2004 Ruling 2004-0060271R3 - Alter Ego Trust Planning

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.

Principal Issues: 1. Whether s. 88(1)(d) bump is available where alter ego trust holds shares of subsidiary. 2. Whether 88(1)(d.3) will apply to deem acquisition of control from non-arm's-length person. 3. Whether partnerships and trusts are to be recharacterized as corporations for the purposes of ascertaining specified shareholders for the purposes of s. 88(1)(c)(vi). 4. Whether alter ego trust may claim charitable donation tax credit upon making gift to registered charity. 5. Whether capital losses arising on share-for-share exchange involving trust and wholly-owned subsidiary that are denied under s. 40(3.6) will be realized on dispositions of shares to beneficiaries and donees of trust and are available to be carried back by trust to offset capital gains realized by trust pursuant to s. 104(4).

Position: 1. Yes 2. Yes 3. Yes 4. Yes 5. Yes

Reasons: 1. Technical requirements are met. 2. Shares of subsidiary are acquired as a consequence of death pursuant to the directions of the settlor in the terms governing the alter ego trust, trustees of the alter ego trust under equitable obligation to transfer shares of subsidiary to parent on the death of the settlor. 3. Wording of s. 88(1)(c.2) provides that recharacterization rules are to be taken into account for the purposes of s. 88(1)(c)(vi). 4. Trustee has full discretion to make voluntary transfer of property to charity in accordance with the intent of the settlor. 5. Property of trust will be fully distributed before the end of the third taxation year of the trust following the year in which it is deemed to dispose of its property pursuant to s. 104(4).

XXXXXXXXXX 2004-006027

XXXXXXXXXX, 2004

Dear Sir:

Re: Advance Income Tax Ruling Request
XXXXXXXXXX
XXXXXXXXXX (the "Taxpayers")

We are writing in response to your letter of XXXXXXXXXX in which you requested an advance income tax ruling on behalf of the Taxpayers. In this regard, we acknowledge your written submissions of XXXXXXXXXX made in connection with your request, our numerous telephone conversations with respect thereto XXXXXXXXXX You have advised us that to the best of your knowledge, and that of the Taxpayers, none of the issues contained herein is:

(a) in an earlier return of a Taxpayer or a person related to a Taxpayer;

(b) being considered by a tax services office or taxation centre in connection with a previously filed tax return of a Taxpayer or a person related to a Taxpayer;

(c) under objection by a Taxpayer or a person related to a Taxpayer;

(d) the subject of a ruling previously issued by the Income Tax Rulings Directorate; or

(e) before the Courts.

Our understanding of the facts, proposed transactions and the purpose of the proposed transactions is as follows:

DEFINITIONS

(a) "adjusted cost base" has the meaning assigned by section 54;

(b) "Agreed Amount" means the amount elected pursuant to subsection 85(1) by XXXXXXXXXX and XCO as described in paragraph 40;

(c) "Business Corporations Act (XXXXXXXXXX)" means the Business Corporations Act, XXXXXXXXXX;

(d) "Canada Corporations Act" means the Canada Corporations Act, R.S. 1970 c. C-32;

(e) "CBCA" means the Canada Business Corporations Act, R.S.C. 1985, c. C-44;

(f) "CHARITY" is XXXXXXXXXX;

(g) "CHARITY 2" is the XXXXXXXXXX;

(h) "Charity Portion" has the meaning given in paragraph 33(g);

(i) "Class A Preference shares" means the Class A Preference Shares in the capital stock of XCO which are redeemable, retractable, non-voting, which carry an entitlement to a fixed non-cumulative dividend of XXXXXXXXXX% per annum on the redemption price thereof and entitle their holder(s) to the property and assets of XCO on a liquidation, dissolution, winding-up or return of capital in priority to the Common shares, Class B Preference shares, Class C Preference shares, Class D Preference shares, Class E Preference shares, Class F Preference shares and Class H Preference shares in an amount not exceeding the aggregate of their redemption price and any unpaid dividends declared thereon;

(j) "Class B Preference shares" means the Class B Preference Shares in the capital stock of XCO which are redeemable, non-voting, which carry an entitlement to a fixed non-cumulative dividend of XXXXXXXXXX% per annum on the redemption price thereof and entitle their holder(s) to the property and assets of XCO on a liquidation, dissolution, winding-up or return of capital in priority to the Common shares, Class D Preference shares, Class E Preference shares, Class F Preference shares and Class H Preference shares in an amount not exceeding the aggregate of their redemption price and any unpaid dividends declared thereon;

(k) "Class C Preference shares" means the Class C Preference Shares in the capital stock of XCO which are redeemable, retractable, non-voting, which carry an entitlement to a fixed non-cumulative dividend of XXXXXXXXXX% per annum on the redemption price thereof and entitle their holder(s) to the property and assets of XCO on a liquidation, dissolution, winding-up or return of capital in priority to the Common shares, Class B Preference shares, Class D Preference shares, Class E Preference shares, Class F Preference shares and Class H Preference shares in an amount not exceeding the aggregate of their redemption price and any unpaid dividends declared thereon;

(l) XXXXXXXXXX;

(m) XXXXXXXXXX;

(n) XXXXXXXXXX;

(o) XXXXXXXXXX;

(p) XXXXXXXXXX;

(q) "Class J Preference shares" means the Class J Preference shares in the capital stock of XCO to be added to the authorized capital of XCO in the manner described in paragraph 36 which are non-voting, preference shares that are redeemable and retractable for an amount equal to the value of the consideration received for such shares, entitle their holders to receive a fixed, non-cumulative dividend that is calculated by multiplying the redemption price thereof by the per annum rate of interest prescribed by paragraph 4301(c) of the Income Tax Regulations at the time of the issuance of the share, and entitle their holders to the property and assets of XCO on a liquidation, dissolution, winding-up or return of capital in priority to the holders of all other classes of shares of XCO, other New XCO Preferred Shares, in an amount not exceeding their redemption price;

(r) XXXXXXXXXX;

(s) "Exchanged Shares" has the meaning given in paragraph 37;

(t) "Final Distribution Date" has the meaning given in paragraph 33(k);

(u) "First Agreement" has the meaning given in paragraph 37;

(v) "GCO" means XXXXXXXXXX;

(w) "Gift" has the meaning given in paragraph 54;

(x) "Income Tax Regulations" means the Income Tax Regulations, C.R.C., c. 945;

(y) "Material Date" means the day that is one day after the death of XXXXXXXXXX;

(z) XXXXXXXXXX;

(aa) "New XCO Common Shares" means the Class A Common shares in the capital stock of XCO to be added to the authorized capital of XCO in the manner described in paragraph 36 which are voting, participating common shares, which will entitle their holders to XXXXXXXXXX votes per share, to receive dividends as and when declared by the directors of XCO and to share in the remaining property and assets of XCO on its dissolution, liquidation, winding-up or distribution of capital on a pro-rata basis with any holders of voting Common shares in the capital stock of XCO, but subject to the prior rights of holders of all classes of Preference shares in the capital stock of XCO;

(bb) "New XCO Preferred Shares" means the Class I Preference shares in the capital stock of XCO to be added to the authorized capital of XCO in the manner described in paragraph 36 which are non-voting, preference shares, which are redeemable and retractable for $XXXXXXXXXX per share, entitle their holders to receive a fixed, non-cumulative dividend that is calculated by multiplying the redemption price thereof by the per annum rate of interest prescribed by paragraph 4301(c) of the Income Tax Regulations at the time of the issuance of the share, and which entitle their holders to the property and assets of XCO on a liquidation, dissolution, winding-up or return of capital in priority to the holders of Class J Preference shares in an amount not exceeding their redemption price;

(cc) "Newco" means the wholly-owned subsidiary of the Trust that is to be incorporated by the Trust after the death of XXXXXXXXXX as described in paragraph 43;

(dd) "Newco Common Shares" has the meaning given in paragraph 43;

(ee) "Newco Preferred Shares" has the meaning given in paragraph 43;

(ff) "New Shares" has the meaning given in paragraph 51;

(gg) "paid-up capital" has the meaning assigned by subsection 89(1) of the Act;

(hh) "qualified donee" has the meaning assigned by subsection 149.1(1) of the Act;

(ii) "registered charity" has the meaning assigned by subsection 248(1);

(jj) "Second Agreement" has the meaning given in paragraph 45;

(kk) "Second Exchange" has the meaning given in paragraph 45;

(ll) "SOCIETY" means XXXXXXXXXX;

(mm) XXXXXXXXXX;

(nn) "Society Distribution Date" has the meaning given in paragraph 33(j);

(oo) "Society Portion" has the meaning given in paragraph 33(g);

(pp) "Subject Shares" has the meaning given in paragraph 51;

(qq) "Subsidiaries" has the meaning given in paragraph 6;

(rr) "Subsidiary Shares" has the meaning given in paragraph 6;

(ss) "taxable Canadian corporation" has the meaning assigned by subsection 89(1);

(tt) "Third Agreement" has the meaning given in paragraph 51;

(uu) "Third Exchange" has the meaning given in paragraph 51;

(vv) "Trust" means the XXXXXXXXXX, a trust to be formed under the laws of the Province of XXXXXXXXXX in the manner described in paragraphs 26 to 35;

(ww) "Trust Indenture" means the Trust Indenture of the Trust as described in paragraphs 28 to 35, containing the terms of the draft version of XXXXXXXXXX that was submitted on XXXXXXXXXX for the purposes of this request for an advance income tax ruling;

(xx) "Trustco" has the meaning given in paragraph 27;

(yy) "XCO" means XXXXXXXXXX;

(zz) "XCO Distributed or Substituted Property" has the meaning given in Ruling H; and

(aaa) "XCO Person" has the meaning given in Ruling H.

Unless otherwise indicated, all statutory references in this letter are to the Income Tax Act (Canada) R.S.C. 1985 c. 1 (5th Suppl.) (the "Act"). All monetary references are to Canadian dollars.

FACTS

1. XXXXXXXXXX was born on XXXXXXXXXX and is a resident of XXXXXXXXXX. XXXXXXXXXX is an individual who is a resident of Canada for the purposes of the Act. XXXXXXXXXX principal residence is located at XXXXXXXXXX. XXXXXXXXXX files XXXXXXXXXX tax returns with the XXXXXXXXXX Tax Centre and XXXXXXXXXX tax affairs are administered by the XXXXXXXXXX Tax Services Office.

2. XCO is a corporation governed by the CBCA and is a taxable Canadian corporation for the purposes of the Act. Its main office and principal place of business is located at XXXXXXXXXX It files its tax returns with the XXXXXXXXXX Tax Centre and its tax affairs are administered by the XXXXXXXXXX Tax Services Office.

3. The authorized share capital of XCO consists of:

(a) an unlimited number of Class A Preference shares;

(b) an unlimited number of Class B Preference shares;

(c) XXXXXXXXXX;

(d) XXXXXXXXXX;

(e) XXXXXXXXXX;

(f) XXXXXXXXXX;

(g) XXXXXXXXXX;

(h) XXXXXXXXXX; and

(i) an unlimited number of voting Common shares.

4. The issued share capital of XCO is as follows:

Shareholder
Number and Class of Shares
XXXXXXXXXX
XXXXXXXX Common
XXXXXXXXXX
XXXXXXXX Class B Preference
XXXXXXXXXX
XXXXXXXX Class C Preference
GCO
XXXXXXXX
GCO
XXXXXXXX

5. GCO is a wholly-owned subsidiary of XCO.

6. In addition to GCO, XCO is the sole shareholder of a number of other subsidiary companies (the "Subsidiaries"), the shares of which are held by XCO as capital property for the purposes of the Act (the "Subsidiary Shares").

7. SOCIETY is a not-for-profit corporation governed by the XXXXXXXXXX . To the best of the Taxpayers' knowledge, SOCIETY has not been assigned a business number.

8. The members of SOCIETY are XXXXXXXXXX , XXXXXXXXXX . The directors of SOCIETY are XXXXXXXXXX , XXXXXXXXXX . The officers of SOCIETY are as follows:

Officer Title
XXXXXXXXXX President
XXXXXXXXXX Secretary
XXXXXXXXXX Treasurer
XXXXXXXXXX Assistant Secretary

9. With the exception of XXXXXXXXXX, who is also the XXXXXXXXXX of XXXXXXXXXX, an entity that is indirectly controlled by XXXXXXXXXX, XXXXXXXXXX is not related to any of the members, directors or officers of SOCIETY for the purposes of the Act. XXXXXXXXXX.

10. XXXXXXXXXX

11. Prior to the commencement of the proposed transactions described herein, the current members of SOCIETY will have amended the Constitution of SOCIETY so that SOCIETY will be authorized to support CHARITY 2. The Constitution of SOCIETY will be amended to reflect that (a) the objects of SOCIETY are to support CHARITY 2 or, in the event CHARITY 2 ceases to be a qualified donee, as defined pursuant to subsection 149.1(1), to support such other qualified donees as shall be designated by the Board of Directors of SOCIETY and (b) on the winding-up or dissolution of SOCIETY, after the payment or discharge of its debts and certain expenditures, the remaining funds and property will be distributed to CHARITY 2 or, where CHARITY 2 is not a qualified donee, to such other qualified donees as designated by the Board of Directors of SOCIETY.

12. Prior to the commencement of the proposed transactions described herein, the By-Laws of SOCIETY will be amended to:

XXXXXXXXXX.

13. Prior to the commencement of the proposed transactions described herein:

(a) XXXXXXXXXX will resign as member, director and President of SOCIETY;

(b) XXXXXXXXXX, the remaining members of SOCIETY, will pass a resolution pursuant to the By-Laws of SOCIETY admitting XXXXXXXXXX as members of SOCIETY; and

(c) XXXXXXXXXX will resign as member and Assistant Secretary of SOCIETY.

14. Along with XXXXXXXXXX are members of the XXXXXXXXXX to XXXXXXXXXX. None of these individuals are related to XXXXXXXXXX for the purposes of the Act and none are employees of XXXXXXXXXX, XCO, GCO, XXXXXXXXXX, or the Subsidiaries.

15. XXXXXXXXXX.

16. XXXXXXXXXX.

17. Thereafter, in accordance with By-Laws of SOCIETY, XXXXXXXXXX, being the members of SOCIETY, will elect directors of SOCIETY at each annual general meeting and will determine the admission of its future members.

18. CHARITY is a not-for-profit corporation governed by the Canada Corporations Act and is a registered charity, as defined pursuant to subsection 248(1). The members of CHARITY are XXXXXXXXXX, XXXXXXXXXX. The directors of CHARITY are XXXXXXXXXX , XXXXXXXXXX . Its officers are as follows:

Officer Title
XXXXXXXXXX President
XXXXXXXXXX Secretary
XXXXXXXXXX Treasurer
XXXXXXXXXX Assistant Secretary

19. With the exception of XXXXXXXXXX, XXXXXXXXXX is not related to any of the members, directors or officers of CHARITY for the purposes of the Act. XXXXXXXXXX.

20. The current members of CHARITY will have amended the Letters Patent of CHARITY prior to the commencement of the proposed transactions described herein so that CHARITY will be authorized to support CHARITY 2. The Letters Patent of CHARITY will be amended to reflect that (a) the objects of CHARITY are to support CHARITY 2 or, in the event CHARITY 2 ceases to be a qualified donee, to support such other qualified donees as shall be designated by the Board of Directors of CHARITY and (b) on the winding-up or dissolution of CHARITY, after the payment or discharge of its debts and certain expenditures, the remaining funds and property will be distributed to CHARITY 2 or, where CHARITY 2 is not a qualified donee, to such other qualified donees as designated by the Board of Directors of CHARITY.

21. Prior to the commencement of the proposed transactions described herein, By-Law No. 2 of CHARITY will be amended to:

XXXXXXXXXX.

22. Prior to the commencement of the proposed transactions described herein:

(a) XXXXXXXXXX will resign as member, director and President of CHARITY;

(b) XXXXXXXXXX, the remaining members of CHARITY, will pass a resolution pursuant to By-Law No. 2 of CHARITY admitting XXXXXXXXXX as members of SOCIETY;

(c) XXXXXXXXXX will resign as member and Assistant Secretary of CHARITY; and

(d) XXXXXXXXXX will resign as member and Treasurer of CHARITY.

23. Thereafter, in accordance with By-Law No. 2 of CHARITY, XXXXXXXXXX, being the members of CHARITY, will elect directors of CHARITY at each annual general meeting and will determine the admission of its future members.

24. CHARITY 2 is a not-for-profit corporation governed by the XXXXXXXXXX and is a registered charity. The business number of CHARITY 2 is XXXXXXXXXX. The members of CHARITY 2 are XXXXXXXXXX, XXXXXXXXXX. Its directors are XXXXXXXXXX, XXXXXXXXXX, XXXXXXXXXX, XXXXXXXXXX. XXXXXXXXXX is not related to any of XXXXXXXXXX for the purposes of the Act. As stated in paragraph 9 and 19 above, XXXXXXXXXX is not related to XXXXXXXXXX for the purposes of the Act.

25. The Constitution of CHARITY 2 provides that its purposes are to:

(a) XXXXXXXXXX;

(b) XXXXXXXXXX; and

(c) XXXXXXXXXX .

PROPOSED TRANSACTIONS

26. XXXXXXXXXX will settle the Trust by making a gift of $XXXXXXXXXX to Trustco. The Trust will be established and governed under the laws of XXXXXXXXXX.

27. The sole trustee of the Trust will be a corporation governed by either the XXXXXXXXXX or the Business Corporations Act (XXXXXXXXXX) ("Trustco"). Trustco will be incorporated before the Trust is settled. During XXXXXXXXXX lifetime, XXXXXXXXXX will own XXXXXXXXXX common shares of Trustco, which will represent XXXXXXXXXX % of the issued shares of Trustco.

28. The terms of the Trust will be established pursuant to a trust indenture made between XXXXXXXXXX and Trustco (the "Trust Indenture").

29. XXXXXXXXXX of the Trust Indenture will provide that prior to the "Material Date", meaning the day that is one day after the death of XXXXXXXXXX:

(a) all of the income of the Trust shall be paid to XXXXXXXXXX;

(b) the trustee may, in its absolute discretion, encroach upon the capital of the trust for the benefit of XXXXXXXXXX; and

(c) no person other than XXXXXXXXXX shall receive or otherwise obtain the use of any of the property held pursuant to the Trust or the income derived therefrom.

30. XXXXXXXXXX of the Trust Indenture will provide that there will be an Appointor of the Trust. The original Appointor of the Trust will be XXXXXXXXXX. In the event of any vacancy in the office of the Appointor, the vacancy shall be filled by the personal representatives of XXXXXXXXXX duly appointed to administer XXXXXXXXXX estate or, in the event that XXXXXXXXXX is alive but incompetent, by XXXXXXXXXX attorney, representative or committee duly appointed to administer XXXXXXXXXX financial affairs.

31. The Appointor will have the ability to remove any trustee of the Trust, or add additional or substitute Appointors to the Trust. Decisions of Appointors must be unanimous but if there are more than two Appointors, the Appointors shall make decisions by majority vote.

