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: Whether there is a "disposition" to the holders of debentures XXXXXXXXXX
Position: No
Reasons: XXXXXXXXXX
XXXXXXXXXX XXXXXXXXXX 20000-000476 XXXXXXXXXX
Attention: XXXXXXXXXX
XXXXXXXXXX, 2000
Dear Sirs:
We are writing in response to your correspondence of January 24, 2000 wherein you had requested an advance income tax ruling. We also acknowledge our (XXXXXXXXXX) various telephone conversations in furtherance of this matter.
You have advised that, to the best of your knowledge, none of the issues being considered in this advance income tax ruling request is involved in an income tax return of XXXXXXXXXX, is being considered by a Taxation Services Office or Taxation Centre of Canada Customs and Revenue Agency, is the subject of an objection or appeal or is the subject of a previously issued advance income tax ruling.
Facts
1.
XXXXXXXXXX
2.
XXXXXXXXXX
3. XXXXXXXXXX conducted its operations primarily through its wholly owned subsidiary XXXXXXXXXX was incorporated under the Canada Business Corporations Act.
4. XXXXXXXXXX financed its business operations partially through the issue of debentures as follows:
XXXXXXXXXX
(hereinafter each referred to as a "Debenture" and collectively referred to as the "Debentures").
5. Offering documents relating to the issue of all of the Debentures state that the Debentures constitute direct and unconditional obligations of each of XXXXXXXXXX. The documents further state that the Debentures constitute a charge on and are payable out of the XXXXXXXXXX.
6.
XXXXXXXXXX
7. The Debentures remained debts of XXXXXXXXXX and were not assumed by XXXXXXXXXX entered into a Debt Restructuring Agreement on XXXXXXXXXX, pursuant to which XXXXXXXXXX agreed to provide XXXXXXXXXX with the funds to discharge the Debentures in an orderly fashion.
XXXXXXXXXX
8.
XXXXXXXXXX
Proposed Transaction
It is proposed that the dissolution of XXXXXXXXXX be completed before XXXXXXXXXX. Pursuant to the draft Transfer Agreement, XXXXXXXXXX will transfer its assets to XXXXXXXXXX. The Debentures will not be reissued, but XXXXXXXXXX will directly discharge all of XXXXXXXXXX obligations under the Debentures and will become the sole obligor. In the event of default under the Debentures, the holders thereof will have an unsecured right collectable from the assets of XXXXXXXXXX.
Ruling Provided
Provided that the above statements of Fact are accurate and complete and that the Proposed Transaction is undertaken as described, the following ruling is provided:
Upon the dissolution of XXXXXXXXXX as contemplated by the Proposed Transaction, a holder of a Debenture will not be considered to have disposed of that Debenture solely by virtue of such dissolution.
The ruling is provided subject to the limitations and qualifications set out in Information Circular 70-6R3 issued by Revenue Canada on December 30, 1996 and is binding upon the Agency provided that the proposed transactions are completed on or before XXXXXXXXXX. The ruling is based on the Act and the Income Tax Regulations in their present form and does not take into account the effects of any proposed amendments thereto.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch