2000 2000-0061401 - Supplementary Ruling

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

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: minor changes

Position: none

Reasons: minor changes

XXXXXXXXXX 							2000-006140

Attention: XXXXXXXXXX

XXXXXXXXXX, 2000

Dear Sirs:

Re: XXXXXXXXXX
Supplementary Advance Income Tax Ruling

This is in reply to your letter dated XXXXXXXXXX, and is supplemental to our advance income tax ruling number 2000-000524, dated XXXXXXXXXX, 2000 (the "Ruling").

As a result of your letter, the following changes will be made to the Ruling:

1. Delete the word "XXXXXXXXXX" in line 6 of the third paragraph in paragraph 7 in "Proposed Transactions" and replace it with "XXXXXXXXXX".

2. Delete paragraph 11 in "Proposed Transactions" and replace it with the following:

"11. Each Investor's subscription commitment (the "Commitment") will be comprised of an equity commitment ("Equity Commitment") and a leveraged commitment ("Leveraged Commitment"). The Equity Commitment is the portion of an Investor's investment which he or she will be required to pay from his or her own resources. The Leveraged Commitment is the portion of an Investor's investment which will be loaned to the Investor by XXXXXXXXXX (also referred to herein as the "lender"). The Leveraged Commitment will be in the range of approximately XXXXXXXXXX the Investor's Equity Commitment.

It should also be noted that some, but not all, of the Investors will be shareholders of XXXXXXXXXX ("Investor/shareholders"). No Investor/shareholder, however, will be a "specified employee" of XXXXXXXXXX within the meaning of subsection 248(1) of the Act."

3. Delete the period at the end of paragraph 13 in "Proposed Transactions" and replace it with the following:

", provided that the Partnership is otherwise able to make such investment, having regard to any investment, regulatory or legislative restrictions, and subject to the General Partner's discretion to vary the requirement if necessary in the circumstances."

4. Delete the word "Partnership" in the second line of paragraph 14 in "Proposed Transactions" and replace it with the word "indemnification".

5. Delete the word "not" in the first line of paragraph 15 in "Proposed Transactions".

6. Delete the word "XXXXXXXXXX" in the second line in paragraph 16 in "Proposed Transactions" and replace it with "XXXXXXXXXX".

7. Delete paragraph 20 in "Proposed Transactions" and replace it with the following:

"20. All distributions due to an Investor on his or her interest in the Partnership and all sale proceeds will first be applied to pay any outstanding, accrued interest on the Investor's Leveraged Loans, then to repayment of the principal of the Investor's Leveraged Loans and then to Equity Loans, if any, of the Investor. Only after the Leveraged Loans and any Equity Loans outstanding are repaid will amounts actually be distributed to an Investor. As a result, the Leveraged Loans are expected to be repaid well before the XXXXXXXXXX year period referred to in paragraph 15(a) above. XXXXXXXXXX may waive the requirement that XXXXXXXXXX% of such distributions be so applied, at its discretion."

8. Delete paragraph 22 in "Proposed Transactions" and replace it with the following:

"22. An Investor who is employed by XXXXXXXXXX at the time of making an investment in the Partnership is subject to (but has no right to) having his or her interest purchased by XXXXXXXXXX or by one or more parties designated by XXXXXXXXXX upon termination (other than as a result of death or disability) of his or her employment at any time during the term of the Partnership. XXXXXXXXXX must exercise its right to purchase or designate another party or parties to purchase an Investor's interest within XXXXXXXXXX days after the termination of employment of the Investor.

If XXXXXXXXXX exercises its right to purchase or designate another party or parties to purchase an Investor's Partnership interest, the purchaser will be required to purchase, for cash, all of the Partnership interest then held by the Investor. The purchase price for the interest to be purchased will depend on whether or not the Investors' interest has vested, and on the reason for the termination of the Investor's employment."

Notwithstanding the above changes, we confirm that the Ruling will continue to be binding on the Canada Customs and Revenue Agency in the manner described therein, provided that the proposed transactions are completed by XXXXXXXXXX.

If we can be of any further assistance, please contact the writer.

Yours truly,

XXXXXXXXXX
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch