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:
Whether redemption of preferred shares held by public shareholders is exempted pursuant to paragraph 55(3)(a) from application of subsection 55(2).
Position:
Yes
Reasons:
Proposed subparagraph 55(3)(a)(i) will apply to disposition of money on redemptions.
XXXXXXXXXX 3-962095
XXXXXXXXXX
Attention: XXXXXXXXXX
XXXXXXXXXX, 1997
Dear Sirs:
Re: XXXXXXXXXX
This is in reply to your letter of XXXXXXXXXX in which you requested various advance income tax rulings on behalf of the above-noted taxpayers. We also acknowledge your letters of XXXXXXXXXX and our telephone conversations in connection herewith.
We understand that, to the best of your knowledge and that of the taxpayers involved, none of the issues involved in the requested rulings is being considered by any tax services office or taxation centre in connection with a tax return already filed, or is under objection or appeal.
DEFINITIONS
In this letter unless otherwise expressly stated:
(a) "Act" means the Income Tax Act, R.S.C. 1985 (5th Supp.) c.1 as amended to the date hereof, and unless otherwise stated, every reference herein to a part, section, subsection, paragraph or subparagraph is a reference to the relevant provision of the Act;
(b) "ACB" means "adjusted cost base" as that expression is defined in section 54 and subsection 248(1);
(c) XXXXXXXXXX
(d) "CBCA" means the Canada Business Corporations Act;
(e) "capital property" has the meaning assigned by section 54;
(f) "cost amount" has the meaning assigned by subsection 248(1);
(g) "distribution" has the meaning assigned by subsection 55(1);
(h) "dividend rental arrangement" has the meaning assigned by subsection 248(1)
(i) "forgiven amount" has the meaning assigned by subsection 80(1) or 80(1.1);
(j) "guarantee agreement" has the meaning assigned by subsection 112(2.2);
(k) XXXXXXXXXX;
(l) XXXXXXXXXX;
(m) "prescribed stock exchange" has the meaning assigned by section 3200 and section 3201 of the Regulations;
(n) "private corporation" has the meaning assigned by subsection 89(1);
(o) "PUC" means "paid-up capital" as that expression is defined in subsection 89(1);
(p) "public corporation" has the meaning assigned by subsection 89(1);
(q) "RRSP" means "registered retirement savings plan" as that expression is defined in subsection 146(1);
(r) "Regulations" means the Income Tax Regulations;
(s) "restricted financial institution" has the meaning assigned by subsection 248(1);
(t) "series of transactions or events" has the meaning assigned by subsection 248(10);
(u) "specified financial institution" has the meaning assigned by subsection 248(1);
(v) "Superintendent" means the Superintendent of Financial Institutions; and
(w) "taxable Canadian corporation" has the meaning assigned by subsection 89(1).
Our understanding of the facts and of the proposed transactions is as follows:
FACTS
1. XXXXXXXXXX is a taxable Canadian corporation and a public corporation. XXXXXXXXXX is the ultimate parent corporation for all direct and indirect subsidiaries which are members of the XXXXXXXXXX.
2. XXXXXXXXXX is a corporation which was formed by amalgamation on XXXXXXXXXX. XXXXXXXXXX is a taxable Canadian corporation and a public corporation. XXXXXXXXXX head office and executive office are located in XXXXXXXXXX.
XXXXXXXXXX.
3. The authorized share capital of XXXXXXXXXX consists of an unlimited number of common shares of which XXXXXXXXXX common shares have been issued and are currently outstanding. All the common shares of XXXXXXXXXX are owned by XXXXXXXXXX. In addition, the authorized share capital of XXXXXXXXXX consists of XXXXXXXXXX Class XXXXXXXXXX Preferred Shares without par value and with a redemption amount of $XXXXXXXXXX and XXXXXXXXXX Class XXXXXXXXXX Preferred Shares without par value and with a redemption amount of $XXXXXXXXXX. XXXXXXXXXX Class XXXXXXXXXX Preferred Shares have been issued and were outstanding as at XXXXXXXXXX. XXXXXXXXXX Class XXXXXXXXXX Preferred Shares have been issued and were outstanding as at XXXXXXXXXX. The XXXXXXXXXX Class XXXXXXXXXX Preferred Shares are widely held and are listed on the XXXXXXXXXX Stock Exchanges. The XXXXXXXXXX Class XXXXXXXXXX Preferred Shares are widely held and are listed on the XXXXXXXXXX Stock Exchange.
4. XXXXXXXXXX is the holding company for the XXXXXXXXXX Group of corporations which have constituted a part of the XXXXXXXXXX Group since XXXXXXXXXX. XXXXXXXXXX has a number of subsidiaries of which the following four are the principal operating companies: XXXXXXXXXX. Each of these corporations is wholly owned by XXXXXXXXXX. XXXXXXXXXX also owns XXXXXXXXXX% of the outstanding shares of XXXXXXXXXX.
5. XXXXXXXXXX.
XXXXXXXXXX.
6. XXXXXXXXXX.
The board of directors of XXXXXXXXXX in a meeting held on XXXXXXXXXX resolved to call for redemption all of XXXXXXXXXX outstanding Class XXXXXXXXXX and Class XXXXXXXXXX preferred shares. XXXXXXXXXX has redeemed its Class XXXXXXXXXX and Class XXXXXXXXXX preferred shares for their respective redemption amounts plus accrued and unpaid dividends to the redemption date. Notices of Redemption were issued to the holders of the Class XXXXXXXXXX and Class XXXXXXXXXX preferred shares and the redemption was publicly announced on XXXXXXXXXX. Since the redemption of all of the XXXXXXXXXX Class XXXXXXXXXX and Class XXXXXXXXXX preferred shares, such shares have been delisted from all prescribed stock exchanges.
7. Since being acquired by XXXXXXXXXX, XXXXXXXXXX has, in the normal course of business, undertaken activities that are intended to optimize operating efficiencies. XXXXXXXXXX accounting and other support activities are currently outsourced to XXXXXXXXXX.
8. XXXXXXXXXX.
9. The authorized share capital of XXXXXXXXXX consists of XXXXXXXXXX common shares of which XXXXXXXXXX common shares (the "XXXXXXXXXX Shares") have been issued and are currently outstanding.
XXXXXXXXXX.
In addition, the authorized share capital of XXXXXXXXXX consists of XXXXXXXXXX Preferred Shares without par value. None of the XXXXXXXXXX Preferred Shares are currently issued and outstanding.
10. XXXXXXXXXX is a taxable Canadian corporation with its head office and executive office located in XXXXXXXXXX.
11. The authorized share capital of XXXXXXXXXX consists of an unlimited number of common shares of which XXXXXXXXXX common shares (the "XXXXXXXXXX Common Shares") have been issued and are currently outstanding.
XXXXXXXXXX.
In addition, XXXXXXXXXX has authorized preferred share capital of XXXXXXXXXX Preferred Shares without par value none of which are currently issued and outstanding, XXXXXXXXXX Preferred XXXXXXXXXX Shares without par value all of which are currently issued and outstanding, XXXXXXXXXX Preferred XXXXXXXXXX Shares without par value none of which are currently issued and outstanding, and an unlimited number of XXXXXXXXXX Preferred Shares without par value none of which are currently issued and outstanding.
XXXXXXXXXX.
XXXXXXXXXX.
12. XXXXXXXXXX are in the business of
XXXXXXXXXX.
13. XXXXXXXXXX.
the undertaking of each of XXXXXXXXXX includes the following activities:
XXXXXXXXXX
XXXXXXXXXX.
14. XXXXXXXXXX
the undertaking of each of XXXXXXXXXX includes the following activities:
XXXXXXXXXX
XXXXXXXXXX
15. XXXXXXXXXX.
16. XXXXXXXXXX that would permit the companies to undertake the following transactions at fair market value:
(a) sell to XXXXXXXXXX, for cash, assets with an aggregate fair market value of up to $XXXXXXXXXX and have XXXXXXXXXX assume
XXXXXXXXXX
(b) XXXXXXXXXX
(c) sell to XXXXXXXXXX, for cash, all XXXXXXXXXX loans with an aggregate fair market value of up to $XXXXXXXXXX;
(d) sell to XXXXXXXXXX, for cash, a portfolio of securities with an aggregate fair market value of up to $XXXXXXXXXX;
(e) sell to XXXXXXXXXX, for cash, corporate and government loans with an aggregate fair market value of up to $XXXXXXXXXX;
(f) sell to XXXXXXXXXX, for cash, furniture and artwork with an aggregate fair market value of up to $XXXXXXXXXX; and
(g) purchase from XXXXXXXXXX, for cash, XXXXXXXXXX mortgages with an aggregate fair market value of up to $XXXXXXXXXX.
XXXXXXXXXX
With the exception of this item, all transactions have been completed with the exception of the sale of furniture in item (f) which was not undertaken as it was determined that such items were, in fact, owned by XXXXXXXXXX.
17. XXXXXXXXXX is a wholly-owned subsidiary of XXXXXXXXXX. XXXXXXXXXX is a taxable Canadian corporation.
18. The authorized share capital of XXXXXXXXXX consists of an unlimited number of common shares of which XXXXXXXXXX common shares (the "XXXXXXXXXX Shares") have been issued and are currently outstanding. The XXXXXXXXXX Shares have an ACB of $XXXXXXXXXX and a PUC of $XXXXXXXXXX. In addition, the authorized share capital of XXXXXXXXXX consists of an unlimited number of preferred shares without par value none of which are currently issued and outstanding.
19. XXXXXXXXXX.
20. Since their acquisition by XXXXXXXXXX have undertaken normal-course-of-business transactions to improve their operating efficiency.
XXXXXXXXXX.
21. XXXXXXXXXX.
22. None of the issued shares of XXXXXXXXXX has been or will be issued in the ordinary course of business of the respective acquiror.
23. None of the issued shares referred to herein (including the shares to be issued as described in the proposed transactions) is or will be subject to a guarantee agreement, within the meaning referred to in subsection 112(2.2).
24. None of the issued shares referred to herein (including the shares to be issued as described in the proposed transactions) has been or will be issued or acquired as part of a transaction or event or series of transactions or events of the type described in subsection 112(2.5).
25. XXXXXXXXXX has no intention to dispose of XXXXXXXXXX which, following the proposed transactions described herein, will be carried on separately within XXXXXXXXXX, respectively, nor to dispose of shares of XXXXXXXXXX to any unrelated party.
PROPOSED TRANSACTIONS
26. Each of XXXXXXXXXX will reorganize its capital by enacting a new capital by-law in order to create a new class of preferred shares (the "Class XXXXXXXXXX Shares") and a new class of common shares (the "New Common Shares") and to convert the existing common shares into New Common Shares and Class XXXXXXXXXX Shares as described herein, and to restate the 2nd Preferred XXXXXXXXXX Shares in the case of XXXXXXXXXX.
As a result of the reorganization of capital, XXXXXXXXXX will exchange all of its common shares in XXXXXXXXXX for New Common Shares and Class XXXXXXXXXX Shares of XXXXXXXXXX, as the case may be, and the common shares of XXXXXXXXXX will be cancelled following the exchanges. The New Common Shares and the Class XXXXXXXXXX Shares of XXXXXXXXXX, respectively, will have an aggregate fair market value equal to the fair market of the XXXXXXXXXX common shares, respectively, owned by XXXXXXXXXX, immediately before the exchange.
The aggregate of the amounts to be credited to the stated capital accounts of the New Common Shares and Class XXXXXXXXXX Shares of each of XXXXXXXXXX will be equal to the respective amount of the paid-up capital of the XXXXXXXXXX common shares immediately before the exchange. The stated capital of the common shares of XXXXXXXXXX will be allocated between the New Common Shares and Class XXXXXXXXXX Shares of XXXXXXXXXX, as the case may be, based on the proportion that the fair market value of the New Common Shares or Class XXXXXXXXXX Shares, as the case may be, is of the fair market value of all new shares issued by XXXXXXXXXX.
The Class XXXXXXXXXX Shares will be a class of non-voting, non-cumulative preferred shares, redeemable and retractable for an amount, determined by way of a formula. The New Common Shares will be identical in all respects to the existing old common shares.
The aggregate redemption and retraction amount of the Class XXXXXXXXXX Shares as established by the formula will be an amount equal to the fair market value, immediately before the exchange, of the XXXXXXXXXX assets of XXXXXXXXXX, respectively.
27. After the exchange described in paragraph 26 above, XXXXXXXXXX will take the necessary steps to reduce the paid-up capital of their respective Class XXXXXXXXXX Shares to an amount equal to the ACB of such shares to XXXXXXXXXX. No payment will be made to XXXXXXXXXX in connection with this reduction of paid-up capital.
28. XXXXXXXXXX.
29. XXXXXXXXXX will enact a new capital by-law in order to create two new classes of shares. The XXXXXXXXXX Shares will be convertible, redeemable and retractable, non-voting, non-cumulative preferred shares and the XXXXXXXXXX Shares will be redeemable and retractable, non-voting and non-cumulative preferred shares, but will not be convertible. The new XXXXXXXXXX capital by-law will also restate the XXXXXXXXXX common shares.
30. XXXXXXXXXX.
31. XXXXXXXXXX will transfer to XXXXXXXXXX, at fair market value, all of the Class XXXXXXXXXX Shares it holds in XXXXXXXXXX in consideration of the issuance by XXXXXXXXXX.
XXXXXXXXXX will add to the stated capital account maintained for its Class XXXXXXXXXX Shares an amount not to exceed the aggregate amount of the paid-up capital of the Class XXXXXXXXXX Shares of XXXXXXXXXX.
32. XXXXXXXXXX will jointly elect in prescribed form within the time limit referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfer. The agreed amount in respect of the shares so transferred will be equal to the greater of:
(a) the lesser of the fair market value of the Class XXXXXXXXXX Shares and the ACB of those shares to XXXXXXXXXX, at the time of the transfer; and
(b) one dollar.
33. XXXXXXXXXX.
34. XXXXXXXXXX will transfer, at fair market value, to XXXXXXXXXX and will issue to XXXXXXXXXX an interest-bearing demand note (the "XXXXXXXXXX Issue Note"), the principal amount of which will be equal to the amount, if any, by which the principal amount of the liabilities of the XXXXXXXXXX exceeds the aggregate of the agreed amounts in respect of each eligible property transferred from XXXXXXXXXX.
In consideration for the transfer of the assets of XXXXXXXXXX and the issuance of the XXXXXXXXXX Issue Note,XXXXXXXXXX will assume the liabilities of the XXXXXXXXXX, and will issue to XXXXXXXXXX Shares with a redemption amount equal to the aggregate of the fair market value of the assets transferred by XXXXXXXXXX and the XXXXXXXXXX Issue Note less the fair market value of the liabilities assumed by XXXXXXXXXX.
35. XXXXXXXXXX will jointly elect in prescribed form within the time limit referred to in subsection 85(6), to have the provisions of 85(1) apply to the transfer of each property of XXXXXXXXXX that is an eligible property transferred to XXXXXXXXXX. The agreed amount in respect of each such property so transferred will be equal to the greater of:
(a) the lesser of the fair market value of the property and the cost amount of such property to XXXXXXXXXX, at the time of the transfer; and
(b) one dollar.
No portion of the XXXXXXXXXX liabilities of XXXXXXXXXX will be treated as being assumed in consideration for the transfer of a particular asset by XXXXXXXXXX to the extent that the principal amount of the liabilities exceeds the agreed amount in respect of the transfer of that asset by XXXXXXXXXX.
36. XXXXXXXXXX.
37. XXXXXXXXXX will redeem its Class XXXXXXXXXX Shares issued to XXXXXXXXXX by issuing to XXXXXXXXXX a demand non-interest-bearing promissory note (the "XXXXXXXXXX Redemption Note 1") having a principal amount equal to the redemption amount of the XXXXXXXXXX Shares attributable to the transfer to XXXXXXXXXX.
38. XXXXXXXXXX will purchase for cancellation its Class XXXXXXXXXX Shares owned by XXXXXXXXXX by issuing to XXXXXXXXXX a demand non-interest-bearing promissory note (the "XXXXXXXXXX Purchase Note") having a principal amount and fair market value equal to the fair market value of the XXXXXXXXXX Shares. XXXXXXXXXX will accept the XXXXXXXXXX Purchase Note as absolute payment for its Class XXXXXXXXXX Shares in XXXXXXXXXX.
39. The XXXXXXXXXX Redemption Note 1 will be set off against the XXXXXXXXXX Issue Note and XXXXXXXXXX Purchase Note and all the notes will be cancelled.
40. Contemporaneously with the transfer described in paragraph 34 above, XXXXXXXXXX will transfer, at fair market value, XXXXXXXXXX and will issue to XXXXXXXXXX an interest-bearing demand note (the "XXXXXXXXXX Issue Note"), the principal amount of which will be equal to the amount, if any, by which the principal amount of the liabilities of the XXXXXXXXXX exceeds the aggregate of the agreed amounts in respect of each eligible property transferred from XXXXXXXXXX.
In consideration for the transfer of the assets of XXXXXXXXXX and the issuance of the XXXXXXXXXX Issue Note, XXXXXXXXXX will assume the liabilities of the XXXXXXXXXX, and will issue XXXXXXXXXX Shares with a redemption amount equal to the aggregate of the fair market value of the assets transferred by XXXXXXXXXX and the XXXXXXXXXX Issue Note less the fair market value of the liabilities assumed by XXXXXXXXXX.
41. XXXXXXXXXX will jointly elect in prescribed form within the time limit referred to in subsection 85(6), to have the provisions of 85(1) apply to the transfer of each property of XXXXXXXXXX that is an eligible property transferred to XXXXXXXXXX. The agreed amount in respect of each such property so transferred will be equal to the greater of:
(a) the lesser of the fair market value of the property and the cost amount of such property to XXXXXXXXXX, at the time of the transfer; and
(b) one dollar.
No portion of the XXXXXXXXXX will be treated as being assumed in consideration for the transfer of a particular asset by XXXXXXXXXX to the extent that the principal amount of the liabilities exceeds the agreed amount in respect of the transfer of that asset by XXXXXXXXXX.
42. XXXXXXXXXX.
43. XXXXXXXXXX will redeem its Class XXXXXXXXXX Shares issued to XXXXXXXXXX by issuing to XXXXXXXXXX a demand non-interest-bearing promissory note (the "XXXXXXXXXX Redemption Note 2") having a principal amount equal to the redemption amount of the XXXXXXXXXX Shares attributable to the transfer XXXXXXXXXX.
44. XXXXXXXXXX will purchase for cancellation its Class XXXXXXXXXX Shares owned by XXXXXXXXXX by issuing to XXXXXXXXXX a demand non-interest-bearing promissory note (the "XXXXXXXXXX Purchase Note") having a principal amount and fair market value equal to the fair market value of the XXXXXXXXXX Shares. XXXXXXXXXX will accept the XXXXXXXXXX Purchase Note as absolute payment for its Class XXXXXXXXXX Shares in XXXXXXXXXX.
45. The XXXXXXXXXX Redemption Note 2 will be set off against the XXXXXXXXXX Issue Note and XXXXXXXXXX Purchase Note and all the notes will be cancelled.
46. XXXXXXXXXX.
PURPOSE OF PROPOSED TRANSACTIONS
47. The purpose of the proposed transactions is to separate the
XXXXXXXXXX.
48. XXXXXXXXXX.
49. XXXXXXXXXX.
50. XXXXXXXXXX.
51. XXXXXXXXXX.
52. XXXXXXXXXX.
RULINGS
Provided that the above statements are accurate and constitute complete disclosure of all of the relevant facts, proposed transactions and the purposes of the proposed transactions, we confirm the following:
A. Provided that the common shares of XXXXXXXXXX constitute capital property to XXXXXXXXXX and XXXXXXXXXX does not make an election pursuant to subsection 85(1) with respect to such exchange, subsection 86(1) will apply to the exchange of all of such shares held by XXXXXXXXXX, as described in paragraph 26 above.
For greater certainty, subsection 86(2) will not apply to such exchange.
B. The provisions of subsection 85(1) will apply to the transfer:
(i) by XXXXXXXXXX of the Class XXXXXXXXXX Shares of XXXXXXXXXX described in paragraph 31 above;
(ii) by XXXXXXXXXX properties that are eligible properties to XXXXXXXXXX described in paragraph 34 above; and
(iii) by XXXXXXXXXX properties that are eligible properties to XXXXXXXXXX described in paragraph 40 above
such that, the agreed amount in respect of each transfer of eligible property will be deemed to be the transferor's proceeds of disposition and the transferee's cost thereof pursuant to paragraph 85(1)(a) and the cost oto each transferor of the shares received as consideration for the transfer will be deemed by paragraph 85(1)(g) to be equal to the deemed proceeds of disposition to the transferor.