32. The trustee will have the power to appoint property of the Trust under XXXXXXXXXX of the Trust Indenture, but only subsequent to the Material Date. In order to appoint property of the Trust in this manner, the trustee must exercise the power of appointment prior to the Material Date and during a period in which XXXXXXXXXX is the Appointor of the Trust. Any such appointment shall be exercised by deed signed by the Trustee and delivered by the Appointor in accordance with XXXXXXXXXX of the Trust Indenture. Any such deed may be revocable or irrevocable prior to the Material Date. The power of appointment described herein will in no way result in a person other than XXXXXXXXXX receiving or otherwise obtaining the use of any property of the Trust or the income derived therefrom prior to the Material Date.

33. The Trust Indenture will provide that after the Material Date:

(a) The trustee(s) of the Trust will be required to transfer all of the shares of XCO held by the Trust to a new corporation to be incorporated by the Trust in exchange for shares in the new corporation, with the intention that XCO will be wound-up into the new corporation (XXXXXXXXXX of the Trust Indenture);

(b) if there is more than one trustee, then the majority of the trustees cannot be persons who are each members of either or both of CHARITY and SOCIETY, persons who are related to such members of CHARITY and SOCIETY within the meaning of the Act, or any combination of such persons (XXXXXXXXXX of the Trust Indenture);

(c) if a corporation is a trustee, then the corporation cannot be controlled by persons who are each members of either or both of CHARITY and SOCIETY, persons who are related to such members of CHARITY and SOCIETY within the meaning of the Act or any combination of such persons (XXXXXXXXXX of the Trust Indenture);

(d) if there are more than two trustees, they shall act by majority decision (XXXXXXXXXX of the Trust Indenture);

(e) the trustee may appoint any property of the Trust made pursuant to the exercise of any power of appointment as described in paragraph 32 above (XXXXXXXXXX of the Trust Indenture);

(f) if the Protector of the Trust so directs in the manner described in paragraph 34 below, the trustee shall cause XCO to freeze its interest in any one or more of the Subsidiaries (XXXXXXXXXX of the Trust Indenture);

(g) as soon after the Material Date as the trustee considers practical, the trustee shall allocate the property held pursuant to the Trust that is not subject to the power of appointment described in paragraph 32 above, in such proportions as the trustee shall determine, between the "Charity Portion" and the "Society Portion" (XXXXXXXXXX of the Trust Indenture);

(h) after the Material Date but prior to the "Society Distribution Date", the trustee shall have the power to make a gift of the whole or any part or parts of the Society Portion and the net income derived therefrom as the Trustee, in its absolute discretion, shall determine to either or both SOCIETY and CHARITY, in such proportions as the trustee, in its absolute discretion, shall determine (XXXXXXXXXX of the Trust Indenture);

(i) upon the Society Distribution Date, the Trustee shall pay or transfer the Society Portion then remaining, if any, to one or more registered charities, other than CHARITY or CHARITY 2, as the trustee, in its absolute discretion, shall determine in such proportions as the trustee, in its absolute discretion, shall determine (XXXXXXXXXX of the Trust Indenture);

(j) the "Society Distribution Date" shall be defined in the Trust Indenture as such date as the trustee selects provided that such date must be after the Material Date and prior to the "Final Distribution Date" (XXXXXXXXXX of the Trust Indenture);

(k) the "Final Distribution Date" shall be defined as such date as the trustee selects, provided that such date must be prior to the end of XXXXXXXXXX taxation year of the Trust, determined for the purposes of the Act, following the year in which the Material Date occurs (XXXXXXXXXX of the Trust Indenture);

(l) after the Society Distribution Date, but prior to the Final Distribution Date, the trustee shall have the power to make a gift of the whole or any part or parts of the Charity Portion and the net income derived therefrom as the trustee, in its absolute discretion, shall determine to either or both of the CHARITY OR CHARITY 2, in such proportions as the trustee, in its absolute discretion, shall determine (XXXXXXXXXX of the Trust Indenture); and

(m) on the Final Distribution Date, the Trustee shall pay or transfer to any part of the Charity Portion then remaining, if any, to one or more registered charities, other than CHARITY and CHARITY 2, as the trustee, in its absolute discretion, shall determine in such proportions as the trustee, in its absolute discretion, shall determine (XXXXXXXXXX of the Trust Indenture).

34. The Trust Indenture will provide that there will be a Protector of the Trust. XXXXXXXXXX of the Trust Indenture will provide the Protector of the Trust with the power to direct the trustee of the Trust to reorganize the share capital of any corporation or corporations owned or controlled directly or indirectly by XCO in such manner as the Protector directs, provided that such directions are delivered to the trustee within one year after the Material Date. Such a direction may include, without limitation, a direction to cause XCO to freeze the value of its interest in any such corporation directly or indirectly controlled by XCO, including the Subsidiaries, or a direction to permit any other trusts, persons or individuals that the Protector identifies to subscribe for or otherwise acquire shares in any such corporation. The Protector has no other power or authority to dictate to the trustee the manner in which the share capital of XCO or any other property of the Trust is to be administered, distributed or otherwise dealt with by the trustee.

35. XXXXXXXXXX of the Trust Indenture will provide that XXXXXXXXXX will be the initial Protector of the Trust and will have the authority to appoint any person or trust as a replacement Protector, but it is not presently contemplated that XXXXXXXXXX will appoint a replacement Protector.

36. By amendment to the Articles of Incorporation of XCO, the share capital of XCO will be altered to create an unlimited number of New XCO Common Shares, New XCO Preferred Shares and Class J Preference Shares.

37. Pursuant to an agreement between XXXXXXXXXX and XCO (the "First Agreement"), XXXXXXXXXX will exchange XXXXXXXXXX Common shares, Class B Preference Shares and Class C Preference Shares of XCO (the "Exchanged Shares") for XXXXXXXXXX New XCO Preferred Shares and XXXXXXXXXX New XCO Common Shares.

38. The First Agreement will provide that the amount to be added to the stated capital account of XCO maintained in respect of the XXXXXXXXXX New XCO Preferred Shares issued to XXXXXXXXXX shall be the lesser of $XXXXXXXXXX or the aggregate paid-up capital of the Exchanged Shares, determined as of the time the exchange.

39. The First Agreement will provide that the amount to be added to the stated capital account of XCO maintained in respect of the XXXXXXXXXX New XCO Common Shares issued to XXXXXXXXXX on the exchange shall be the greater of $XXXXXXXXXX and the amount that is equal to the aggregate paid-up capital of the Exchanged Shares, determined as of the time immediately before the time of the exchange, less $XXXXXXXXXX.

40. XXXXXXXXXX and XCO will jointly file an election pursuant to subsection 85(1) of the Act, within the time limits prescribed by subsection 85(6) and, assuming that the adjusted cost base of each Exchanged Share is not less than its fair market value at the time of the exchange, will elect an aggregate amount that is equal to the aggregate adjusted cost base of the Exchanged Shares at the time of the exchange for the purposes of such election (the "Agreed Amount").

41. XXXXXXXXXX will transfer the XXXXXXXXXX New XCO Common Shares that XXXXXXXXXX receives pursuant to the First Agreement to the Trust. XXXXXXXXXX will transfer the XXXXXXXXXX New XCO Preferred Shares to a trust that does not deal at arm's length with XXXXXXXXXX for the purposes of the Act.

42. Upon the death of XXXXXXXXXX, the XXXXXXXXXX common shares of Trustco will be transmitted to the executors of XXXXXXXXXX 's will.

43. In accordance with the terms of the Trust Indenture, Newco will be incorporated under the CBCA after the death of XXXXXXXXXX. The authorized share capital of Newco will consist of an unlimited number of voting Class A Common shares ("Newco Common Shares") and an unlimited number of Class B Preference shares ("Newco Preferred Shares"). The Newco Preferred Shares will be redeemable and retractable at a redemption price equal to the fair market value of the consideration for which such shares were issued, have voting rights equivalent to those attached to the Newco Common Shares, have a non-cumulative dividend entitlement and a preferential entitlement to share in the remaining property and assets of Newco on its dissolution, liquidation, winding-up or distribution of capital.

44. Upon incorporation of Newco, the Trust will be issued one Newco Common Share.

45. After the death of XXXXXXXXXX, the Trust and Newco, in accordance with the terms of the Trust Indenture, will enter into an agreement ("the "Second Agreement") pursuant to which the Trust will transfer its XXXXXXXXXX New XCO Common Shares to Newco in consideration for the issuance by Newco of XXXXXXXXXX Newco Common Shares (the "Second Exchange"). The Second Agreement will provide that the aggregate amount of $XXXXXXXXXX will be added to the stated capital account maintained in respect of the Newco Common Shares and no additional amount will be added to any other stated capital or contributed surplus account of Newco as a consequence of the issuance of the XXXXXXXXXX Newco Common Shares to the Trust.

46. The Trust and Newco will file a joint election pursuant to subsection 85(1) of the Act in respect of the disposition by the Trust of the XXXXXXXXXX New XCO Common Shares under Second Exchange, within the time limits prescribed by subsection 85(6). The Trust and Newco will elect an aggregate amount that is equal to the fair market value of the XXXXXXXXXX New XCO Common Shares at the time of the Second Exchange for the purposes of such election.

47. After the death of XXXXXXXXXX, but prior to the winding-up of XCO described in paragraph 49 below, the XXXXXXXXXX New XCO Preferred Shares issued to XXXXXXXXXX pursuant to the First Agreement will be redeemed by XCO for cash proceeds of $XXXXXXXXXX.

48. After the death of XXXXXXXXXX, but prior to the winding-up of XCO described in paragraph 49 below, XCO will redeem the XXXXXXXXXX and the XXXXXXXXXX held by GCO for cash proceeds in an amount equal to their fair market value.

49. After the Second Exchange has been completed, XCO will be wound-up and the Subsidiary Shares will be distributed by XCO to Newco. Pursuant to paragraph 88(1)(d) of the Act, Newco will designate, in its return of income under Part I of the Act for the taxation year in which XCO is wound-up, amounts to be added to the cost of the Subsidiary Shares in accordance with paragraph 88(1)(c), which in the aggregate will not exceed the amount by which the adjusted cost base of New XCO Common Shares held by the Trust immediately prior to the winding-up exceeds the amounts determined in respect of XCO pursuant to subparagraphs 88(1)(d)(i) and 88(1)(d)(i.1), and in no case will an amount designated in respect of a Subsidiary Share exceed the amount by which the fair market value of the particular Subsidiary Share exceeded its adjusted cost base to XCO at the time immediately after the death of XXXXXXXXXX.

50. In accordance with the terms of the Trust Indenture, as described in paragraph 33 above, Trustco, in its capacity as trustee of the Trust, will, after the Material Date, allocate the property held pursuant to the Trust between the Charity Portion and the Society Portion in such proportions as Trustco shall determine. It is intended that the trustee will allocate sufficient property to the Charity Portion such that the subsequent gift of the Charity Portion to CHARITY will give rise to a deduction from the taxes otherwise payable by the Trust pursuant to Part I sufficient to offset all taxes otherwise owing by the Trust. Consequently, it is expected that XXXXXXXXXX% of the Newco Common Shares will be allocated to the Charity Portion and XXXXXXXXXX% of the Newco Common Shares will be allocated to the Society Portion, but under no circumstances will 50% or less of the Newco Common Shares be allocated to the Charity Portion. The $XXXXXXXXXX cash amount gifted by XXXXXXXXXX to settle the Trust will be allocated to the Charity Portion.

51. After the winding-up of XCO is completed, Newco and the Trust will enter into an agreement (the "Third Agreement") pursuant to which the Trust will exchange XXXXXXXXXX Newco Common Shares (the "Subject Shares") for XXXXXXXXXX Newco Preferred Shares (the "New Shares") and cash of $XXXXXXXXXX (the "Third Exchange"). The Trust will retain 1 Newco Common Share as part of the Charity Portion. The majority of the Newco Preferred Shares received by the Trust on the Third Exchange will be allocated to the Charity Portion.

52. The Third Agreement will provide that the Directors of Newco shall determine that the amount to be added to the stated capital account of Newco maintained in respect of the Newco Preferred Shares as a consequence of the issuance of the New Shares to the Trust shall be equal to the fair market value of the Subject Shares, determined as of the time of the issuance of the New Shares, less $XXXXXXXXXX.

53. In accordance with the terms of the Trust Indenture, as described in paragraph 33 above, upon the Society Distribution Date, the Trust will gift all of the property allocated to the Society Portion, which will consist exclusively of Newco Preferred Shares, to SOCIETY.

54. After the Society Distribution Date, but prior to the Final Distribution Date and in the same taxation year as the taxation year in which transaction contemplated in the Third Agreement occurs, the Trust will make a gift to CHARITY of the one Newco Common Share, the remaining Newco Preferred Shares and any other property allocated to the Charity Portion (the "Gift"). The Gift will be subject to a direction that the gifted property, and property substituted therefor, must be retained by CHARITY for not less than XXXXXXXXXX years.

55. As a consequence of the Gift, there will be no property held in the Trust that will be available for distribution on the Final Distribution Date.

ADDITIONAL INFORMATION

56. Throughout the period commencing at the time the Trust is created as described in paragraphs 26 to 35 above and ending on the death of XXXXXXXXXX, CHARITY and SOCIETY will each deal at arm's length with XXXXXXXXXX.

57. XXXXXXXXXX will not serve again as a member, director or officer of CHARITY or SOCIETY and will not serve on any committee or on the Advisory Council of either CHARITY or SOCIETY in the event such council or committees are formed. XXXXXXXXXX will not attend any meetings of the members or directors of either CHARITY or SOCIETY, nor will XXXXXXXXXX receive notice of such meetings. XXXXXXXXXX will ensure that during XXXXXXXXXX lifetime, that XXXXXXXXXX and the corporations directly and indirectly controlled by XXXXXXXXXX do not engage in any financial transactions with CHARITY or SOCIETY, with the exception of any gifts that XXXXXXXXXX or a corporation directly or indirectly controlled by XXXXXXXXXX, may make to CHARITY or SOCIETY.

58. The books and records of CHARITY and SOCIETY will not be maintained or stored within any premises under the control of XXXXXXXXXX , XCO or any person related to XXXXXXXXXX or XCO. The head office and official addresses of CHARITY and SOCIETY will not be located at any premises or location under the control of XXXXXXXXXX, XCO or any person related to XXXXXXXXXX or XCO.

59. XXXXXXXXXX will not communicate information regarding the proposed transactions described herein or provide knowledge thereof to any members, directors and officers of CHARITY or SOCIETY (with the exception of XXXXXXXXXX), nor will XXXXXXXXXX cause or permit such information or knowledge to be disclosed to or imparted on the members, directors and officers of CHARITY or SOCIETY (with the exception of XXXXXXXXXX).

60. Throughout the period commencing at the time the Trust is created as described in paragraphs 26 to 35 above, CHARITY and SOCIETY will each deal at arm's length with the Trust at all times up to and including the moment of the death of XXXXXXXXXX if the Act were read without reference to paragraph 251(1)(b).

61. The only property that CHARITY 2 will acquire from the Trust, SOCIETY and CHARITY as part of the series of transactions that includes the winding-up of XCO will be property described in subparagraph 88(1)(c.3)(iii).

62. Immediately before the winding-up of XCO described in paragraph 49 above, the adjusted cost base of the New XCO Common Shares held by Newco will not be less than (i) the paid-up capital of such shares and (ii) the aggregate of the cost amount to XCO of properties owned by it immediately before the winding-up of XCO and the amount of money of XCO on hand at that time.

63. No election will be made pursuant to subsection 83(2) of the Act with respect to the dividend that Newco is deemed to have paid to the Trust as a consequence of the sale of the Subject Shares contemplated under the Third Agreement, nor will the Trust designate any portion of a taxable dividend received on the Subject Shares as permitted under subsections 104(19) and (20).

64. The Subsidiary Shares will be capital property at all times.

65. Upon receiving the Gift of the Newco Common Share and Newco Preferred Shares, as described in paragraph 54 above, CHARITY will acquire control of Newco. In addition, the fair market value of the Newco Preferred Shares so acquired by CHARITY will be greater than 50% of all of the issued and outstanding shares of Newco at the time the Newco Preferred Shares are acquired by CHARITY.

66. No election will be made by the Trust pursuant to subparagraph 104(4)(a)(ii.1).

PURPOSE OF THE PROPOSED TRANSACTIONS

The purpose of the proposed transactions is to structure the estate plan of XXXXXXXXXX in an efficient manner such that CHARITY and SOCIETY will receive XXXXXXXXXX's XXXXXXXXXX after XXXXXXXXXX's death. XXXXXXXXXX. Consequently, it is preferable to transfer XXXXXXXXXX's interest in XCO to the Trust in the manner described above.

The members of CHARITY and SOCIETY will be comprised of two different groups of XXXXXXXXXX. It is intended that CHARITY and SOCIETY will act as checks and balances against each other, XXXXXXXXXX at the time of XXXXXXXXXX's death. In addition, the inclusion of SOCIETY in the ownership structure will, in the short term, XXXXXXXXXX by ensuring that the disbursement quota rules applicable to registered foundations do not place an onerous annual liquidity requirement XXXXXXXXXX.

The purpose of the transfer of Newco Preferred Shares to CHARITY by way of gift is to allow the Trust to claim a charitable donation tax credit to reduce any tax liability payable by the Trust. It is intended that the trustee of the Trust will allocate sufficient property to the Charity Portion, such that the subsequent gift of the Charity Portion will result in a charitable tax credit sufficient to offset all taxes owing by the Trust. Based upon present tax rates, the allocation will result in approximately XXXXXXXXXX% of the Newco Common Shares being allocated to the Charity Portion and the other XXXXXXXXXX% to the Society Portion. The purpose of the Third Exchange, which results in the disposition of Newco Common Shares for Newco Preferred Shares and cash under the Third Agreement, is to allow the Trust to make a gift to CHARITY that gives rise to a charitable donation tax credit that can fully offset the Trust's tax liability, as would be the case had the shares of XCO formed part of XXXXXXXXXX's estate.

RULINGS GIVEN

Provided that the above statements constitute a complete and accurate disclosure of all the relevant facts, purposes of the proposed transactions and the proposed transactions, we rule as follows:

A. Provided that XXXXXXXXXX and XCO jointly file an election pursuant to subsection 85(1) in the prescribed form and manner and within the time specified in subsection 85(6), the provisions of subsection 85(1), other than paragraph 85(1)(e.2), will apply to the exchange of shares made pursuant to the First Agreement such that (i) XXXXXXXXXX will be deemed to have disposed of the Exchanged Shares pursuant to the exchange for aggregate proceeds of disposition equal to the Agreed Amount; (ii) the cost of the New XCO Preferred Shares issued to XXXXXXXXXX on the exchange will, pursuant to paragraph 85(1)(f) of the Act, be equal to the lesser of the Agreed Amount and the fair market value of the New XCO Preferred Shares immediately after the exchange; and (iii) the cost of the New XCO Common Shares issued to XXXXXXXXXX on the exchange will, pursuant to paragraph 85(1)(g) of the Act, be equal to the amount, if any, by which the Agreed Amount exceeds the fair market value of the New XCO Preferred Shares immediately after the exchange.

B. The amount added to the stated capital account maintained in respect of the New XCO Preferred Shares as a consequence of the exchange contemplated in the First Agreement described in paragraph 37 above will be included in the calculation of the paid-up capital of the New XCO Preferred Shares.

C. Subsection 73(1) will apply to the transfer of the XXXXXXXXXX New XCO Common Shares from XXXXXXXXXX to the Trust such that XXXXXXXXXX will be deemed to have disposed of the XXXXXXXXXX New XCO Common Shares for proceeds equal to their adjusted cost base, determined as of the time immediately before the transfer.

D. For the purposes of the provisions of the Act enumerated in subsection 256(7), the transfer of the New XCO Common Shares by XXXXXXXXXX to the Trust will not result in an acquisition of control of XCO.

E. For the purposes of the provisions of the Act enumerated in subsection 256(7), the transmission of the shares of Trustco from XXXXXXXXXX to the executors of XXXXXXXXXX estate upon the death of XXXXXXXXXX will not, in and of itself, result in an acquisition of control of Trustco and will not, in and of itself, result in an acquisition of control of XCO.

F. Provided that the Trust and Newco jointly file an election pursuant to subsection 85(1) in the prescribed form and manner and within the time specified in subsection 85(6), the provisions of subsection 85(1), other than paragraph 85(1)(e.2), will apply to the exchange of shares made pursuant to the Second Agreement such that the cost of the XXXXXXXXXX Newco Common Shares acquired by the Trust, determined immediately after the Second Exchange, will be equal to the total of the fair market value of the XXXXXXXXXX New XCO Common Shares, determined as of the time of the transaction contemplated in the Second Agreement.

G. Paragraphs 88(1)(a) and 88(1)(b) will apply to the winding-up of XCO such that (i) XCO will be deemed to have disposed of the Subsidiary Shares for proceeds equal to their adjusted cost base immediately before the winding-up and (ii) Newco will be deemed to have disposed of the XXXXXXXXXX New XCO Common Shares for proceeds equal to their adjusted cost base.

H. Pursuant to paragraphs 88(1)(c) and 88(1)(d), the cost to Newco of each Subsidiary Share that becomes property of Newco on the winding-up of XCO described in paragraph 49 above will be deemed to be the amount deemed by paragraph 88(1)(a) to be the proceeds of disposition of the Subsidiary Share to XCO, plus, subject to the provisions of subparagraphs 88(1)(d)(ii) and (iii), and provided that no property acquired by Newco on the winding-up of XCO, or "any property acquired by any person in substitution therefor" (within the meaning of the phrase for the purposes of clause 88(1)(c)(vi)(B)) ("XCO Distributed or Substituted Property") is acquired by any person described in any of subclauses 88(1)(c)(vi)(B)(I), (II) or (III) (on the assumption that the "subsidiary" referred to in those subclauses is XCO and the "parent" is Newco) (an "XCO Person") as part of the series of the transactions or events that includes the proposed transactions described herein, such portion of the amount, if any, by which:

(i) the aggregate of the adjusted cost base to Newco of each New XCO Common Share immediately before the winding-up
exceeds
(ii) the aggregate of the amounts determined under subparagraphs 88(1)(d)(i) and (i.1),

as is designated by Newco under paragraph 88(1)(d) in respect of the Subsidiary Share in its return of income under Part I of the Act for the taxation year in which the winding-up of XCO occurred, in accordance with paragraph 49 above.

I. Provided that at all times from the time of the creation of the Trust until the time that is immediately after the death of XXXXXXXXXX (i) XXXXXXXXXX deals at arm's length with each of CHARITY and SOCIETY, (ii) CHARITY, CHARITY 2 and SOCIETY deal at arm's length with each other, and (iii) the fair market value of the interest of SOCIETY in the Trust is not greater than 50% of the fair market value of all interests in the Trust, none of the transactions described herein will, in and of themselves, result in XCO Distributed or Substituted Property being acquired by an XCO Person.

J. Pursuant to subsection 84(3) of the Act, the Trust will be deemed to have received a dividend from Newco as a consequence of the sale of the Subject Shares pursuant to the Third Agreement in an amount equal to the amount by which the aggregate of the amount added to the paid-up capital of the New Shares and $XXXXXXXXXX exceeds the paid-up capital of the Subject Shares.

K. At the time of the issuance of the New Shares pursuant to the Third Agreement, the paid-up capital of the New Shares will be equal to the fair market value of the Subject Shares, determined as of the time of the sale, less $XXXXXXXXXX.

L. The amount of the dividend that the Trust is deemed to receive on the Third Exchange will not be included in computing the proceeds of disposition realized by the Trust on the disposition of the Subject Shares to Newco.

M. Subject to subsection 40(3.6), the Trust will realize a capital loss on the disposition of Subject Shares on the Third Exchange equal to the amount by which the total of the adjusted cost base of the Subject Shares and the amount of any costs incurred by the Trust for the purpose of disposing of the Subject Shares to Newco exceeds the paid-up capital of the Subject Shares at the time of the disposition.

N. Pursuant to paragraphs 40(3.6)(a) and (b) and paragraph 53(1)(f.2), the capital loss from the disposition of the Subject Shares on the Third Exchange will be deemed to be nil, and, in computing the adjusted cost base of each Newco Preferred Share and the Newco Common Share held by the Trust immediately after the Third Exchange, there shall be added the proportion of the amount of the capital loss of the Trust on the disposition of Subject Shares on the Third Exchange, determined without reference to subsection 40(3.6), that

(i) the fair market value, determined immediately after the Third Exchange, of the particular Newco Preferred Share or Newco Common Share, as the case may be,
is of

(ii) the fair market value, determined immediately after the Third Exchange, of all of the Newco Preferred Shares and the Newco Common Share owned by the Trust.

O. Provided that (i) the Third Exchange occurs more than 30 days before the time at which the Trust disposes of the Newco Preferred Shares to SOCIETY as described in paragraph 53 above and (ii) SOCIETY owns the Newco Preferred Shares acquired from the Trust throughout the 30-day period commencing at the time immediately after the Trust disposes of such Newco Preferred Shares to SOCIETY, the Trust will realize a capital loss on the disposition of Newco Preferred Shares equal to the amount, if any, by which the total of the adjusted cost base of the Newco Preferred Shares so disposed of and any costs incurred by the Trust for the purpose of disposing of such Newco Preferred Shares exceeds the fair market value of the Newco Preferred Shares, determined at the time of the disposition.

P. Provided that CHARITY owns the Newco Preferred Shares and the Newco Common Share acquired from the Trust throughout the 30-day period commencing at the time immediately after the Trust disposes of the Newco Preferred Shares and the Newco Common Share to CHARITY, the Trust will realize a capital loss on the disposition of Newco Preferred Shares and the Newco Common Share equal to the amount, if any, by which the total of the adjusted cost base of the Newco Preferred Shares and the Newco Common Share so disposed of and any costs incurred by the Trust for the purpose of disposing of the Newco Preferred Shares and the Newco Common Share exceeds the fair market value of the Newco Preferred Shares and the Newco Common Share, determined at the time of the disposition.

Q. Provided that CHARITY is a "qualified donee" as defined in subsection 149.1(1) at the time of the Gift, the Trust may include in its "total charitable gifts", as defined in subsection 118.1(1), for the taxation year that includes that time an amount equal to the fair market value of the Newco Preferred Shares and the Newco Common Share at that time.

R. Paragraph 251(1)(a) and paragraph 251(1)(b) will not apply to deem the Trust and Newco to not deal with each other at arm's length immediately after the time of the Gift.

S. Subsection 245(2) will not be applied to the Proposed Transactions, in and by themselves, to redetermine the tax consequences confirmed in the rulings given.

These rulings are given subject to the limitations and qualifications set forth in Information Circular 70-6R5 issued on May 17, 2002, and are binding on the Canada Revenue Agency provided that the proposed transactions are completed before XXXXXXXXXX and the undertakings described in paragraph 2 of the COMMENTS below are fulfilled.

The above rulings are based on the Act in its present form and do not take into account any proposed amendments to the Act, which if enacted, could have an effect on the rulings provided herein.

OPINION

Provided that (i) before the end of the third taxation year of the Trust following the taxation year of the Trust in which the death of XXXXXXXXXX occurs, the Trust distributes all of its remaining property and ceases to exist and (ii) section 54 of the Notice of Ways and Means Motion to implement certain provisions of the budget tabled in Parliament on March 23, 2004 that was tabled in Parliament by the Minister of Finance on December 6, 2004 is enacted in substantially the same form, it is our opinion that any capital losses that, but for the application of subsection 40(3.4), would have been realized by the Trust on the disposition of the Newco Preferred Shares described in paragraph 53 above, will be capital losses of the Trust at a time that is no later than the end of the third taxation year of the Trust immediately following the taxation year of the Trust in which the death of XXXXXXXXXX occurs.

COMMENTS

1. Nothing in this ruling should be construed as implying that the Canada Revenue Agency has agreed to or reviewed:

(a) the determination of the adjusted cost base, paid-up capital or fair market value of any property referred to herein;

(b) whether CHARITY or CHARITY 2 is currently a charitable organization, qualified donee or private foundation or will have such status at any particular time;

(c) whether any of the parties to the transactions described herein deal at arm's length, except as expressly stated in Ruling R; or

(d) any tax consequences relating to the facts and proposed transactions described herein other than those described in the rulings given above, including the application of subsection 55(2) to the transaction described in paragraph 48 above.

2. Although the Trust Indenture provides that all of the property of the Trust must be distributed prior to the end of the third taxation year of the Trust immediately following the death of XXXXXXXXXX, it is anticipated that the Third Exchange will be implemented and the Gift will be made in the same taxation year of the Trust in which the death of XXXXXXXXXX occurs (the "Terminal Year"), in which case the amount of any capital losses realized by the Trust will be available to offset the capital gains that will be realized by the Trust in the Terminal Year in respect of the disposition of New XCO Common Shares pursuant to subsection 104(4). However, if XXXXXXXXXX dies late in the year, there may not be sufficient time to carry out the Third Exchange and to make the Gift in the Terminal Year. Such transactions would occur in the taxation year of the Trust following the Terminal Year. Under such circumstances, it is anticipated that the gains realized by the Trust in respect of the disposition of New XCO Common Shares pursuant to subsection 104(4) will give rise to a substantial amount of tax that will become payable by the Trust 90 days after the end of the Terminal Year. It is anticipated that the amount of such gains will be offset in full by deducting the net capital losses of the Trust for the taxation year of the Trust immediately following the Terminal Year. Nonetheless, for some period of time, taxes will be owing by the Trust under such circumstances and interest will accrue and become owing by the Trust in respect of such taxes.

In the event that the Third Exchange and the Gift do not occur in the Terminal Year, a number of undertakings have been proposed by the Taxpayers, which must be fulfilled in order for the rulings contained herein to be binding on the Canada Revenue Agency. In the event that any of the undertakings set out below are not honoured, the above rulings are void and will not be binding on the Canada Revenue Agency. The undertakings are as follows:

(a) the return of income for the Terminal Year will be filed within 90 days from the end of the Terminal Year;

(b) a written acknowledgment of the taxes payable by the Trust for the Terminal Year will be submitted in conjunction with the filing of the return of income for the Terminal Year, which will also indicate that such liability will be reduced upon deducting the Trust's net capital losses that will arise in a subsequent taxation year of the Trust;

(c) the Trust will, if required by the Canada Revenue Agency, provide security to defer collection of the taxes payable by the Trust for the Terminal Year, which may entail providing a letter of credit, a pledge of corporate shares or a cash payment to the Canada Revenue Agency;

(d) arrangements will be made with the Canada Revenue Agency for the payment of any interest that may accrue on the amount of any taxes payable by the Trust for the Terminal Year;

(e) an objection to the assessment of income of the Trust for the Terminal Year will not be made solely for the purpose of prohibiting the Minister from carrying out any act of collecting the taxes payable by the Trust for the Terminal Year, including the actions described in paragraphs (a) to (g) of subsection 225.1(1);

(f) the trustee(s) of the Trust will take all reasonable steps to ensure that the Third Exchange and the Gift will occur prior to the end of the taxation year of the Trust immediately following the Terminal Year and that the return of income for such taxation year will be filed and the request to deduct the net capital losses of the Trust for such taxation year in the Terminal Year will be made prior to the end of such taxation year;

(g) in the event that the Third Exchange and the Gift do not occur prior to the end of the taxation year of the Trust immediately following the Terminal Year, the trustee(s) of the Trust will take all reasonable steps to ensure that the such transactions and related tax filings occur forthwith; and

(h) the trustee(s) or other legal representatives of the Trust will make an application for a certificate pursuant to subsection 159(2) prior to distributing the property of the Trust to Charity and Society as contemplated in the Proposed Transactions.

Yours truly,

for Division Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Planning Branch

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