Principal Issues: 1) Whether section 84.1 will apply to deem the heirs to have received a dividend upon the disposition of shares to the new company. 2) Whether section 84.1 will apply to reduce the PUC on the shares of the new company received as consideration for the disposition of the shares. 3) Whether subsection 84(2) will apply to the proposed transactions. 4) Whether subsection 245(2) will apply to the proposed transactions.
Position: 1) No. Favorable ruling given. 2) No. Favorable ruling given. 3) No. Favorable ruling given. 4) No. Favorable ruling given.
Raisons: In accordance with the provisions of the Act and our previous positions.
XXXXXXXXXX.
XXXXXXXXXX 2021
Subject: Request for advance income tax rulings
XXXXXXXXXX
Dear Madam,
Dear Madam,
This is in response to your letter of XXXXXXXXXX, in which you requested advance income tax rulings on behalf of XXXXXXXXXX. We have also taken into account the information you have sent us by email as well as additional information submitted during telephone conversations (XXXXXXXXXX).
Unless otherwise indicated, all statutory references below are to the provisions of the Income Tax Act, R.S.C. (1985), c. 1, (5th Supp.), (the "Act").
To the best of your knowledge and that of the parties involved in the transactions, none of the matters to which this request for advance rulings:
(i) relates to a tax return previously filed by the taxpayers or a person related to them
(ii) is under examination by a Tax Services Office or Tax Centre in connection with a tax return previously filed by the taxpayers or a person related to them;
(iii) is the subject of a notice of objection by the taxpayers or a person related to them;
(iv) is the subject of a pending or completed legal proceeding involving the taxpayers or a person related to them; or
(v) is the subject of a ruling request previously reviewed by the Income Tax Rulings Directorate.
DEFINITIONS AND ABBREVIATIONS USED
The names and corporate names of the taxpayers are replaced by the names and corporate names listed below.
Unless otherwise stated, the following abbreviations have the meanings set out below.
"ACB" means "adjusted cost base" as defined in section 54;
"Agreed amount" has the meaning assigned by subsection 85(1);
"Amalco" means the corporation resulting from the amalgamation of Newco and Investco, as described in paragraph 52 of the Proposed Transactions;
"Capital dividend" means a dividend for which an election has been made under subsection 83(2);
"Capital property" has the meaning assigned by section 54;
"CBCA" means the Canada Business Corporations Act, R.S.C. (CBCA" means the Canada Business Corporations Act, R.S.C. 1985, c. C-44;
"CCPC means Canadian-controlled private corporation" as defined in subsection 125(7);
"CDA" means "capital dividend account" as defined in subsection 89(1);
"Child Trust1" means XXXXXXXXXX;j
"Child Trust2" means XXXXXXXXXX;
"Child1" means XXXXXXXXXX;
"Child2" means XXXXXXXXXX;
"Common-law Partner" has the same meaning as in the definition of "common-law partner" in subsection 248(1);
"Completed Transactions" means the transactions referred to in paragraphs 42 and 43 of this letter;
"connected corporation" has the meaning assigned by subsection 186(4);
"CRA" means the Canada Revenue Agency;
"DR" means "dividend refund" as defined in subsection 129(1);
"eligible dividend" has the same meaning as in subsection 89(1);
“ERDTOH” means "eligible refundable dividend tax on hand" as defined in subsection 129(4);
"Estate" means the estate of X governed by the terms of the Will.
“FMV” means the highest price, in dollars, that would be agreed upon in the open market by two knowledgeable and prudent parties dealing at arm's length, neither party being under any compulsion to act;
“GRIP” means "general rate income pool" as defined in subsection 89(1);
"Holdco" means XXXXXXXXXX;
"Investco" means XXXXXXXXXX;
“NERDTOH” means "non-eligible refundable dividend tax on hand" as defined in subsection 129(4);
"Newco" means the new corporation to be incorporated in connection with the implementation of the Proposed Transactions, as described in paragraph 44 of the Proposed Transactions;
"Non-Arm's length" means not dealing at arm’s length, as described in subsection 251(1);
"Note1" means a demand note, not bearing interest, as described in paragraph 16 of the Investco Facts;
"Note2" means a demand note, non-interest bearing, as described in paragraph 42 of the Completed Transactions;
"Note3" means a demand note, non-interest bearing, as described in paragraph 42 of the Completed Transactions;
"Note4" means a demand note, non-interest bearing, as described in paragraph 48 of the Proposed Transactions;
"Proposed Transactions" means the transactions referred to in paragraphs 44 to 55 of this letter;
"PUC means "paid-up capital" as defined in subsection 89(1);
"QSBCS" means a "qualified small business corporation share" as defined in subsection 110.6(1);
"RV" means "redemption value".
"Spouse" means XXXXXXXXXX;
"Subject Shares" means the XXXXXXXXXX Class F Shares, XXXXXXXXXX Class H Shares, XXXXXXXXXX Class I Shares and XXXXXXXXXX Class J Shares of the capital stock of Investco held by the Estate immediately prior to the Proposed Transactions;
"taxable dividend" has the meaning assigned by the definition in subsection 89(1);
"Taxation Year" has the meaning set out in subsection 249(1);
"TCC means "taxable Canadian corporation" as defined in subsection 89(1);
"Trustee1" means XXXXXXXXXX;
"Trustee2" means XXXXXXXXXX;
"Will" means the will of X signed on XXXXXXXXXX;
"X" means XXXXXXXXXX;
RELEVANT FACTS
Facts respecting Investco
1. Investco was incorporated on XXXXXXXXXX under the CBCA. It is a CCPC and a TCC. Its fiscal period end is XXXXXXXXXX.
2. Investco is a portfolio company. Its only activities are to hold, manage and trade various investments. As at XXXXXXXXXX, Investco's assets consisted primarily of shares of the capital stock of Holdco, a note receivable from Holdco, cash and equity investments.
3. As at XXXXXXXXXX, the amount of Investco's GRIP was $XXXXXXXXXX, excluding the total of Eligible Dividends paid in the amount of $XXXXXXXXXX during its Taxation Year ended XXXXXXXXXX.
4. As of XXXXXXXXXX, Investco's ERDTOH amount was $XXXXXXXXXX, excluding the DR in the amount of $XXXXXXXXXX for its taxation year ended XXXXXXXXXX.
5. As of XXXXXXXXXX, Investco's NERDTOH amount was $XXXXXXXXXX, excluding the DR of $XXXXXXXXXX for its taxation year ended XXXXXXXXXX.
6. As of XXXXXXXXXX, Investco's CDA was estimated to be $XXXXXXXXXX.
7. The shares of Investco's capital stock held by X at the time of his death did not qualify as QSBCS to him.
8. The shares of the capital stock of Investco held by X at the time of his death qualified as Capital Property to him.
9. Immediately prior to X's death, the issued and outstanding capital stock of Investco consisted of:
- XXXXXXXXXX Class B.1 shares, held by Child1, which were non-voting, participating and entitled to receive a dividend.
- XXXXXXXXXX Class B.2 shares, held by Child2, which were non-voting, participating and entitled to receive a dividend.
- XXXXXXXXXX Class C.1 shares, of which XXXXXXXXXX were held by X and XXXXXXXXXX by Spouse, which were voting, non-participating, redeemable at RV in the amount of $XXXXXXXXXX.
- XXXXXXXXXX Class F shares, held by X, which were non-voting, non-participating, entitled to receive a dividend, redeemable at their RV in the amount of $XXXXXXXXXX.
- XXXXXXXXXX Class H shares, held by X, which were non-voting, non-participating, entitled to receive a dividend, redeemable at their RV in the amount of $XXXXXXXXXX.
- XXXXXXXXXX Class I shares, held by X, which were voting, non-participating, entitled to receive a dividend, redeemable at their RV in the amount of $XXXXXXXXXX.
- XXXXXXXXXX Class J shares, held by X, non-voting, non-participating, entitled to receive a dividend, redeemable at their RV in the amount of $XXXXXXXXXX.
- XXXXXXXXXX Class L shares, held by X, non-voting, non-participating, entitled to receive a dividend, redeemable at their RV in the amount of $XXXXXXXXXX.
10. Immediately prior to X's death, the XXXXXXXXXX Class.1 C shares held by X at his death had a PUC, ACB and RV of $XXXXXXXXXX.
11. Immediately before X's death, the XXXXXXXXXX Class F shares held by X at his death had a PUC and ACB of $XXXXXXXXXX and an RV of $XXXXXXXXXX.
12. Immediately before X's death, the XXXXXXXXXX Class H shares held by X at his death had a PUC of $XXXXXXXXXX, an ACB of $XXXXXXXXXX and an RV of $XXXXXXXXX.
13. Immediately prior to X's death, the XXXXXXXXXX Class I shares held by X at his death had a PUC, ACB and RV of $XXXXXXXXXX.
14. Immediately prior to X's death, the XXXXXXXXXX Class J shares held by X at his death had a PUC and ACB of $XXXXXXXXX and an RV of $XXXXXXXXXX.
15. Immediately prior to X's death, the XXXXXXXXXX Class L shares held by X at his death had a PUC, ACB and RV of $XXXXXXXXXX.
16. Immediately prior to his death, X had a receivable from Investco in the amount of $XXXXXXXXXX (Note 1).
17. Immediately prior to his death, X had de jure control of Investco for the purposes of the Act. As of the date hereof, the Estate holds the shares of the capital stock of Investco giving it de jure control of Investco.
18. An investment policy has been established for Investco.
Facts respecting Holdco
19. Holdco was formed by the amalgamation of XXXXXXXXXX and XXXXXXXXXX on XXXXXXXXXX. The amalgamation took place under the CBCA. Holdco is a CCPC and a TCC. Its fiscal period end is XXXXXXXXXX.
20. Holdco is a portfolio company. Its only activities are to hold and manage various investments. On XXXXXXXXXX, Holdco's assets consisted principally of real estate investments, cash and an advance receivable from Investco.
21. As at XXXXXXXXXX, the amount of Holdco's GRIP was $XXXXXXXXXX. The GRIP balance available for the transactions described herein is therefore approximately $XXXXXXXXXX.
22. As of XXXXXXXXXX, the amount of Holdco's ERDTOH and NERDTOH was $XXXXXXXXXX.
23. As of XXXXXXXXXX, Holdco's CDA is estimated to be $XXXXXXXXXX.
24. The shares of the capital stock of Holdco held by X at the time of his death did not qualify as QSBCS to him.
25. The shares of the capital stock of Holdco held by X at the time of his death qualified as Capital Property to him.
26. Immediately prior to X's death, the issued and outstanding capital stock of Holdco consisted of:
- XXXXXXXXXX Class A.1 shares, held by Investco, which were voting, participating and entitled to receive a dividend.
- XXXXXXXXXX Class C.1 shares, held by X, which were voting, non-participating, redeemable at their RV in the amount of $XXXXXXXXXX.
- XXXXXXXXXX Class C.1 shares, held by the Spouse, which were voting, non-participating, redeemable at their RV in the amount of $XXXXXXXXXX.
- XXXXXXXXXX Class H shares, held by Investco, which were non-voting, non-participating, entitled to receive a dividend, redeemable at their RV in the amount of $XXXXXXXXXX.
27. The XXXXXXXXXX Class C.1 shares held by X, immediately before his death, had a PUC, ACB and RV of $XXXXXXXXXX.
Facts respecting the death of X
28. X died on XXXXXXXXXX. X was a resident of Canada for the purposes of the Act.
29. At the time of his death, X was the Common-law Partner of Spouse.
30. Child1 and Child2 are the children of X.
31. Child Trust1 was created under the terms of the Will, for the benefit of Child1 and the descendants thereof.
32. Child Trust2 was created under the terms of the Will, for the benefit of Child2 and the descendants thereof.
33. Child Trust1 and Child Trust2 are the residual universal legatees of X's estate.
34. On XXXXXXXXXX, Trustee1 resigned as trustee of Child Trust1 and Child Trust2 and was replaced by Trustee2.
35. On XXXXXXXXXX, Trustee1 resigned as executor of the Estate and was replaced by Child2. The change in executor resulted in an acquisition of control of Investco and Holdco for purposes of the Act. As a result, a deemed taxation year end occurred for Investco and Holdco immediately prior to the time of the change of Trustee.
36. As a result of X's death and pursuant to paragraph 70(5)(a), X was deemed to have disposed of, immediately before his death, all of the shares of the capital stock of Investco and Holdco held by him and to have received proceeds of disposition equal to their respective FMV immediately before his death. By virtue of paragraph 70(5)(b), the Estate was deemed to have acquired all of the shares of the capital stock of Investco and Holdco at a cost equal to their FMV immediately before X's death.
37. The deemed disposition of the Investco shares resulted in a capital gain to X of $XXXXXXXXXX, resulting in a taxable capital gain of $XXXXXXXXXX.
38. X (or his estate) has not claimed and will not claim a capital gains deduction pursuant to subsection 110.6(2.1) in computing his taxable income in respect of the taxable capital gain resulting from the deemed disposition of the shares held by X of the capital stock of Investco at the time of his death.
39. The deemed disposition of the Holdco shares did not result in any capital gain to X.
40. The Estate claims to be a resident of Canada for purposes of the Act.
41. The Subject Shares are Capital Property to the Estate.
COMPLETED TRANSACTIONS
42. The following transactions relevant to Investco have taken place since the death of X:
- On XXXXXXXXXX (retroactive to XXXXXXXXXX in accordance with the provisions of Investco's articles of incorporation), Investco redeemed XXXXXXXXXX Class C.1 shares of its capital stock held by the Estate for a consideration of $XXXXXXXXXX.
- On XXXXXXXXXX (retroactive to XXXXXXXXXX in accordance with the provisions of Investco's articles), Investco redeemed XXXXXXXXXX Class L shares of its capital stock held by the Estate for a consideration of $XXXXXXXXXX.
- Effective on XXXXXXXXXX, Investco proceeded to purchase for cancellation XXXXXXXXXX Class C.1 shares of its capital stock held by Spouse for consideration of $XXXXXXXXXX. The purchase for cancellation resulted in an acquisition of control of Investco for the purposes of the Act. As a result, a Deemed Taxation Year End for Investco occurred immediately prior to the time of the purchase for cancellation.
- On XXXXXXXXXX, Investco declared a dividend in the amount of $XXXXXXXXX. This dividend was payable on the Class F shares of its capital stock by the issuance of a demand note in the amount of $XXXXXXXXXX to the Estate (Note2).
In respect of the above dividend, Investco made an election pursuant to subsection 83(2) for the full amount of such dividend to be deemed to be a Capital Dividend. This subsection 83(2) election was made in the prescribed manner.
- On XXXXXXXXXX, Investco paid Note2 in full to the Estate.
- On XXXXXXXXXX, Investco paid a portion of Note1 to the Estate in the amount of $XXXXXXXXXX to enable the Estate to pay taxes. The outstanding principal amount of Note 1 on XXXXXXXXXX was $XXXXXXXXXX.
- On XXXXXXXXXX, Investco declared a dividend in the amount of $XXXXXXXXXX on the Class F shares of its capital stock and a dividend in the amount of $XXXXXXXXXX on the Class H shares of its capital stock. These dividends were payable by the issuance of a demand note in the amount of $XXXXXXXXXX in favour of the Estate (Note 3).
These dividends were Taxable Dividends and Investco designated a portion of such Taxable Dividends, namely $XXXXXXXXXX, as Eligible Dividends in accordance with the provisions of subsection 89(14).
43. The following transactions relevant to Holdco have taken place since the death of X:
- On XXXXXXXXXX (effective retroactively to XXXXXXXXXX under the provisions of Holdco's articles of association), Holdco redeemed the XXXXXXXXXX Class C.1 shares of its share capital held by Estate for consideration of $XXXXXXXXXX.
- Effective XXXXXXXXXX, Holdco purchased for cancellation the XXXXXXXXXX Class C.1 shares of its capital stock held by Spouse for a consideration of $XXXXXXXXXX. The purchase for cancellation resulted in an acquisition of control of Holdco for the purposes of the Act. As a result, a Deemed Taxation Year End occurred for Holdco immediately prior to the time of the purchase for cancellation.
PROPOSED TRANSACTIONS
44. The Estate will proceed to incorporate Newco under the CBCA. Newco will, at all times relevant for the purposes of the Act in this letter, be a CCPC and a TCC.
The authorized capital stock of Newco will consist of, among other things, an unlimited number of Class B, C, D and J shares.
The principal rights, privileges, conditions and restrictions of the Class B, C, D and J shares will be as follows:
- Class B shares will be voting, non-participating, and will not be entitled to receive a dividend.
- Class C shares will be non-voting, participating, and entitled to receive a dividend.
- Class D shares will be non-voting, participating, and entitled to receive a dividend.
- Class J shares will be non-voting, non-participating, and entitled to receive a monthly dividend at a rate of XXXXXXXXXX%. A price adjustment clause will also be provided for the event of a challenge by the tax authorities to the FMV of the consideration received.
45. The Estate will subscribe for XXXXXXXXXX Class B shares of the capital stock of Newco for consideration of $XXXXXXXXXX.
46. Child1 will transfer the XXXXXXXXXX Class B.1 shares of the capital stock of Investco to Newco. In exchange, Newco will issue XXXXXXXXXX Class C shares of its capital stock with a PUC and an ACB of $XXXXXXXXXX to Child1. Child1 will accept the XXXXXXXXXX Class C shares as full and absolute payment for the transfer of the XXXXXXXXXX Class B.1 shares of the capital stock of Investco.
Child1 and Newco will make the election provided for in subsection 85(1) in the prescribed form and within the period provided for in subsection 85(6), in respect of the XXXXXXXXXX Class B.1 shares of the capital stock of Investco. For greater certainty, the Agreed Amount made by Child1 and Newco for the XXXXXXXXXX Class B.1 shares of the capital stock of Investco transferred will be equal to the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii) (i.e. their FMV at the time of the transfer and their ACB to Child1 at the time of the transfer, respectively, which is $ XXXXXXXXXX)
The PUC of the Class C shares of the capital stock of Newco issued will be $XXXXXXXXXX, which is the maximum amount that can be added to the PUC of the shares by virtue of paragraph 84.1(1)(a).
47. Child2 will transfer the XXXXXXXXXX Class B.2 shares of the capital stock of Investco to Newco. In exchange, Newco will issue XXXXXXXXXX Class D shares of its capital stock with a PUC and an ACB of $XXXXXXXXXX to Child2. Child2 will accept the XXXXXXXXXX Class D shares as full and absolute payment for the purchase of the XXXXXXXXXX Class B.2 shares of the capital stock of Investco.
Child2 and Newco will make the election provided for in subsection 85(1) in the prescribed form and within the time period provided for in subsection 85(6), in respect of the XXXXXXXXXX Class B.2 shares of the capital stock of Investco. For greater certainty, the Agreed Amount made byChild2 and Newco for the XXXXXXXXXX Class B.2 shares of the capital stock of Investco transferred will be equal to the lesser of the amounts described in subparagraph 85(1)(c.1)(i) and (ii) (namely, their FMV at the time of the transfer and the ACB for Child2 at the time of the transfer, respectively, which is $XXXXXXXXXX)
The PUC of the Class D shares of the capital stock of Newco issued will be $XXXXXXXXXX, which is the maximum amount that can be added to the PUC of the shares by virtue of paragraph 84.1(1)(a).
48. The Estate will transfer the Subject Shares to Newco. In exchange, Newco will issue to the Estate:
(a) Note4, the principal amount of which will be the ACB of the Subject Shares to the Estate, taking into account paragraph 84.1(2)(a.1), less an amount of $XXXXXXXXXX; and
(b) XXXXXXXXXX Class J shares of its capital stock having a FMV equal to the amount, if any, by which the FMV of the Subject Shares on the Transfer Date exceeds the principal amount (and FMV) of Note4.
The Estate will accept Note4, together with the XXXXXXXXXX Class J shares of the capital stock of Newco, as full and absolute payment for the transfer of the Subject Shares.
Furthermore, and for greater certainty, the aggregate amount of the FMV represented by Note4 and the XXXXXXXXXX Class J shares of the capital stock of Newco issued upon such transfer will not exceed the FMV of the Subject Shares at the time of such transfer.
The Estate and Newco will make the election provided for in subsection 85(1) in the prescribed form and within the period provided for in subsection 85(6), in respect of the Subject Shares to be transferred to Newco. For greater certainty, the Agreed Amount made by the Estate and Newco for the transferred Subject Shares will be equal to the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii) (being, respectively, their FMV at the time of transfer and the ACB, for the Estate, at the time of transfer).
In addition, the Agreed Amount for the Subject Shares will not exceed their FMV at the time of transfer and will not be less than the amount set out in paragraph 85(1)(b).
The PUC of the XXXXXXXXXX Class J shares of the capital stock of Newco issued will be $XXXXXXXXXX, which is the maximum amount that can be added to the PUC of the shares by virtue of paragraph 84.1(1)(a).
The sale agreement will contain a price adjustment clause to the effect that the parties effected the transfer at FMV and that they will adjust the sale price and the consideration received if the CRA assesses the property at a different value that is acceptable to the parties.
49. Investco will be a subsidiary of Newco.
50. Investco will remain a separate legal entity (i.e., Investco will not be wound up into Newco or any other corporation, or amalgamated with Newco or any other corporation) for a period of at least XXXXXXXXXX from the time the transaction described in paragraph 48 of the Proposed Transactions is completed. In addition, during this same period, Investco will continue its investment activities on the date hereof and its investment policy will remain the same.