C. On the redemption of the XXXXXXXXXX Shares described in paragraph 37 above and the XXXXXXXXXX Shares described in paragraph 43 above, the purchase for cancellation of the XXXXXXXXXX Shares described in paragraph 38 above and the purchase for cancellation of the XXXXXXXXXX Shares described in paragraph 44 above, the amount, if any, by which the amount paid to redeem or purchase the particular shares, as the case may be, exceeds PUC of the particular shares immediately before the redemption or the purchase for cancellation:
(1) will be deemed pursuant to paragraph 84(3)(b) to be a dividend received by the holder of such shares;
(ii) to the extent that a dividend described in (i) above is a taxable dividend, such dividend will, pursuant to subsection 112(1), be deductible in computing the taxable income of the recipient for the year in which the dividend is deemed to have been received, and, for greater certainty, such deduction will not be precluded by of subsections 112(2.1), (2.2) or (2.4);
(iii) by virtue of the application of paragraph (j) of the definition "proceeds of disposition" in section 54, the amount of a deemed dividend described in (i) above will be excluded from the proceeds of disposition of the share, and any loss arising from the disposition of the share will be reduced by the amount of such dividends pursuant to subsection 112(3);
(iv) Part IV.1 of the Act will not apply to the deemed dividends described in (i) above because the dividends will be excepted dividends pursuant to paragraph (c) of the definition of "excepted dividend" in section 187.1;
(v) Part VI.1 of the Act will not apply to the deemed dividends described in (i) above because the dividends will be excluded dividends pursuant to paragraph (a) of the definition of "excluded dividend" in subsection 191(1).
D. By virtue of paragraph 55(3)(a), subsection 55(2) will not apply to deem any portion of the dividends described in Ruling C above to be proceeds of disposition, provided that there is no:
(i) disposition of any property to a person to whom XXXXXXXXXX is not related, or
(ii) significant increase in the interest (whether by means of equity or debt) in any corporation of any person to whom XXXXXXXXXX is not related,
other than as described in paragraphs 48 to 52 above, which occurs as part of a series of transactions or events that includes the proposed transactions described herein.
E. The set-off and cancellation of the notes described in paragraphs 39 and 45 above will not give rise to a forgiven amount.
F. Provided that the shares of XXXXXXXXXX held by XXXXXXXXXX represent capital property to XXXXXXXXXX prior to the proposed transactions described herein, the New Common Shares and Class XXXXXXXXXX Shares of XXXXXXXXXX, respectively, while held by XXXXXXXXXX, will represent capital property to the holder for the purposes of the transactions described herein.
G. Provided that the XXXXXXXXXX of each of XXXXXXXXXX is a separate business and that XXXXXXXXXX will continue to carry on the XXXXXXXXXX, then XXXXXXXXXX will be entitled to make a joint election with XXXXXXXXXX under subsection 22(1).
H. The provisions of subsections 15(1), 56(2), 56(4), 69(1), 69(4) and 246(1) will not be applied as a result of the proposed transactions, in and by themselves.
I. The provisions of subsection 245(2) will not be applied as a result of the proposed transactions, in and by themselves, to redetermine the tax consequences confirmed in the rulings given.
These rulings are given subject to the limitations and qualifications set out in Information Circular 70-6R2 dated September 28, 1990 issued by Revenue Canada and are binding provided that the proposed transactions are completed before XXXXXXXXXX.
These rulings are based on the Act as it currently reads and do not take into account any future amendments, whether currently proposed or not, to the Act.
1. Nothing in this letter should be construed as confirmation that Revenue Canada has reviewed or accepted
(a) the determination of the fair market value or adjusted cost base of any property referred to herein, or the paid-up capital of any shares, or
(b) any tax consequences arising from the facts or proposed transactions described herein other than those specifically confirmed in the rulings given.
2. XXXXXXXXXX.
OPINION
Provided that proposed subparagraphs 55(3)(a)(i) to (v) are reintroduced and enacted in substantially the same form as set out in the proposed amendments tabled by the Department of Finance on December 2, 1996 in Bill C-69, it is our opinion that subsection 55(2) will not apply to the taxable dividends described in Ruling C above, provided that as part of the series of transactions or events as part of which the dividends were received, there is no event described in proposed subparagraphs 55(3)(a)(i) to (v) which has not been described herein as a proposed transaction.
The foregoing opinion is not a ruling and, in accordance with the practice referred to in Information Circular 70-6R2, is not binding on Revenue Canada.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1996
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1996
Email this Content