Income Tax Severed Letters - 1999-09-03

Principal Issues:

Principal Issues:

1. Is excess of principal amount of debenture over initial offering price where there is no stated interest rate, treated as interest for 212(1)(B)(vii)
2. Do change of control provisions qualify under 212(1) (b) (vii) (C)
3. Is fluctuation in exchange rate between Canadian and US dollar relevant for the 5/25 test in 212(1)(b)(vii)

Position:

1. Yes.
2. Yes
3. No.

Reasons:

Principal Issues:
Whether an unfunded supplemental pension arrangement results in current taxation.

Position:
No.

Reasons:
The plan provides for maintaining notional accounts. Funds will not be held in trust for the benefit of participants and participants will not have any right to any assets held in respect of the plan. Such assets are available to the employerts general creditors.

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.

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xxxxxxxxxx 983014
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Attention: xxxxxxxxxx

XXXXXXXXXX, 1999

Dear Sirs:

Re XXXXXXXXXX Advance Income Tax Ruling

Principal Issues:
The addition of a redesignation feature to the existing units of a group of mutual fund trusts and the redesignation of the existing units to provide for multiple Classes of Units for different investor segments so that the manager of the Fund has the flexibility to charge differing management fees to the various investors depending on the size of the investment. The proposals also allow the management fees to be paid by the Fund or by the investor directly. The proposed transactions can result in investors (unitholders) having a greater percentage interest in the income of the Fund than such investor's percentage interest in the capital of the Fund.

Rulings requested are: 1) whether the proposed transactions result in a disposition of units: 2) will subsections 104(7.1) and 245(2) apply to the proposed transactions.

Position:
1) Unitholders are not considered to have disposedof their units because of the redesignation of the units from one class to another class. Also, the addition of a redesignation feature to the existing units will not result in a disposition of those units.

2) Subsections 104(7.1) and 245(2) will not apply to the proposed transactions.

Reasons:
1) Similar positions taken in 9820753, 9726113 and 9525413.
2) Similar positions taken in 9820753 and 9603753

Principal Issues: Butterfly reorganization

Position: routine

Reasons:

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 docupient, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

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xxxxxxxxxx 981090
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Attention: xxxxxxxxxx

XXXXXXXXXX, 1998

Dear Sirs:

Re: XXXXXXXXXX
Amendments to Advance Income Tax Ruling 3-980799

Principal Issues:

1) Extension of time
2) Amendments to Ruling

Position:

1) Extension of time given for 6 months as due to nature of capital markets they have not been able to issue the Units
2) The amendments requested did not impact or change the rulings given. The amendments were OK

Reasons:

Principal Issues: Whether Gaar should apply to a series of transactions, one of the purposes of which is to avoid the application of subsection 129(6)

Position: In this instance, no

Reasons: As the corporations were not otherwise associated and the specific anti-avoidance rules in section 256 do not apply, it was decided that Gaar should not apply.