1998 Ruling 9825983 - SUPP. TO 3-971606

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.

XXXXXXXXXX
XXXXXXXXXX 982598
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1998

Dear Sirs:

Re: XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Advance Income Tax Ruling 971606 dated XXXXXXXXXX, 1998

We are writing in response to your letters of XXXXXXXXXX wherein you advised us of certain amendments to the facts and proposed transactions described in advance income tax ruling 971606 which was issued on XXXXXXXXXX, 1998 (the “Ruling Letter”).

As requested the following amendments are hereby made to the Ruling Letter:

1. Paragraph 4 is replaced by:

Holdco 1, a corporation incorporated under the laws of XXXXXXXXXX, is a TCC and a CCPC. The authorized capital of Holdco 1 consists of an unlimited number of common shares and an unlimited number of Class A voting preference shares. The issued and outstanding capital of Holdco 1 consists of XXXXXXXXXX Class A Shares that are owned by Mr. C and XXXXXXXXXX common shares that are owned by Holdco 4.

2. Paragraph 5 is replaced by:

Holdco 2, a corporation incorporated under the laws of XXXXXXXXXX, is a TCC and a CCPC. The authorized capital of Holdco 2 consists of XXXXXXXXXX Class A Preference Shares, XXXXXXXXXX Class C Preference Shares, XXXXXXXXXX Class D Preference Shares, an unlimited number of Class F Shares, XXXXXXXXXX Common Shares and an unlimited number of Voting Special Shares.

The issued and outstanding capital of Holdco 2 is held as follows:

Shareholder	Class A	Class C	Class D	Common	Special	Class F

XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

Holdco 2 is controlled by Holdco 5, a TCC which is not related to any of Mr. B, Trust #1 or Trust #2. The Voting Special Shares of Holdco 2 were acquired by Holdco 5 as a result of a series of transactions which was the subject of advance income tax ruling 953017 which was issued on XXXXXXXXXX, 1996.

3. Paragraph 6 of the Ruling Letter is replaced by:

Holdco 3, a corporation incorporated under the laws of XXXXXXXXXX, is a TCC and a CCPC. At the time of her death XXXXXXXXXX owned all of the issued and outstanding shares of Holdco 3 which consisted of XXXXXXXXXX common shares (PUC $XXXXXXXXXX) and 1 Class A Preference share (PUC $XXXXXXXXXX) all of which, at the time of her death, had a fair market value of $XXXXXXXXXX. As a consequence of XXXXXXXXXX death, all of her shares of Holdco 3 passed to the Estate.

On XXXXXXXXXX, the Executors of the Estate distributed all of the issued shares of Holdco 3 to Mrs. A who then became the registered and beneficial owner of those shares. This transaction was a transaction described in paragraph 55(3.2)(d) of the Act.

Also on XXXXXXXXXX, Mrs. A transferred, pursuant to subsection 85(1) of the Act, certain property to Holdco 3 in consideration for XXXXXXXXXX Class B Preference shares of Holdco 3 having a PUC of $XXXXXXXXXX and a fair market value of $XXXXXXXXXX.

Mrs. A is now the registered and beneficial owner of all of the issued and outstanding capital of Holdco 3 consisting of 1 Class A Preference Share, XXXXXXXXXX Class B Preference Shares and XXXXXXXXXX common shares.

The aggregate ACB of the outstanding shares of Holdco 3 is $XXXXXXXXXX and the aggregate PUC of those shares is $XXXXXXXXXX.

4. The second subparagraph of paragraph 7 is replaced by:

The authorized share capital of Subco 1 includes XXXXXXXXXX non-voting Class A Preference Shares, XXXXXXXXXX Common Shares, Voting Special Shares and Class F Shares. The issued and outstanding share capital of Subco 1 consists of:

(a) XXXXXXXXXX Class A Preference Shares, of which XXXXXXXXXX are owned by a corporation related to Mr. C, XXXXXXXXXX are owned by DC2 and XXXXXXXXXX are owned by DC1;

(b) XXXXXXXXXX Common Shares, all of which are owned by Holdco 4; and

(c) XXXXXXXXXX Voting Special Shares which are owned by Holdco 5.

5. Subparagraph 10(i) is replaced by:

i) each Class A Share will be redeemable at the option of the corporation and retractable at the option of the holder for an amount equal to $XXXXXXXXXX, together with all declared and unpaid dividends thereon;

6. Paragraph 10.1 is replaced by:

Each of Holdco 1, Holdco 2 and Newco 3 will cause a new corporation (“Sub-Holdco 1”, "Sub-Holdco 2" and "Sub-Newco 3", respectively) to be incorporated under the BCA. Each of Sub-Holdco 1, Sub-Holdco 2 and Sub-Newco 3 will be a TCC and a CCPC. The authorized share capital of each of Sub-Holdco 1, Sub-Holdco 2 and Sub-Newco 3 will consist of an unlimited number of Class A Shares and an unlimited number of common shares. The Class A Shares of each of Sub-Holdco 1, Sub-Holdco 2 and Sub-Newco 3 will have the following attributes:

i) each Class A Share will be redeemable at the option of the corporation and retractable at the option of the holder for an amount equal to $XXXXXXXXXX, together with all declared and unpaid dividends thereon (the "Class A Redemption Amount");

ii) the Class A Shares will carry one vote per share;

iii) the holder of each Class A Share will be entitled to receive non-cumulative dividends in an amount or amounts to be determined by the directors of the corporation from time to time;

iv) the Class A Shares will rank in priority to the common shares on a dissolution of the corporation; and

v) the Specified Amount, for purposes of subsection 191(4) of the Act, in respect of the Class A Shares will be $XXXXXXXXXX per share, which amount will be equal to the fair market value of the property received by such corporation as consideration for each such share.

Holdco 1, Holdco 2 and Newco 3, as the case may be, will subscribe for a sufficient number of common shares of Sub-Holdco 1, Sub-Holdco 2 and Sub-Newco 3, as the case may be, for nominal consideration, to ensure that it will control its respective subsidiary after the Class A Shares of Sub-Holdco1, Sub-Holdco 2 and Sub-Newco 3, as the case may be, have been issued to DC1 or DC2, as the case may be, as proposed in paragraphs 18 and 22 below.

Holdco 3 wishes to ensure that each property that is distributed to Newco 3 will ultimately be owned by a separate corporation. Consequently, Newco 3 will cause additional corporations, as necessary, ("Newco3Sub1", "Newco3Sub2" and "Newco3Sub3”) to be incorporated under the BCA. Newco3Sub1, Newco3Sub2 and Newco3Sub3 will each be a TCC and a CCPC. The authorized share capital of each of Newco3Sub1, Newco3Sub2 and Newco3Sub3 will consist of an unlimited number of Class A Shares and an unlimited number of common shares. Newco 3 will subscribe for a nominal number of common shares of each of Newco3Sub1, Newco3Sub2 and Newco3Sub3 for nominal consideration. The Class A Shares of Newco3Sub1, Newco3Sub2 and Newco3Sub3 will have the following attributes:

i) each Class A Share will be redeemable at the option of the corporation and retractable at the option of the holder for an amount equal to $XXXXXXXXXX, together with all declared and unpaid dividends thereon (the "Class A Redemption Amount");

ii) the Class A Shares will not carry any voting rights;

iii) the holder of each Class A Share will be entitled to receive non-cumulative dividends in an amount or amounts to be determined by the directors of the corporation from time to time; and

iv) the Class A Shares will rank in priority to the common shares on a dissolution of the corporation.

7. Paragraph 11 is replaced by:

Each of the Estate, Mr. B and Mr. C will cause a new corporation ("Newco 1", "Newco 2" and "Newco 4", respectively) to be incorporated under the BCA. The authorized capital of Newco 1, Newco 2 and Newco 4 will consist of an unlimited number of Class A Shares and an unlimited number of common shares. The Estate, Mr. B and Mr. C will subscribe for one common share in the capital of Newco 1, Newco 2 and Newco 4, as the case may be, for nominal consideration.

The Class A Shares of each of Newco 1, Newco 2 and Newco 4 will have the following attributes:

i) each Class A Share will be redeemable at the option of the corporation and retractable at the option of the holder for an amount equal to $XXXXXXXXXX, together with all declared and unpaid dividends thereon;

ii) the Class A Shares will not carry any votes;

iii) the holder of each Class A Share will be entitled to receive non-cumulative dividends in an amount or amounts to be determined by the directors of the corporation from time to time; and

iv) the Class A Shares will rank in priority to the common shares on a dissolution of the corporation.

