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: Unwinding an NRO: Will interest on debt which was transferred by NRO to the partnership continue to be deductible?
Position: Yes
Reasons: Changes in information do not jeopardize the rulings given before.
XXXXXXXXXX 2003-001442
XXXXXXXXXX, 2003
Dear XXXXXXXXXX:
Re: Supplementary Advance Income Tax Rulings
XXXXXXXXXX.
XXXXXXXXXX.
We are writing in reply to your letter of XXXXXXXXXX, in which you requested a supplementary advance income tax ruling on behalf of the above-referenced taxpayers with respect to our advance income tax ruling number 2003-000527 dated XXXXXXXXXX, 2003 (the "Ruling").
You outlined in your letter the following changes to the facts and proposed transactions set out in the Ruling:
1. Paragraph 2 is modified to reflect the fact that the stated capital of the preferred shares is $XXXXXXXXXX, not $XXXXXXXXXX.
2. Paragraph 16 is modified to reflect that the value of the preferred shares of Canco that will be contributed by US Sub to ULC1 is $XXXXXXXXXX, not $XXXXXXXXXX. In addition, that paragraph is further modified to reflect that US Sub and ULC1 will jointly elect under subsection 85(1) of the Income Tax Act (the "Act") to transfer the preferred shares of Canco for proceeds of disposition equal to their fair market value with the result that US Sub will realize a capital gain that is exempt from tax in Canada pursuant to Article XIII of the Canada-United States Income Tax Convention (the "Convention").
3. Paragraph 24 is modified to reflect that the principal amount of the ULC1 Debt is approximately $XXXXXXXXXX, not $XXXXXXXXXX. In addition, that paragraph is further modified to reflect that US Sub and ULC1 will jointly elect under subsection 85(1) of the Act to transfer the shares of NRO for proceeds of disposition equal to their fair market value with the result that US Sub will realize a capital gain that is exempt from tax in Canada pursuant to Article XIII of the Convention.
Notwithstanding the above changes, we confirm that the rulings given in the Ruling will continue to be binding on the Canada Customs and Revenue Agency, subject to the same limitations and qualifications set out in the Ruling. However, for greater certainty, paragraph (c) under the heading "Comments" in the Ruling is modified to read "the application of section 212.1 of the Act to the transactions described in 16 and 24 above".
Yours truly,
XXXXXXXXXX
Section Manager
for Division Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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