1996 Ruling 961368

With respect to a situation where a taxable Canadian corporation made an offer to purchase at a premium outstanding notes that were eligible for the exemption under s. 212(1)(b)(vii), RC ruled that provided that the premium "cannot reasonably be considered to have been made in respect of the substitution of the Notes into another debt obligation", the premium will be exempt.

With respect to a situation where a taxable Canadian corporation made an offer to purchase at a premium outstanding notes that were eligible for the exemption under s. 212(1)(b)(vii), RC ruled that provided that the premium "cannot reasonably be considered to have been made in respect of the substitution of the Notes into another debt obligation", the premium will be exempt.