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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
Can wording which was inadvertently deleted from an amended DSU plan and ruling be reinstated?
Position: Yes.
Reasons:
An error occurred which resulted in wording being deleted from the amended DSU plan and our ruling, which presented administrative problems for the plan. The correction of the error does not affect the previous rulings given.
XXXXXXXXXX 2002-012614
XXXXXXXXXX, 2002
Dear XXXXXXXXXX:
Re: Supplemental Income Tax Ruling
XXXXXXXXXX (the "Corporation") XXXXXXXXXX
This is in reply to your letter dated XXXXXXXXXX and is supplemental to our advance income tax ruling, number 2001-009268 dated XXXXXXXXXX, 2001. We also acknowledge receipt of your letter dated XXXXXXXXXX, in which you confirm that:
1. No additional amounts referred to in your letter dated XXXXXXXXXX have been awarded to any participant under the XXXXXXXXXX (the "Amended DSU Plan") for the period commencing on XXXXXXXXXX and ending on XXXXXXXXXX.
2. All amounts that have been credited to a participant under the Amended DSU Plan during the period commencing on XXXXXXXXXX, and ending on XXXXXXXXXX, have been determined in accordance with the definition of "Dollar Amount", as defined in the Amended DSU Plan and Ruling 2001-009268, dated XXXXXXXXXX, 2001.
In your letter dated XXXXXXXXXX, you indicated that wording which was present in the XXXXXXXXXX (the "Original DSU Plan") and Advance Income Tax Ruling 9641823, dated XXXXXXXXXX, 1997, was inadvertently deleted from the Amended DSU Plan and Advance Income Tax Ruling 2001-009268, dated XXXXXXXXXX, 2001.
Accordingly, the inadvertent deletions from Section 7 of the Amended DSU Plan, entitled Computation of Awards, and paragraphs 7.(a) and (d) of Ruling 2001-009268 are being rectified and the wording replaced with the following:
Section 7
In order to compute the number of Share Units to be awarded to an Eligible Key Employee under Section 6 hereof, the Committee shall determine an amount expressed in dollars (the "Dollar Amount") to be assigned to such Eligible Key Employee for the Award Period, which amount shall only be determined after the Election Expiry Date. The Dollar Amount shall be equal to the product obtained by multiplying the Participation Level and the Bonus Amount. The "Bonus Amount" means an amount that is at least equal to the cash bonus which would, if not for an Eligible Key Employee's participation in the Plan, be awarded to such Eligible Key Employee under the Annual Short-Term Incentive Program for the Award Period. The criteria which shall be used by the Committee to determine an Eligible Key Employee's Bonus Amount shall be similar to those used by the Committee, or committee of the board of directors of a Subsidiary, to determine the amount of cash bonuses awarded under the Annual Short-Term Incentive Program. The number of Share Units (including fractional Share Units) to be awarded to an Eligible Key Employee under the Plan and credited to his or her account with respect to any particular Award Period shall be equal to the quotient obtained by dividing: (a) the Dollar Amount, by (b) the Market Value of a Common Share on the last trading day prior to the Effective Date.
Paragraph 7.(a)
Each Eligible Key Employee who is eligible for participation in the DSU Plan for a particular Award Period will be given the right to elect in respect of that Award Period whether to participate in whole or in part in the DSU Plan. Each Eligible Key Employee who elects to participate wholly or partly in the DSU Plan for a particular Award Period will be eligible to receive an award under the DSU Plan based on similar criteria as the STIP for that Award Period, but the award will be expressed in Deferred Share Units rather than a cash payment.
Paragraph 7.(d)
The number of Deferred Share Units to be credited to an Eligible Key Employee for a particular Award Period shall be based on the Dollar Amount, divided by the Market Value of a XXXXXXXXXX common share on the last trading day prior to the Effective Date for that particular Award Period.
We confirm that the rectification of the inadvertent deletions from the Amended DSU Plan and Advance Income Tax Ruling 2001-009268 will not affect the rulings given in Ruling 2001-009268 and they will continue to be binding on the Canada Customs and Revenue Agency as indicated therein.
Yours truly,
XXXXXXXXXX
for Director
Financial Industries Division
Income Tax Rulings Directorate
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© Her Majesty the Queen in Right of Canada, 2002
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