be greater than current fmv. Still a section 7 plan.
XXXXXXXXXX XXXXXXXXXX 981991 XXXXXXXXXX
Attention: XXXXXXXXXX
XXXXXXXXXX, 1998
Dear Sirs:
Re: Supplementary Advance Income Tax Ruling Request
XXXXXXXXXX
This is in reply to your letter dated XXXXXXXXXX wherein you requested an amendment with respect to the proposed transactions described in the advance income tax ruling issued in the above-captioned matter on XXXXXXXXXX, 1998, our reference 981681 (the "Ruling"). The requested change relates to the fact that the offer to be made to each employee will be made on the basis that the right to acquire stock under the SMSOP will be at a price which is not less than the notional issue price which that employee has for his or her units in the PSP. Effectively, an employee will not be provided a lower strike price under the SMSOP than that which currently exists under PSP.
As a result of your request, subparagraph 14(b)(i) of the Ruling is to be deleted and replaced by the following:
"will provide the Participant with a right to acquire a share of the Corporation's stock at a price equal to the greater of the weighted average trading price for the Corporation's stock on the day before the offer is made and the notional issue price for each unit held in the PSP."
We confirm that the above change will not affect the rulings given in the Ruling and they will continue to be binding on the Department as indicated therein.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate