| 24(1) | 920781 |
| T. Harris | |
| (613) 957-2114 |
Attention: 19(1) General Manager
April 16, 1992
Dear Sirs:
Re: Advance Income Tax Ruling Request
This is further to our telephone conversation of April 9, 1992 concerning your letter of February 20, 1992 in which you requested certain advance income tax rulings on behalf of your company.
Information Circular 70-6R2 sets out the guidelines under which advance income tax rulings are issued. The cost of providing the advance ruling service is borne by those taxpayers who benefit from it. Consequently, a fee is charged for the time spent servicing advance ruling requests. Currently, the fee is $90 for each hour or part thereof spent on the request and a deposit of $450 must be submitted before work will commence. Any additional fee is billed once the ruling is completed or the request is withdrawn. Additional information concerning the charge for advance rulings is described in paragraph 18 of the Circular. As discussed during our telephone conversation, we would require a deposit of $450 before we could commence work on your advance ruling request.
Also, the proposed transactions described in your request involve your company, which is incorporated under the laws of Ontario, issuing shares for consideration consisting of a promissory note. As discussed, subsection 23(3) of the Business Corporations Act (Ontario) (the "OBCA") provides that a share of a company which is governed by the OBCA can not be issued until the consideration for the share is fully paid and, pursuant to subsection 23(6) of the OBCA, a promissory note or other indebtedness is not acceptable consideration for the issue of a share. Consequently, it appears that the proposed transactions as described in your letter can not be legally implemented by your company. You may wish to discuss this matter with your company's legal counsel.
Finally, if we are to consider your request further we will require a more detailed description of the facts and proposed transactions, including copies of any relevant agreements relating thereto. A copy of Information Circular 70-6R2, which also describes the types of information which should be submitted with an advance ruling request, is enclosed for your information.
In the event that your company wishes to proceed with the proposed transactions, we would be pleased to consider your ruling request further upon receipt of the following:
i) a deposit of $450;
ii) an opinion from your legal counsel that the proposed transactions can legally be implemented under the terms of the OBCA; and
iii) a detailed description of the facts and proposed transactions.
Yours truly,
for DirectorReorganizations and Foreign DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch