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:
Confirmation that the plan is a prescribed plan under paragraph (d) of Regulation 6801.
Position:
Yes.
Reasons:
The plan meets all the conditions in paragraph (d) of Regulation 6801.
XXXXXXXXXX
XXXXXXXXXX 990992
XXXXXXXXXX
Attention: XXXXXXXXXX
XXXXXXXXXX, 1999
Re: Advance Income Tax Ruling
Deferred Share Unit Plan for Key Employees (the “Key Employees’ Plan”)
XXXXXXXXXX (the “Corporation”) (XXXXXXXXXX)
This is in reply to your facsimile dated XXXXXXXXXX, in which you requested clarifications and amendments to Advance Income Tax Ruling 983183, regarding the above Key Employees’ Plan.
We agree that certain paragraphs of the above ruling letter should be amended to reflect the fact situation as described by you in the above facsimile. Hence, we have revised the said paragraphs which are reproduced below in their amended version.
The second sentence of paragraph 5 k) should read as follows:
k) (...). The number of whole Shares will be determined by dividing the amount payable, as determined under subparagraph 5(i) above, net of applicable withholdings, by the Market Value of a Share as determined on the Entitlement Date.
Rulings F(i) to F(iv) should read as follows:
i) under paragraph 6(1)(a) of the Act, the cash amount paid in the year to the Key Employee (or his or her estate) by the Corporation or the Key Employee’s employer in lieu of fractional DSUs as described in subparagraph 5(k) above and the cash amount paid for DSUs where Shares are not purchased on behalf of the Key Employee (or his or her estate) as described in subparagraph 5(j) above;
ii) under paragraph 6(1)(a) of the Act, the amount paid in the year by the Corporation or the Key Employee’s employer to the Designated Broker (excluding brokerage fees) to acquire the Shares purchased on behalf of the Key Employee (or his or her estate) as described in subparagraph 5(k) above;
iii) under paragraph 6(1)(a) of the Act, the amount of applicable withholdings withheld in the year by the Corporation or the Key Employee’s employer as described in subparagraph 5(j) above with respect to amounts payable to the Key Employee or the Key Employee’s estate, or described in subparagraph 5(k) above with respect to brokerage fees paid to the Designated Broker and cash payments to the Key Employee or the Key Employee’s estate, in lieu of fractional DSUs; and
iv) under paragraph 6(1)(a) of the Act, the amount of brokerage fees paid in the year by the Corporation or the Key Employee’s employer, to the Designated Broker, for the acquisition of the Shares purchased on behalf of the Key Employee (or his or her estate) as described in subparagraph 5(k) above.
Rulings G(i) to G(iv) should read as follows:
i) under paragraph 6(1)(a) and subparagraph 115(1)(a)(i) of the Act, the cash amount, to the extent it is attributable to services rendered in Canada, paid to the Key Employee (or his or her estate) by the Corporation or the Key Employee’s employer in the year in lieu of fractional DSUs as described in subparagraph 5(k) above and the cash amount paid for DSUs where Shares are not purchased on behalf of the Key Employee (or his or her estate) as described in subparagraph 5(j) above;
ii) under paragraph 6(1)(a) and subparagraph 115(1)(a)(i) of the Act, the amount, to the extent it is attributable to services rendered in Canada, paid in the year by the Corporation or the Key Employee’s employer to the Designated Broker (excluding brokerage fees) to acquire the Shares purchased on behalf of the Key Employee (or his or her estate), as described in subparagraph 5(k) above;
iii) under paragraph 6(1)(a) and subparagraph 115(1)(a)(i) of the Act, the amount, to the extent it is attributable to services rendered in Canada, of applicable withholdings withheld in the year by the Corporation or the Key Employee’s employer as described in subparagraph 5(j) above with respect to amounts payable to the Key Employee or the Key Employee’s estate, or described in subparagraph 5(k) above with respect to brokerage fees paid to the Designated Broker and cash payments to the Key Employee or the Key Employee’s estate, in lieu of fractional DSUs; and
iv) under paragraph 6(1)(a) and subparagraph 115(1)(a)(i) of the Act, the amount of brokerage fees paid in the year by the Corporation or the Key Employee’s employer, to the Designated Broker, to the extent they are paid with respect to the acquisition of the Shares purchased on behalf of the Key Employee (or his or her estate) as described in subparagraph 5(k) above, and attributable to services rendered in Canada.
Ruling H should read as follows:
H. Subject to paragraph 18(1)(a) and section 67 of the Act, any amounts referred to in rulings F) and G) that are payable in a particular year including, without limitations, applicable withholdings as described in Rulings F(iii) and G(iii) above, will be deductible for that year to the Corporation or the Key Employee’s employer (“the Payer”), as the case may be, in accordance with section 9 of the Act, provided the payment is made in respect of a Key Employee employed by the Payer.
The above advance income tax rulings are given subject to the limitations and qualifications set forth in Information Circular 70-6R3 dated December 30, 1996, issued by Revenue Canada, and are binding upon Revenue Canada provided the Key Employees’ Plan is implemented within six months of the date of this letter. Furthermore, these rulings, as well as the rulings provided in Advance Income Tax Ruling 983183, will be binding only in respect of the last version of the Key Employees’ Plan, as submitted for our review, and will not be binding in the event the Key Employees’ Plan is amended as outlined in subparagraph 5(m) above.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation
4
.../cont’d
.../cont’d