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: Change in facts and proposed transactions
Position: Ruling confirmed
Reasons: Minor changes
XXXXXXXXXX 2003-005021
XXXXXXXXXX, 2003
Dear XXXXXXXXXX:
Re: XXXXXXXXXX
Supplementary Advance Income Tax Ruling
This is in reply to your letter of XXXXXXXXXX and is supplemental to our Advance Income Tax Ruling number 2002-016957 dated XXXXXXXXXX, 2003 ("the Ruling") as extended by our Supplementary Advance Income Tax Ruling 2003-002681 dated XXXXXXXXXX, 2003. Unless otherwise noted, all defined terms used below have the meanings given to them in the Ruling.
You have advised us of the following changes to the Facts and the Proposed Transactions as they were described in the Ruling.
Changes to Facts
Paragraph 2 of the Ruling is deleted and replaced by the following:
2. DC, TC and Holdco are taxable Canadian corporations and CCPCs governed by the provisions of the BCA. DC was formed by the amalgamation on XXXXXXXXXX which were incorporated on XXXXXXXXXX, respectively. The taxation year for each of DC, TC and Holdco ends on XXXXXXXXXX of each year.
Paragraph 5 of the Ruling is deleted and replaced by the following:
5. The authorized share capital of DC consists of:
a) an unlimited number of Common shares, and
b) an unlimited number of Special shares (issuable in series).
TC owns XXXXXXXXXX Common shares and XXXXXXXXXX Special shares (representing, in the aggregate, more than 50% of the voting shares of DC) and Holdco owns XXXXXXXXXX Common shares and XXXXXXXXXX Special shares of DC.
Paragraph 6 of the Ruling is deleted and replaced by the following:
6. The Common shares and Special shares of DC represent capital property to each of DC's shareholders. The shares of TC and Holdco are capital property to Sib1 and Sib2 for the purposes of the Act. None of the shareholders of DC, TC and Holdco have acquired any shares of DC, TC or Holdco in contemplation of the proposed transactions described in this letter.
Paragraph 10 of the Ruling is deleted and replaced by the following:
10. DC had $XXXXXXXXXX of RDTOH at XXXXXXXXXX. As at XXXXXXXXXX, DC had $XXXXXXXXXX of CDA, which was reduced to zero as a result of paying dividends prior to XXXXXXXXXX. DC does not have, and will not have before the proposed transactions described below are carried out, any unutilized losses or deductions for tax purposes except possibly a reserve under section 28 from the prior year.
Paragraph 11 of the Ruling is amended by adding the following paragraph to the end of Paragraph 11:
There have been no significant transactions completed between the date of the Ruling and the date of this letter other than:
(a) Completion of the purchase of XXXXXXXXXX acres of farmland for $XXXXXXXXXX as described in the Ruling; and
(b) Commencement of construction of a residence for Sib2 on the newly purchased farmland from which to manage the farm operations of DC once separated.
Changes to Proposed Transactions
The following Paragraph 11A is added to the Proposed Transactions:
11A. Holdco and TC will each exchange all of their issued and outstanding Special shares in the capital of DC for Common shares in the capital of DC on a one-for-one basis.
As a consequence of the addition of the Proposed Transaction described above, all subsequent references in the Ruling to the Class A voting shares of DC are deleted.
Confirmation
We confirm that the rulings given in the Ruling, as amended by this letter, will continue to be binding on the Canada Customs and Revenue Agency subject to the same limitations and qualifications set out therein, provided that the proposed transactions are completed on or before XXXXXXXXXX.
Yours truly,
for Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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© Her Majesty the Queen in Right of Canada, 2003
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