The Estate wishes to ensure that each property that is distributed to Newco 1 will ultimately be owned by a separate corporation. Consequently, Newco 1 will cause additional corporations, as necessary, ("Sub-Newco1A" and "Sub-Newco1B”) to be incorporated under the BCA. Sub-Newco1A and Sub-Newco1B will each be a TCC and a CCPC. The authorized share capital of each of Sub-Newco1A and Sub-Newco1B will consist of an unlimited number of Class A Shares and an unlimited number of common shares. Newco 1 will subscribe for a nominal number of common shares of each of Sub-Newco1A and Sub-Newco1B for nominal consideration. The Class A Shares of Sub-Newco1A and Sub-Newco1B will have the same attributes as the Class A Shares of Newco3Sub1, Newco3Sub2 and Newco3Sub3 which are described in paragraph 10.1 above.

8. In paragraph 14 of the Ruling Letter all references to “Holdco 1” are deleted and replaced by “Newco 4”.

9. Paragraph 15 of the Ruling Letter is replaced by:

Each of Newco 1, Newco 2 and Newco 4 will cause a new corporation ("Sub-Newco 1", “Sub-Newco 2” and "Sub-Newco 4", respectively) to be incorporated under the BCA. Each of Sub-Newco 1, Sub-Newco 2 and Sub-Newco 4 will be a TCC and a CCPC. The authorized share capital of each of Sub-Newco 1 Sub-Newco 2 and Sub-Newco 4 will consist of an unlimited number of Class A Shares and an unlimited number of common shares. The Class A Shares of each of Sub-Newco 1, Sub-Newco 2 and Sub-Newco 4 will have the following attributes:

i) each Class A Share will be redeemable at the option of the corporation and retractable at the option of the holder for an amount equal to $XXXXXXXXXX, together with all declared and unpaid dividends thereon (the "Class A Redemption Amount");

ii) the Class A Shares will carry one vote per share;

iii) the holder of each Class A Share will be entitled to receive non-cumulative dividends in an amount or amounts to be determined by the directors of the corporation from time to time;

iv) the Class A Shares will rank in priority to the common shares on a dissolution of the corporation; and

v) the Specified Amount, for purposes of subsection 191(4) of the Act, in respect of the Class A Shares will be $XXXXXXXXXX per share, which amount will be equal to the fair market value of the property received by such corporation as consideration for each such share.

Newco 1, Newco 2 and Newco 4, as the case may be, will subscribe for a sufficient number of common shares of Sub-Newco 1, Sub-Newco 2 and Sub-Newco 4, as the case may be, for nominal consideration, to ensure that it will control its respective subsidiary after the Class A Shares of Sub-Newco 1, Sub-Newco 2 and Sub-Newco 4, as the case may be, have been issued to DC3 as proposed in paragraph 26 below.

10. In paragraph 22 the reference to “DC1” is replaced by “DC2”.

11. In paragraph 26, all references to “Sub-Holdco 1” are replaced by references to “Sub-Newco 4”, any reference to the “Holdco 1 Proportion” is replaced by a reference to the “Newco 4 Proportion” and any reference to “Holdco 1” is replaced by a reference to “Newco 4”.

12. In paragraph 27, all references to “Sub-Holdco 1” are replaced by references to “Sub-Newco 4”.

13. Paragraph 28 of the Ruling Letter is replaced by:

Following the completion of the transfers of assets referred to in paragraphs 18, 22 and 26 above, each of Sub-Newco 1, Sub-Newco 2, Sub-Newco 4, Sub-Holdco 1, Sub-Holdco 2 and Sub-Newco 3 will redeem its Class A Shares held by DC1, DC2 and DC3, as the case may be, for an amount equal to their fair market value, being the Class A Redemption Amount of such shares, and as payment of the Class A Redemption Amount will, where applicable, deliver to DC1, DC2 and DC3, as the case may be, for cancellation the DC1 Promissory Note, DC2 Promissory Note or DC3 Promissory Note, as the case may be, held by it and will issue to DC1, DC2 or DC3, as the case may be, a new non-interest bearing promissory note (the "Sub-Newco 1 Note", "Sub-Newco 2 Note", “Sub-Newco 4 Note”, "1st Sub-Holdco 1 Note", "2nd Sub-Holdco 1 Note", "1st Sub-Holdco 2 Note", "2nd Sub-Holdco 2 Note", "1st Sub-Newco 3 Note" and "2nd Sub-Newco 3 Note") payable on demand and assignable by the holder thereof having a principal amount and fair market value equal to the amount by which the Class A Redemption Amount exceeds the fair market value of the DC1 Promissory Note, DC2 Promissory Note or DC3 Promissory Note, as the case may be. Each of DC1, DC2 and DC3 will, in each case, accept the delivery for cancellation of the DC1 Promissory Note, DC2 Promissory Note or DC3 Promissory Note, as the case may be, and the delivery of the Sub-Newco 1 Note, Sub-Newco 2 Note, Sub-Newco 4 Note, 1st Sub-Holdco 1 Note, 2nd Sub-Holdco 1 Note, 1st Sub-Holdco 2 Note, 2nd Sub-Holdco 2 Note, 1st Sub-Newco 3 Note and 2nd Sub-Newco 3 Note, as the case may be, as full payment of the redemption amount for the Class A Shares of each of Sub-Newco 1, Sub-Newco 2, Sub-Newco 4, Sub-Holdco 1, Sub-Holdco 2 and Sub-Newco 3 so redeemed.

