2001 Ruling 2001-0083483 - REAL ESTATE CORP. DEBT OBLIGATION PENSION

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: Amend facts, proposed transactions and rulings in ruling 2000-005546 and ruling supplemental 2001-007103.

Position: N/A

Reasons: Amendments are not material and will not affect the rulings given.

XXXXXXXXXX 							2001-008348

XXXXXXXXXX, 2001

Dear XXXXXXXXXX:

Re: XXXXXXXXXX
Advance Income Tax Ruling 2000-005546, dated XXXXXXXXXX, 2001
Advance Income Tax Ruling Supplement 2001-007103, dated XXXXXXXXXX, 2001

This is in reply to your letter of XXXXXXXXXX, wherein you advised us of certain amendments to the proposed transactions described in the above-referenced Advance Income Tax Ruling and the Advance Income Tax Ruling Supplement (hereinafter collectively referred to as the "Ruling Letters").

Any reference herein to paragraphs are references to those contained in the Ruling Letters and any defined terms used in this letter have the meanings assigned to them in the Ruling Letters.

The Ruling Letters are hereby amended as follows:

1. The following new sentence will be added to the end of paragraph 9:

"In connection with certain of its holdings of the Participating Bonds, the Fund has an obligation to provide additional cash to the investment vehicle by way of further acquisition of bonds ("Bond Cash Call Obligations")."

2. The following new sentence will be added to the end of paragraph 13(a):

"Realty Holdco 2, Mortgage Holdco 2 and Investment Holdco 2 will only be incorporated if necessary (i.e., to the extent that there are assets that cannot either as a legal or practical matter be transferred on the Transfer Date, because the necessary consents have not been obtained)."

3. The following new sentence will be added to the end of the first paragraph in paragraph 13(d):

"The Fund will also transfer to Mortgage Holdco, in return for shares of Mortgage Holdco, sufficient cash to permit Mortgage Holdco to satisfy anticipated Bond Cash Call Obligations."

4. The following new sentence will be added to the end of the second paragraph in paragraph 13(d):

"The Fund will also transfer to Mortgage Holdco 2, in return for shares of Mortgage Holdco 2, sufficient cash to permit Mortgage Holdco 2 to satisfy anticipated Bond Cash Call Obligations."

5. Ruling C is hereby deleted and will be replaced by

"C. The assumption of the Bond Cash Call Obligations by Mortgage Holdco and Mortgage Holdco 2, the assumption of Cash Call Obligations by Investment Holdco and Investment Holdco 2, and the acquisition and holding of interests in limited partnerships that have or will have debt obligations will not, in and by themselves, result in Mortgage Holdco, Mortgage Holdco 2, Investment Holdco or Investment Holdco 2 issuing debt obligations and being disqualified from satisfying the condition in clause 149(1)(o.2)(iii)(B) of the Act."

6. The following will be added after the last paragraph in the Ruling Letters:

"Comment

Provided that section 253.1 is enacted in substantially the same format as proposed in Bill C-22, we are of the view that the acquisition and holding of the limited partnership units included in the Private Equity Assets will not, in and by themselves, result in Investment Holdco or Investment Holdco 2 being disqualified from satisfying the conditions in subparagraph 149(1)(o.2)(iii) of the Act."

Notwithstanding the above changes, we confirm that, subject to the conditions set out therein, the rulings given in the Ruling Letters will continue to be binding on the Canada Customs and Revenue Agency in accordance with the practice outlined in Information Circular 70-6R4 dated January 29, 2001, provided that the proposed transactions are completed by XXXXXXXXXX.

Yours truly,

XXXXXXXXXX
for Director
Financial Industries Division
Income Tax Rulings Directorate