23 July 2007 Internal T.I. 2007-0228601I7 F - Redemption of U.S. Denominated Shares -- summary under Subsection 39(2)

Where US-dollar denominated preferred shares in a wholly-owned subsidiary are redeemed through the issuance of Canadian-dollar denominated preferred shares having a higher stated capital than the Canadian-dollar equivalent of the value of the US-dollar denominated preferred shares at the time of their issue, there is a good argument that the subsidiary will not have sustained a loss as a result of the transaction as its "patrimony" will not be affected by the transaction.