14. Paragraph 29 of the Ruling Letter is replaced by:

In order to avoid a Part IV tax circularity problem, it is expected that the proposed transactions will be carried out near Holdco 2's normal fiscal year end. If the parties are unable to close the transactions at that time, Holdco 2 will request permission from its local tax services office to change its fiscal year end to the day on which the share redemptions described in paragraph 28 above occur. Provided that permission for this change is granted, Holdco 2 will adopt this new fiscal year end. In either case, the share redemptions described in paragraph 28 above will be carried out before the fiscal year end and the windings-up described in paragraph 31 below will be carried out after the fiscal period end.

15. Paragraph 30 of the Ruling Letter is replaced by:

Shortly after the transaction described in paragraph 29 above, Newco 1, Newco 2, Newco 4, Holdco 1, Holdco 2 and Newco 3 will cause Sub-Newco 1, Sub-Newco 2, Sub-Newco 4, Sub-Holdco 1, Sub-Holdco 2 and Sub-Newco 3, respectively, to be wound up pursuant to the provisions of the BCA. As a result of the wind-ups, the assets and liabilities of Sub-Newco 1 (including the obligation owing by Sub-Newco 1 to DC3 under the Sub-Newco 1 Note), Sub-Newco 2 (including the obligation owing by Sub-Newco 2 to DC3 under the Sub-Newco 2 Note), Sub-Newco 4 (including the obligation owing by Sub-Newco 4 to DC3 under the Sub-Newco 4 Note), Sub-Holdco 1 (including the obligations owing by Sub-Holdco 1 to each of DC1 and DC2 under the 1st, and 2nd Sub-Holdco 1 Notes, respectively), Sub-Holdco 2 (including the obligations owing by Sub-Holdco 2 to each of DC1 and DC2 under the 1st and 2nd Sub-Holdco 2 Notes, respectively) and Sub-Newco 3 (including the obligations owing by Sub-Newco 3 to each of DC1 and DC2 under the 1st and 2nd Sub-Newco 3 Notes, respectively) will become assets and liabilities of Newco 1, Newco 2, Newco 4, Holdco 1, Holdco 2 and Newco 3, respectively.

16. The preamble to paragraph 31 of the Ruling Letter is replaced by:

On the first business day of the new taxation year of Holdco 2 referred to in paragraph 29 above, the shareholders of DC1, DC2 and DC3, will, by special resolution, resolve to wind up and dissolve DC1, DC2 and DC3 under the applicable provisions of the BCA. In connection with the winding-up;

17. Subparagraph 31(vii) of the Ruling Letter is replaced by:

DC3 will distribute to Newco 4 the Sub-Newco 4 Note;

18. The penultimate subparagraph in paragraph 31 of the Ruling Letter is replaced by:

Following receipt of the dividend refund to which DC1, DC2 and DC3 will become entitled as a result of the proposed transactions described herein, each of DC1 and DC2 will distribute one-third of such amount to each of Holdco 1, Holdco 2 and Newco 3 and DC3 will distribute one-third of such amount to each of Newco 1, Newco 2 and Newco 4. The refund will not arise until after the end of the fiscal period in which the dividend was paid (or deemed paid).