51. Investco will redeem the Note1 and the Note3 in part or in full. In order to be able to redeem part of Note1 and Note3, Investco may dispose of certain investments, but this shall not result in a winding-up, discontinuance or reorganization of its business.
Note4 will not be repaid for a period of at least XXXXXXXXXX following the implementation of the transaction described in paragraph 48 of the Proposed Transactions.
52. After the expiry of a period of at least XXXXXXXXXX following the implementation of the transaction described in paragraph 48 of the Proposed Transactions, Investco and Newco will be amalgamated to form Amalco. Section 87(1) will apply to the amalgamation.
53. There are no plans to combine Holdco with Newco, Investco or Amalco for commercial reasons.
54. After completing the transaction described in paragraph 52 of the Proposed Transactions, Amalco will repay Note4 progressively over several years. However, any repayment made in any of the first four quarters following the period of at least XXXXXXXXXX described in paragraph 52 of the Proposed Transactions will not exceed XXXXXXXXXX% of the total principal amount of Note 4, as applicable.
55. At the appropriate time, the Estate will distribute its shares held of the capital stock of Newco or Amalco as the case may be, together with the unredeemed Note1, Note3 and Note4 or the funds resulting from the repayment such Notes, in equal parts to Child Trust1 and Child Trust2.
PURPOSE OF THE PROPOSED TRANSACTIONS
56. The purpose of the transactions contemplated above is to deliver in due course to the heirs of X, under the terms of the Will, certain property having a FMV equal to the ACB resulting from the application of subsection 70(5), as modified by paragraph 84.1(2)(a.1) as applicable, to the Estate of the shares of the capital stock of Investco that were acquired by the Estate as a result of X's death.
ADDITIONAL INFORMATION
XXXXXXXXXX
RULINGS
Provided that the statement of facts, the Completed Transactions, the Proposed Transactions and the Additional Information constitutes full disclosure of all relevant facts, all Completed Transactions and all Proposed Transactions and that the Proposed Transactions are carried out as described above, our decisions are as follows:
A. To the extent that:
(a) the principal amount of Note4 payable by Newco will not exceed the ACBs, for the Estate, of the Subject Shares, having regard to paragraph 84.1(2)(a.1); and
(b) the PUC of the XXXXXXXXXX Class J shares in the capital stock of Newco will not exceed the maximum amount that may be added to the PUC of such shares by virtue of paragraph 84.1(1)(a),
the provisions of section 84.1 will not apply to deem a dividend to be paid by Newco to the Estate and received by the Estate or to reduce the PUC of the XXXXXXXXXX Class J shares of the capital stock of Newco upon the disposition of the Subject Shares described in paragraph 48 of the Proposed Transactions.
B. The provisions of subsection 84(2) will not apply as a result of and by reason of the Proposed Transactions described above to deem Investco to have paid to the Estate, and the Estate to have received, a dividend on the Subject Shares.
C. The provisions of subsection 245(2) will not apply as a result of and because of the proposed Transactions described above to redetermine the tax consequences confirmed in the above rulings.
These rulings are subject to the limitations and general conditions set out in Information Circular 70-6R10 dated September 29, 2020, issued by the CRA and are binding on the CRA provided that the Proposed Transactions described in paragraphs 44 to 48 are completed by XXXXXXXXXX. Subsequent transactions contemplated in paragraphs 50 to 55 of the Proposed Transactions must be completed within the time frames set out herein, as described above. These determinations are based on the current Act and do not take into account the proposed amendments thereto.
OTHER COMMENTS
The decisions rendered should in no way be construed as implying on the part of the CRA that:
(a) we have considered the other tax consequences that may result from the Completed Transactions and the Proposed Transactions set out herein
(b) the amount allocated to a property in the Statement of Facts, the Completed Transactions and the Proposed Transactions truly represents the FMV or ACB of a property, or the PUC amount of a share; and
(c) the amount attributed to the CDA, GRIP, ERDTOH, NERDTOH or DR of a corporation truly represents the CDA, GRIP, ERDTOH, NERDTOH or DR of such corporation
In addition, since the application and operation of price adjustment clauses are not proposed transactions, we do not issue rulings on those clauses. Income Tax Folio S4-F3-C1, Price Adjustment Clauses, sets out the CRA's administrative position on price adjustment clauses.
The statement of our fees for the time spent on your case will be sent to you under separate cover.
Best regards,
XXXXXXXXXX
for the Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch