2005 Ruling 2005-0125982R3 - Purchase of Target and Bump

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.

Principal Issues: Acquisition of control of a Target. Amalgamation of the Target with the Parent, and bump of the cost of shares held by the Target. Drop-down of the bumped shares under the buyer's operating corporation.

Position: Favourable rulings provided.

Reasons: In compliance with the law.

XXXXXXXXXX 2005-012598

XXXXXXXXXX, 2005

Dear Sirs:

Re: Advance Income Tax Ruling
XXXXXXXXXX

This is in reply to your letter of XXXXXXXXXX in which you requested an advance income tax ruling on behalf of the above-noted taxpayers. We also acknowledge the information provided in your letters of XXXXXXXXXX, and during our various telephone conversations in connection with your ruling request (XXXXXXXXXX).

We understand that to the best of your knowledge and that of the taxpayers involved, none of the issues involved in this ruling is:

(i) involved in an earlier return of the taxpayers or a related person,

(ii) being considered by a tax services office or taxation centre in connection with a previously filed tax return of the taxpayers or a related person,

(iii) under objection by the taxpayers or a related person,

(iv) before the courts,

(v) the subject of a ruling previously issued by the Income Tax Rulings Directorate.

Unless otherwise indicated, all references to monetary amounts are in Canadian dollars.

LEGAL ENTITY DEFINITIONS

In this letter, except in Paragraph 33, the taxpayers (or group of taxpayers) and partnerships will be referred to as follows:

(a) "Amalco I" means the corporation resulting from the amalgamation of Target Holdco and Buyer Holdings as described in Paragraph 30(i);

(b) "Amalco II" means the corporation resulting from the amalgamation of Target Opco and Buyerco as described in Paragraph 30(iii);

(c) "XXXXXXXXXX" means XXXXXXXXXX is an affiliate of X. XXXXXXXXXXs primary objective is to invest in securities of publicly traded companies that offer opportunities to realize substantial long-term capital appreciation;

(d) "Buyer GP" means XXXXXXXXXX., a corporation incorporated under the CBCA;

(e) "Buyer Group" means the Fund, Buyer Trust, Buyer LP, Buyer GP, Buyer Holdings and Buyerco;

(f) "Buyer Holdings" means XXXXXXXXXX., a corporation incorporated under the CBCA;

(g) "Buyer LP" means a limited partnership existing under the XXXXXXXXXX pursuant to a Partnership Agreement dated XXXXXXXXXX;

(h) "Buyer Trust" means an unincorporated, open-ended, limited purpose trust established under the Laws of the Province of XXXXXXXXXX on XXXXXXXXXX by a Declaration of Trust, as amended on XXXXXXXXXX;

(i) "Buyerco" means XXXXXXXXXX., a corporation incorporated under the XXXXXXXXXX;

(j) "Fund" means XXXXXXXXXX, an unincorporated, open-ended, limited purpose trust established under the Laws of the Province of XXXXXXXXXX on XXXXXXXXXX by a Declaration of Trust, as amended on XXXXXXXXXX;

(k) XXXXXXXXXX;

(l) "Sellerco" means XXXXXXXXXX.;

(m) "SellerSubco I" means XXXXXXXXXX, a corporation incorporated under the XXXXXXXXXX;

(n) "SellerSubco II" means XXXXXXXXXX, a corporation incorporated under the XXXXXXXXXX;

(o) "SellerSubco III" means XXXXXXXXXX., a corporation incorporated under the CBCA;

(p) "SellerSubco IV" means XXXXXXXXXX., a corporation incorporated under the CBCA;

(q) "Seller Holdings" means XXXXXXXXXX., a corporation incorporated under the XXXXXXXXXX;

(r) "Seller Partnership I" means XXXXXXXXXX, a limited partnership which held all of the issued and outstanding shares of the capital stock of Seller Holdings prior to the completion of the Preliminary Transactions;

(s) "Seller Partnership II" means XXXXXXXXXX, a limited partnership which held debt of SellerSubco III prior to the completion of the Preliminary Transactions;

(t) "Target GP" means XXXXXXXXXX., a corporation incorporated under the XXXXXXXXXX;

(u) "Target Group" means Sellerco and its subsidiaries;

(v) "Target Holdco" means the corporation resulting from the amalgamation between SellerSubco I, SellerSubco II, SellerSubco III, SellerSubco IV and Seller Holdings, as described in Paragraph 27;

(w) "Target LP" means XXXXXXXXXX;

(x) "Target Opco" means XXXXXXXXXX., a corporation resulting from the amalgamation under the XXXXXXXXXX between XXXXXXXXXX;

(y) "X" means the XXXXXXXXXX, a group composed of XXXXXXXXXX, and its affiliates.

DEFINITIONS

In this letter, unless otherwise expressly stated, the following terms have the meanings specified.

(a) XXXXXXXXXX;

(b) "ACB" has the meaning assigned to the expression "Adjusted Cost Base" in section 54 of the Act;

(c) "Acquisition" means the indirect acquisition by Fund of the shares of the capital stock of Target Holdco for a total consideration equal to the Purchase Price;

(d) "Act" means the Income Tax Act, R.S.C. 1986 (5th Supp.) c. 1, as amended from time to time and consolidated to the date of this letter and, unless otherwise expressly stated, every reference herein to a part, section or subsection, paragraph or subparagraph and clause or subclause is a reference to the relevant provision of the Act;

(e) "CBCA" means the Canada Business Corporations Act, R.S.C. 1985 c. C.44;

(f) "Closing" means the closing of the Acquisition, which occurred on XXXXXXXXXX.

(g) "Competition Act" means the Competition Act (Canada), R.S.C. 1985 c. C.34;

(h) "CRA" means the Canada Revenue Agency;

(i) "Eligible Property" has the meaning assigned by subsection 85(1.1);

(j) "FMV" means fair market value;

(k) XXXXXXXXXX;

(l) "Mutual Fund Trust" has the meaning assigned by subsection 132(6);

(m) XXXXXXXXXX;

(n) "paid-up capital" has the meaning assigned by subsection 89(1);

(o) "Prospectus Supplement" means the prospectus supplement to the Shelf Prospectus dated XXXXXXXXXX;

(p) "Prospectuses" means the Shelf Prospectus and the Prospectus Supplement;

(q) "Purchase Price" means $XXXXXXXXXX minus the indebtedness plus the cash and cash equivalent of Target Holdco and Target Opco at Closing;

(r) "Share Purchase Agreement" means the Share Purchase Agreement dated as of XXXXXXXXXX between Sellerco and Target Opco and Buyer LP;

(s) "Shares" means the shares of the capital stock of Seller Holdings (or such other member of the Target Group that immediately prior to the Closing owns directly or indirectly all other members of the Target Group, including Seller Holdings and Target Opco);

(t) "Shelf Prospectus" means the shelf prospectus of the Fund and Buyer Holdings dated XXXXXXXXXX;

(u) "Specified Person" has the meaning assigned by subparagraph 88(1)(c.2)(i).

(v) "Specified Shareholder" has the meaning assigned by subparagraph 88(1)(c.2)(iii) and subsection 248(1);

(w) "Subscription Receipt Agreement" means the subscription receipt agreement dated XXXXXXXXXX between the Fund, XXXXXXXXXX;

(x) "Subscription Receipts" means the subscription receipts qualified to be issued by the Fund under the Shelf Prospectus and the Prospectus Supplement;

(y) "Target Business" means XXXXXXXXXX currently carried on by the Target Group;

(z) "Target Holdco Indebtedness" means the indebtedness owed to Sellerco by Target Holdco;

(aa) XXXXXXXXXX;

(bb)" Underwriters" means XXXXXXXXXX;

(cc) "Underwriting Agreement" means the underwriting agreement dated XXXXXXXXXX between Buyer Group and the Underwriters;

(dd) "Units" means trust units issued by the Fund;

FACTS

Facts relating to the Buyer Group

1. The Fund is a Mutual Fund Trust and was established to, among other things:

(i) Acquire, invest in, transfer, dispose of and otherwise deal with securities of Buyer Trust or, in limited circumstances, any member of the Buyer Group;

(ii) Issue Units and other securities of the Fund;

(iii) Issue debt securities;

(iv) Redeem Units;

(v) Guarantee the payment of any indebtedness, liability or obligation of any member of the Buyer Group or the performance of any obligation of any member of the Buyer Group, and mortgage, pledge, charge, grant a security interest in or otherwise encumber all or any part of its assets, including securities issued by it or by any member of the Buyer Group, as the case may be, as security for such guarantee.

2. The Fund has not applied to the Minister of National Revenue to be accepted as a "registered investment" as defined in section 204.4. The Units of the Fund are traded on the XXXXXXXXXX. The fiscal period of the Fund ends on XXXXXXXXXX of each year.

3. Under the declaration of trust, the Fund may issue an unlimited number of Units. Each Unit represents an equal and undivided beneficial interest in any distributions made by the Fund, and in the net assets of the Fund in the event of termination or winding-up of the Fund. Each Unit of the Fund is transferable, entitles the holder to one vote and is redeemable at the demand of the holder at a redemption price determined by a formula. The Fund's declaration of trust precludes non-residents of Canada from collectively owning the majority of the Units.

4. As of XXXXXXXXXX, there were XXXXXXXXXX Units issued and outstanding.

As of the date hereof, the Fund does not have knowledge of any purchase of Units or Subscription Receipts of the Fund or debt instruments issued by Buyer Group by any person, other than a Specified Person, that was a Specified Shareholder of Target Holdco before control of Target Holdco was last acquired by Buyer Holdings.

5. Buyer Trust is a limited purpose trust and its activities are restricted to:

(i) Investing in securities, including those issued by Buyer LP and Buyer GP;

(ii) Issuing units;

(iii) Issuing debt securities;

(iv) Redeeming units;

(v) Purchasing securities issued by it;

(vi) Guaranteeing the obligations of Buyer LP, or any of its affiliates or affiliates of Buyer LP, pursuant to any good faith debt for borrowed money incurred by Buyer LP or the affiliates, as the case may be, and pledging securities held by it, Buyer LP or any such affiliates, as security for such guarantee; and

(vii) Satisfying the obligations, liabilities or indebtedness of Buyer Trust.

6. As of XXXXXXXXXX, there were XXXXXXXXXX units of Buyer Trust issued and outstanding, which are wholly-owned by the Fund.

7. As at the date hereof, Buyer Trust's sole investments are an interest in Buyer LP and Buyer GP. The fiscal period of Buyer Trust ends on XXXXXXXXXX of each year.

8. Buyer GP has exclusive authority to manage the business and affairs of Buyer LP, to make all decisions regarding the business of Buyer LP and to bind Buyer LP. The fiscal period of Buyer GP ends on XXXXXXXXXX of each year.

9. Buyer LP is a limited partnership, the fiscal period of which ends on XXXXXXXXXX of each year.

10. Buyer Trust owns all of the issued and outstanding shares of the capital stock of Buyer GP. Buyer Trust has a XXXXXXXXXX% interest in Buyer LP. Buyer GP has a XXXXXXXXXX % interest in Buyer LP.

11. Buyer Holdings operates as a holding company and its principal assets are the shares of the capital stock of Buyerco and advances made to Buyerco. The fiscal period of Buyer Holdings ends on XXXXXXXXXX of each year.

12. The authorized share capital of Buyer Holdings consists of an unlimited number of Class A common shares and Class B common shares. The issued and outstanding share capital of Buyer Holdings consists of XXXXXXXXXX Class A common shares and XXXXXXXXXX Class B common shares.

Buyer LP owns all of the issued and outstanding shares of the capital stock of Buyer Holdings.

13. Buyerco is the operating entity that carries on the XXXXXXXXXX business. The fiscal period of Buyerco ends on XXXXXXXXXX of each year.

14. The authorized share capital of Buyerco consists of XXXXXXXXXX common shares with a par value of $XXXXXXXXXX. The issued and outstanding share capital of Buyerco consists of XXXXXXXXXX common shares.

Buyer Holdings owns all of the issued and outstanding shares of the capital stock of Buyerco.

15. XXXXXXXXXX

Facts relating to the Target Group

16. On XXXXXXXXXX, Buyer LP, through its general partner, Buyer GP, entered into the Share Purchase Agreement , which provides for the acquisition by Buyer LP of all of the issued and outstanding shares of the capital stock of Seller Holdings (or such other member of the Target Group that, immediately prior to the Closing, owns directly or indirectly all other members of the Target Group, including Seller Holdings and Target Opco) for the Purchase Price.

17. Prior to the completion of the Preliminary Transactions described in Paragraph 26 to 29 below, the Target Group could be described as follows:

(i) Sellerco owned all of the issued and outstanding shares of the capital stock of SellerSubco I and SellerSubco II;

(ii) SellerSubco I and SellerSubco II owned respectively XXXXXXXXXX% and XXXXXXXXX% of the partnership interests in Seller Partnership II and XXXXXXXXXX% and XXXXXXXXXX% of the issued and outstanding shares of the capital stock of SellerSubco III;

(iii) SellerSubco III owned all of the issued and outstanding shares of the capital stock of SellerSubco IV and a XXXXXXXXXX% partnership interest in Seller Partnership I. The remaining XXXXXXXXXX% partnership interest in Seller Partnership I was owned by SellerSubco IV;

(iv) Seller Partnership I owned all of the issued and outstanding shares of the capital stock of Seller Holdings;

(v) Seller Holdings owned all of the issued and outstanding shares of the capital stock of Target Opco;

(vi) Target Opco owned and still owns all of the issued and outstanding shares of the capital stock of Target GP and a XXXXXXXXXX% partnership interest in Target LP. The remaining XXXXXXXXXX% partnership interest in Target LP is owned by Target GP.

At the time of the acquisition of Target Opco, the various entities part of the Target Group were capitalized with a combination of debt and equity.

Seller Holdings held the shares of the capital stock of Target Opco as capital property.

18. XXXXXXXXXX.

Facts relating to the Share Purchase Agreement

19. On XXXXXXXXXX, the rights of Buyer LP under the Share Purchase Agreement were assigned to Buyer Holdings pursuant to section XXXXXXXXXX of the Share Purchase Agreement.

20. Section XXXXXXXXXX of the Share Purchase Agreement reads as follows: "XXXXXXXXXX."

21. The Share Purchase Agreement also provides the following in Section XXXXXXXXXX: "XXXXXXXXXX."

A certificate was recently delivered by the officers of Sellerco confirming that the undertakings set out in Section XXXXXXXXXX of the Share Purchase Agreement have been respected and complied with up to XXXXXXXXXX. This certificate also extended the said undertakings to any debt issued by Buyer Holdings.

22. Section XXXXXXXXXX of the Share Purchase Agreement provides that Sellerco will apply for a certificate pursuant to section 116 in respect of the sale of the shares in favour of Buyer Holdings. Such certificate was obtained on XXXXXXXXXX.

23. The Closing occurred on XXXXXXXXXX.

Facts relating to the financing of the Buyer Group

24. Pursuant to the Underwriting Agreement, on XXXXXXXXXX, the Fund sold XXXXXXXXXX Subscription Receipts to the Underwriters for total net proceeds of $XXXXXXXXXX. Pursuant to the Subscription Receipt Agreement, such proceeds were held in escrow by XXXXXXXXXX until the completion of the Acquisition. The Underwriters, in turn, resold such Subscription Receipts to purchasers in Canada where such sales could be made by the Underwriters to the general public since the offering of Subscription Receipts by the Fund was qualified by prospectus for sales across Canada. In addition, the Underwriters may have resold such Subscription Receipts to certain eligible persons in the United States pursuant to certain prospectus exemptions under United States securities laws. The Subscription Receipts have been listed on the XXXXXXXXXX since XXXXXXXXXX . The Subscription Receipts were automatically exchanged for Units of the Fund on the day of Closing.

25. The net cash available to the Fund, after issuance of the Subscription Receipts and additional Units issued through a private placement with an institutional investor, was $XXXXXXXXXX.

Preliminary Transactions

26. Prior to the day of Closing, the Target Group was reorganized through a series of transactions resulting in a simplified structure under which Target Holdco owns all of the issued and outstanding shares of Target Opco. XXXXXXXXXX:

XXXXXXXXXX

27. At the earliest moment on the day of Closing, SellerSubco I, SellerSubco II, SellerSubco III, SellerSubco IV and Seller Holdings were amalgamated to form Target Holdco. This amalgamation was governed by subsection 87(1).

At the time Buyer Holdings acquired control of Target Holdco, Target Holdco held the shares of the capital stock of Target Opco as capital property.

28. On the day of Closing but prior to the effective time of the Acquisition, the following transactions were completed by the Fund and its affiliates, XXXXXXXXXX:

XXXXXXXXXX

29. On the day of Closing, Buyer Holdings used the funds borrowed from Buyer LP and the syndicate of Canadian Banks (described in Paragraph 28 above) in an aggregate amount of $XXXXXXXXXX and cash on hand of approximately $XXXXXXXXXX as follows and in the order provided below:

(i) XXXXXXXXXX.

(ii) Effective at XXXXXXXXXX., to purchase all of the issued and outstanding shares of Target Holdco for $XXXXXXXXXX. To this effect, Target Holdco will elect, in its return of income for its taxation year ending immediately before the acquisition of control of it by Buyer Holdings, not to have subsection 256(9) apply;

(iii) XXXXXXXXXX;

(iv) XXXXXXXXXX;

(v) XXXXXXXXXX.

PROPOSED TRANSACTIONS

30. On XXXXXXXXXX, the following proposed transactions will be completed or approved sequentially in the order provided below:

(i) Target Holdco and Buyer Holdings will be amalgamated to form Amalco I. As a consequence, all of the assets and liabilities of Target Holdco and Buyer Holdings will become assets and liabilities of Amalco I, and all the shares of the capital stock of Target Holdco and the Target Holdco Indebtedness will be cancelled. No shares of Amalco I will be issued such that the issued and outstanding shares of the capital stock of Buyer Holdings will become the shares of Amalco I. This amalgamation will be governed by subsection 87(1).

In connection with this amalgamation, in the return of income for its first taxation year ending XXXXXXXXXX, Amalco I will designate an amount under the provisions of subsection 87(11) and paragraph 88(1)(d) to increase, within the limits described in paragraph 88(1)(d), the ACB of the shares of the capital stock of Target Opco that Target Holdco owned continuously since the time Buyer Holdings acquired control of Target Holdco and owned immediately prior to the amalgamation.

(ii) Amalco I will transfer all of the issued and outstanding shares of the capital stock of Target Opco and any indebtedness owing to it by Target Opco to Buyerco for FMV consideration. The consideration for this transfer will be paid in full by Buyerco by the issuance to Amalco I of interest-bearing debt, redeemable and retractable preferred shares, and common shares.

Amalco I and Buyerco will elect, jointly and in prescribed form and within the time limit referred to in subsection 85(6), to have the rules in subsection 85(1) apply to the transfer of each asset of Amalco I that is an Eligible Property to Buyerco. The "agreed amount" specified in such elections in respect of each Eligible Property so transferred that has a FMV in excess of its cost amount to Amalco I will be an amount that is not less than the lesser of the amounts specified in subparagraph 85(1)(c.1)(i) or (ii) in the case of property described in paragraph 85(1)(c.1). In each case, the "agreed amount" will not exceed the FMV of the respective property, nor will it be less than the amount permitted under paragraph 85(1)(b).

(iii) Target Opco and Buyerco will be amalgamated to form Amalco II. As a consequence, all of the assets and liabilities of Target Opco and Buyerco will become assets and liabilities of Amalco II, and all the shares of the capital stock of Target Opco and any indebtedness owed by Target Opco to Buyerco will be cancelled. No shares of Amalco II will be issued such that the issued and outstanding shares of the capital stock of Buyerco will become the shares of Amalco II. This amalgamation will be governed by subsection 87(1).

In connection with this amalgamation, no designation will be made by Amalco II in the return of income for its first taxation year under the provisions of subsection 87(11) and paragraph 88(1)(d) to increase the cost of any property that Target Opco owned immediately prior to the amalgamation. XXXXXXXXXX.

31. The fiscal periods of Amalco I, Amalco II and Target GP will end on XXXXXXXXXX of each year.

ADDITIONAL INFORMATION

32. The federal business number of the parties referred to herein, the location of the tax services office and taxation centre where their returns are filed, and the address of their head office are as follows:

XXXXXXXXXX
-  Business Number: 		XXXXXXXXXX
-  Tax Services Office:  	XXXXXXXXXX
-  Taxation Centre:  		XXXXXXXXXX
-  Address:				XXXXXXXXXX 

XXXXXXXXXX.
-  Business Number: 		XXXXXXXXXX
-  Tax Services Office:  	XXXXXXXXXX
-  Taxation Centre:  		XXXXXXXXXX
-  Address:				XXXXXXXXXX 

XXXXXXXXXX.
-  Business Number: 		XXXXXXXXXX
-  Tax Services Office:  	XXXXXXXXXX
-  Taxation Centre:  		XXXXXXXXXX
-  Address:				XXXXXXXXXX 

XXXXXXXXXX.
-  Business Number: 		XXXXXXXXXX
-  Tax Services Office:  	XXXXXXXXXX
-  Taxation Centre:  		XXXXXXXXXX
-  Address:				XXXXXXXXXX 

XXXXXXXXXX
-  Business Number: 		XXXXXXXXXX 

-  Tax Services Office:  	XXXXXXXXXX
-  Taxation Centre:  		XXXXXXXXXX
-  Address:				XXXXXXXXXX 

XXXXXXXXXX
-  Business Number: 		XXXXXXXXXX
-  Tax Services Office:  	XXXXXXXXXX
-  Taxation Centre:  		XXXXXXXXXX
-  Address:				XXXXXXXXXX 

PURPOSES OF THE PROPOSED TRANSACTIONS

33. The purpose of the proposed transactions is to facilitate the consolidation of the businesses of Buyerco and Target Opco. The Business strategy of Buyer Group's management has always been to legally combine the Target Business and Buyer Group XXXXXXXXXX business in order to benefit from cost saving opportunities and other synergies including consolidation of general and administrative expenses, economies of scale with respect to selling expenses, technology integration and improved supply chain cost management, and to have a legal structure aligned with the operational philosophy of regrouping all the operations of Buyerco and Target Opco into one business. Management expects annual savings of approximately $XXXXXXXXXX once the Target business and the Buyer Group XXXXXXXXXX business have been fully integrated. The legal amalgamation between Buyerco and Target Opco is intended to reflect and contribute to these synergies and cost savings as well as facilitate cash flow management within Buyer Group.

RULINGS GIVEN

Provided that the preceding statements constitute a complete and accurate disclosure of all relevant Facts, Proposed Transactions and the Purposes of the Proposed Transactions, and provided that the proposed transactions are completed in the manner described above, we confirm the following:

A. The provisions of subsections 87(11) and 88(1) will apply to the vertical amalgamation of Target Holdco and Buyer Holdings to form Amalco I as described in Paragraph 30(i) such that, for purposes of the Act, and provided that no property acquired by Amalco I on such amalgamation or "any property acquired by any person in substitution therefor" (within the meaning of that phrase for the purposes of clause 88(1)(c)(vi)(B)) is acquired by any person described in any of subclauses 88(1)(c)(vi)(B)(I), (II), or (III) (on the assumption that the "subsidiary" referred to in those subclauses is Target Holdco and the "parent" is Buyer Holdings) as part of the series of transactions or events that includes the proposed transactions described herein, the cost to Amalco I of the shares of the capital stock of Target Opco owned by Target Holdco at the time Buyer Holdings acquired control of Target Holdco and that became property of Amalco I pursuant to the amalgamation will be deemed by paragraph 88(1)(c) to be the cost amount of such property plus, provided that such property is capital property, the amount designated by Amalco I under paragraph 88(1)(d) in respect of the property as described in Paragraph 30(i).

For greater certainty, the shares of the capital stock of Target Opco will not be ineligible property for the purposes of paragraph 88(1)(c) solely as a result of any of the Facts or Proposed Transactions described herein.

The above rulings are given subject to the limitations and qualifications set forth in Information Circular 70-6R5 issued on May 17, 2002, and are binding on the CRA provided that the proposed transactions are completed before XXXXXXXXXX.

The above rulings are based on the Act in its present form and do not take into account any proposed amendments to the Act, which if enacted, could have an effect on the rulings provided herein.

OPINION

For the purposes of subparagraph 88(1)(c)(vi), whether "substituted property" as described in paragraph 88(1)(c.3) is acquired by a person or persons described in subclauses 88(1)(c)(vi)(B)(I) to (III) as part of the series of transactions or events that includes the amalgamation of Target Holdco with Buyer Holdings, is a question of fact that will depend on the circumstances. In general, an acquisition of units of the Fund by investors in X, each of which would not be a Specified Shareholder of Target Holdco absent subclause 88(1)(c)(vi)(B)(II), will not necessarily be considered to occur as part of a series of transactions or events that includes the amalgamation of Target Holdco with Buyer Holdings.

COMMENTS

Nothing in this ruling should be construed as implying that the CRA has agreed to or reviewed:

(a) the determination of the FMV or ACB of any property referred to herein, or the paid-up capital in respect of any share referred to herein;

(b) any provincial tax consequences of the proposed transactions; or

(c) any tax consequences relating to the Facts and Proposed Transactions described herein other that those specifically confirmed in the rulings given above.

An invoice for our fees in connection with this ruling request will be forwarded to you under separate cover.

Yours truly,

XXXXXXXXXX
for Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Planning Branch