19. Paragraph 33 of the Ruling Letter is replaced by:

Holdco 3 wants to ensure that each property that was distributed to Newco 3 as part of the proposed transactions described above will be owned by a separate corporation. To achieve this objective Newco 3 will, immediately following the transactions described in paragraphs 10 to 32 above, transfer one of the properties it received from DC1 and DC2 to each of Newco3Sub1, Newco3Sub2 and Newco3Sub3. As consideration for such transfers, each of Newco3Sub1, Newco3Sub2 and Newco3Sub3 will assume certain liabilities of Newco 3 to the extent that, in the aggregate, such liabilities do not exceed the aggregate agreed amounts referred to in paragraph 34 below in respect of the assets received by such transferee and will issue to Newco 3 Class A Shares of its capital stock having an aggregate Class A Redemption Amount and fair market value equal to the amount by which the fair market value of the assets received by it exceeds the amount of the liabilities assumed by it. At all times throughout the series of transactions which includes the proposed transactions described herein and after the incorporation of each of Newco3Sub1, Newco3Sub2 and Newco3Sub3, Newco 3 and each of Newco3Sub1, Newco3Sub2 and Newco3Sub3 will be related to each other for the purposes of section 55 of the Act.

20. In paragraph 34 each reference to “Sub-Newco 4” is replaced by “each of Newco3Sub1, Newco3Sub2 and Newco3Sub3”. Also, in subparagraph 34(b) the reference to “DC2” is replaced by a reference to “Newco 3”.

21. New paragraph 34.1 is added to the Ruling Letter as follows:

34.1. The Estate wants to ensure that each property that was distributed to Newco 1 as part of the proposed transactions described above will be owned by a separate corporation. To achieve this objective Newco 1 will, immediately following the transactions described in paragraphs 10 to 32 above, transfer one of the properties it received from DC3 to each of Sub-Newco1A and Sub-Newco1B. As consideration for such transfers, each of Sub-Newco1A and Sub-Newco1B will assume certain liabilities of Newco 1 to the extent that, in the aggregate, such liabilities do not exceed the aggregate agreed amounts referred to below in respect of the assets received by such transferee and will issue to Newco 1 Class A Shares of its capital stock having an aggregate Class A Redemption Amount and fair market value equal to the amount by which the fair market value of the assets received by it exceeds the amount of the liabilities assumed by it. At all times throughout the series of transactions which includes the proposed transactions described herein and after the incorporation of each of Sub-Newco1A and Sub-Newco1B, Newco 1 and each of Sub-Newco1A and Sub-Newco1B will be related to each other for the purposes of section 55 of the Act.

Newco 1 and each of Sub-Newco1A and Sub-Newco1B will elect, jointly and in prescribed form and within the time limits referred to in subsection 85(6) of the Act, to have the provisions of subsection 85(1) of the Act apply to the transfer of each property of Newco 1 that is an eligible property. The amount agreed upon in each such election in respect of each of the eligible properties so transferred will be equal to:

(a) in the case of capital property (other than depreciable property of a prescribed class) and inventory, an amount equal to the least of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii) of the Act; and

(b) in the case of depreciable property of a prescribed class, an amount equal to the least of the cost amount of such property, the cost of such property to Newco 1 and the fair market value of such property at the time of disposition.

For greater certainty the agreed amount for any eligible property included in the subsection 85(1) elections referred to herein will not be greater than the fair market value, at the time of the disposition, of such property, nor will it be less than the amount of any liabilities assumed by Sub-Newco1A and Sub-Newco1B as consideration for the transfer of such property.

Each of Sub-Newco1A and Sub-Newco1B will add to the stated capital account maintained for its Class A shares, pursuant to subsection 24(3) of the BCA, an amount equal to the amount by which the aggregate of the cost of the properties transferred to it (determined pursuant to subsection 85(1) of the Act where relevant) exceeds the amount of the liabilities assumed by it as consideration therefor.

22. Paragraph 35 of the Ruling Letter is replaced by:

Except as described in this letter, no liabilities have been or will be incurred by, and no assets have been or will be acquired by or disposed of by DC1, DC2 or DC3 or a corporation controlled by DC1, DC2 or DC3 in contemplation of and before the proposed transactions described in paragraphs 18, 22 and 26 above. Nor is it contemplated that subsequent to the implementation of the transactions described herein under "Proposed Transactions" that Holdco 1, Holdco 2, Newco 3, Newco3Sub1, Newco3Sub2, Newco3Sub3, Sub-Newco1A, Sub-Newco1B, Newco 1, Newco 2 or Newco 4 will transfer or sell any of its assets to any other person as part of a series of transactions that includes these transactions except as described herein.

23. Paragraph 36 of the Ruling Letter is replaced by:

None of DC1, DC2, DC3, Holdco 1, Holdco 2, Newco 3, Newco 1, Newco 2, Newco 4, Sub-Holdco 1, Sub-Holdco 2, Sub-Newco 1 Sub-Newco 2, Sub-Newco 3 and Sub-Newco 4 is, or will be at the time of the proposed transactions, an SFI or a RFI.

24. The preamble to paragraph 37 of the Ruling Letter is replaced by:

None of the shares of DC1, DC2, DC3, Holdco 1, Holdco 2, Newco 3, Newco 1, Newco 2, Newco 4, Sub-Holdco 1, Sub-Holdco 2, Sub-Newco 1, Sub-Newco2, Sub-Newco 3 and Sub-Newco 4 has been or will be, at any time during the implementation of the proposed transactions described herein:

25. Subparagraphs (iv), (vii) and (viii) of Ruling A in the Ruling Letter are replaced by:

(iv) the transfer of the 1 common share and XXXXXXXXXX Class B Shares of DC3 by Mr. C to Newco 4 as described in paragraph 14 above,

(vii) the transfer of each eligible property which is the subject of an election under subsection 85(1) as described in paragraph 27 above by DC3 to each of Sub-Newco 1, Sub-Newco 2 and Sub-Newco 4,

(viii) the transfer of each eligible property which is the subject of an election under subsection 85(1) as described in paragraph 34 above by Newco 3 to each of Newco3Sub1, Newco3Sub2 and Newco3Sub3, and

(ix) the transfer of each eligible property which is the subject of an election under subsection 85(1) as described in paragraph 34.1 above by Newco 1 to each of Sub-Newco1A and Sub-Newco1B,

26. In Rulings B, and H of the Ruling Letter, any reference to “Sub-Holdco 1, Sub-Holdco 2, Sub-Newco 3, Sub-Newco 1 and Sub-Newco 2” is replaced by a reference to “Sub-Holdco 1, Sub-Holdco 2, Sub-Newco 3, Sub-Newco 1, Sub-Newco 2 and Sub-Newco 4” and any reference to “Holdco 1, Holdco 2, Newco 3, Newco 1, and Newco 2” is replaced by “Holdco 1, Holdco 2, Holdco 3, Newco 1, Newco 2 and Newco 4”.

27. In Ruling B of the Ruling Letter:

(a) the reference in subparagraph (a) to “Holdco 2” is deleted; and

(b) the reference in subparagraph (b)(ii) to “paragraph 30” is replaced by a reference to “paragraph 31”.

28. In Rulings E, K and M of the Ruling Letter, any reference to “Sub-Holdco 1, Sub-Holdco 2, Sub-Newco 3, Sub-Newco 1 and Sub-Newco 2” is replaced by a reference to “Sub-Holdco 1, Sub-Holdco 2, Sub-Newco 3, Sub-Newco 1, Sub-Newco 2 and Sub-Newco 4”.

29. In Rulings F and J of the Ruling Letter, any reference to “Holdco 1” is replaced by a reference to “Newco 4”.

30. In Ruling L of the Ruling Letter is replaced by:

Subsection 85(2.1) of the Act will not apply to reduce the PUC of the Class A Shares of each of Newco3Sub1, Newco3Sub2 and Newco3Sub3 issued to Newco 3 as described in paragraphs 33 and 34 above or of the Class A Shares of each of Sub-Newco1A or Sub-Newco1B issued to Newco 1 as described in paragraph 34.1.

31. Ruling N of the Ruling Letter is replaced by:

The extinguishment of the debt obligations as a result of the cancellation of the 1st and 2nd Sub-Holdco 1 Note, the 1st and 2nd Sub-Holdco 2 Note, the 1st and 2nd Sub-Newco 3 Note, the Sub-Newco 1 Note, the Sub-Newco 2 Note, the Sub-Newco 4 Note and the 1st and 2nd Holdco 2 Note described in paragraph 31 above, will not give rise to a "forgiven amount", within the meaning thereof in subsections 80(1) and 80.01(1) of the Act.

32. Ruling O of the Ruling Letter is replaced by:

Subsections 1100(2.2), 1100(19), 1101(1ad) and 1102(14) of the Income Tax Regulations will apply to the transfers of property described in paragraphs 18, 22, 26, 30, 33 and 34.1 above.

Notwithstanding the above changes to the facts, proposed transactions and additional information described in the Ruling Letter, we confirm that, subject to the conditions set out therein, the rulings given in the Ruling Letter, as hereby amended, will continue to be binding on Revenue Canada in accordance with the practice outlined in Information Circular 70-6R3, dated December 30, 1996, provided that the proposed transactions, as amended herein, are completed in the manner described in the Ruling Letter, as amended herein, by XXXXXXXXXX.

Yours truly,

for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

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