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 the deferred share unit plan satisfies the conditions in paragraph 6801(d)?
2. Whether the issuance of treasury shares in satisfaction of the DSU's results in the application of section 7?
Position:
1. Yes.
2. Yes.
Reasons:
Previous positions.
XXXXXXXXXX 2004-007204
XXXXXXXXXX, 2004
Dear XXXXXXXXXX:
Re: Advance Income Tax Ruling Request
XXXXXXXXXX
This is reply to your letters of XXXXXXXXXX wherein you requested an advance income tax ruling on behalf of the above taxpayer.
We understand that, to the best of your knowledge and that of the taxpayer, none of the issues involved in the ruling request is:
(i) in an earlier return of the taxpayer or a related person,
(ii) being considered by a tax services office or taxation centre in connection with a previously filed tax return of the taxpayer or a related person,
(iii) under objection by the taxpayer or a related person,
(iv) before the courts, or if a judgment has been issued, the time limit for appeal to a higher court has expired, and
(v) the subject of a ruling previously issued to the taxpayer or a related person by this Directorate.
Unless otherwise stated, all references to a statute are to the Income Tax Act (Canada), R.S.C. 1985, c.1 (5th Supp.), as amended to the date of this letter (the "Act"), and all terms and conditions used herein that are defined in the Act have the meaning given in such definition unless otherwise indicated.
Our understanding of the facts, proposed transactions and the purpose of the proposed transactions is as follows:
Definitions and Abbreviations
"Account" means an account maintained for each Participant on the books of the Company which will be credited with Deferred Share Units and Dividend Equivalents, in accordance with the terms of the Plan.
"Affiliate" means any related or associated corporation, or any corporation that is a member of a group of corporations that do not deal at arm's length, notwithstanding that they may not be related or associated for the purposes of the Act. For purposes of this definition, the terms "related", "associated" and "arm's length" have the meanings ascribed to such terms pursuant to subsections 251(2), 256(1) and 251(1) respectively.
"Applicable Withholding Taxes" means any and all taxes and other source deductions or other amounts which the Company is required by law to withhold from any amounts paid or credited under the Plan.
"Award Date" means each date on which DSUs are credited to a Participant's Account, which shall be, unless otherwise determined by the Board, the last business day of each Quarter of each Year.
"Beneficiary" means an individual who, on the date of a Participant's death, is the person who has been designated in accordance with the Plan and the laws applying to the Plan to receive the value of the Deferred Share Units standing to the credit of the Participant on the date of death, or where no such individual has been validly designated by the Participant, or where the individual does not survive the Participant, the Participant's legal representative.
"Board" means those individuals who serve from time to time on the Board of Directors of the Company.
"Broker" means a broker, independent from the Company, who has been designated by the Company as the broker that will purchase XXXXXXXXXX Voting Shares in accordance with the Plan and who is a member of the Exchange.
"XXXXXXXXXX Voting Shares" means a XXXXXXXXXX Voting Share of the Company, without nominal or par value, which is listed on the Exchange.
"Committee" means the Human Resources and Corporate Governance Committee of the Board, or such other persons or other committee of the Board, as may be designated by the Board.
"Company" means XXXXXXXXXX.
"CRA" means the Canada Revenue Agency.
"Deferred Share Unit" or "DSU" means a unit credited by the Company to a Participant's Account by way of a bookkeeping entry in the books of the Company and administered pursuant to the terms of the Plan, the value of which, on a particular date, shall be equal to the Fair Market Value at that date.
"Dividend Equivalent" means a bookkeeping entry equivalent in value to a dividend paid on a XXXXXXXXXX Voting Share, credited to a Participant's Account in accordance with 8(h) below .
"Effective Date" means, with respect to the Plan, the date that an advance income tax ruling is received from the CRA advising that the Plan is a "prescribed plan or arrangement" in accordance with paragraph 6801(d) of the Regulations.
"Election Notice" means an annual written notice to the Corporate Secretary of the Company, in a prescribed form, by an Eligible Director, of the Eligible Director's wish to receive a percentage of his Quarterly Remuneration in the form of DSUs.
"Eligible Director" means each member of the Board who, at the relevant time, is not otherwise an employee, for the purpose of the Act, of the Company, and such member shall continue to be an Eligible Director for so long as such member continues to be a member of the Board and is not otherwise an employee, for the purpose of the Act, of the Company. However, the Board, in its sole discretion, may determine from time to time that a member of the Board who is otherwise an employee, for the purpose of the Act, of the Company shall be an Eligible Director or that a member of the Board, who would otherwise be an Eligible Director, shall not be an Eligible Director.
"Exchange" means the XXXXXXXXXX Stock Exchange or, in the event that the XXXXXXXXXX Voting Shares are listed on any other stock exchange in Canada or the United States and not on the XXXXXXXXXX Stock Exchange, the foregoing references to the XXXXXXXXXX Stock Exchange shall be deemed to be references to such other stock exchange, or, in the event that the XXXXXXXXXX Voting Shares are listed on more than one stock exchange in Canada or the United States and not on the XXXXXXXXXX Stock Exchange, to such one as shall be designated by the Board.
"Fair Market Value" means, for a particular date, the closing price of the XXXXXXXXXX Voting Shares traded on the Exchange, averaged over the five (5) consecutive trading days immediately preceding that particular date.
"Participant" means an Eligible Director who executes an Election Notice and participates in the Plan.
"Plan" means the XXXXXXXXXX.
"Quarter" means a fiscal quarter of the Company, which, until changed by the Company, shall be the three month period ending March 31, June 30, September 30 or December 30 in any Year.
"Quarterly Remuneration" means the annual retainer, paid on a quarterly basis, by the Company to an Eligible Director in a fiscal year for service on the Board (together with fees for attending meetings of the Board or Board committees), but excludes reimbursable out-of-pocket expenses.
"Redemption Date" with respect to a Participant who had a Termination Date, means the day specified by the Participant as the day on which DSUs credited to a Participant's Account may be redeemed.
"Redemption Notice" means a written notice to the Corporate Secretary of the Company, in a prescribed form, by the Participant of his wish to redeem the DSUs credited to his Account.
"Regulations" means the Income Tax Regulations.
"Termination Date" in respect of a Participant means the date on which both of the following conditions are met: (1) the Participant has ceased to be employed by the Company or an Affiliate for any reason whatsoever; and (2) the Participant is not a member of the Board.
"Year" means a fiscal year commencing on XXXXXXXXXX and ending on XXXXXXXXXX.
Facts
1. The Company was incorporated under the laws of XXXXXXXXXX and its head office is located in XXXXXXXXXX. The Company is a taxable Canadian corporation and a public corporation. The expressions "taxable Canadian corporation" and "public corporation" have the meanings assigned by subsection 89(1).
2. The Company is located at XXXXXXXXXX. It is serviced by the XXXXXXXXXX Tax Services Office and files its income tax returns at the XXXXXXXXXX Tax Centre.
3. The Company's primary business is that of XXXXXXXXXX.
4. The Company's XXXXXXXXXX Voting Shares are listed and traded on the XXXXXXXXXX Stock Exchange and the XXXXXXXXXX Exchange.
5. The Company currently pays members of its Board an annual retainer, paid on a quarterly basis, for service on the Board. The Company also pays members fees for attending meetings of the Board or Board committees and reimburses its members for their out-of-pocket expenses.
Proposed Transactions
6. The Company will establish the Plan for the benefit of resident and non-resident directors of the Company. The establishment of the Plan is subject to the receipt of an advance income tax ruling confirming that the Plan meets the requirements of paragraph 6801(d) of the Regulations.
7. The Company will not contribute any amounts to a third party or otherwise set aside any amounts to fund the benefits that will be provided under the Plan.
8. The relevant terms of the Plan are as follows:
(a) The Plan will be administered by the Board or, if determined by the Board, by the Committee. The Board may have full power and authority, subject to the express provisions of the Plan, to construe and interpret the Plan. The Board's decisions, determinations and interpretations will be final, binding and conclusive on all Participants, and all other persons having an interest in the Plan.
(b) As of the Effective Date, each Eligible Director may elect, on an annual basis, to be paid a percentage of up to 100% of his Quarterly Remuneration, in the form of DSUs, with the balance, if any, to be paid in cash. Each election shall be evidenced by a written notice executed by the Eligible Director to the Corporate Secretary of the Company.
(c) For the first Year of the Plan, as of the Effective Date, Eligible Directors who wish to be Participants must file their Election Notices with the Corporate Secretary of the Company as soon as possible and no later than (30) thirty days after the Effective Date. In the case of new Eligible Director who wishes to be a Participant, the Election Notice must be filed with the Corporate Secretary of the Company as soon as possible and no later than (30) thirty days after the Eligible Director's appointment to the Board. The election shall be effective on the first day of the Quarter following the date of the Company's receipt of the Election Notice until the final day of that Year
(d) For any subsequent Year, Eligible Directors who wish to be Participants must file their Election Notices with the Corporate Secretary of the Company by the end of the Year preceding the Year to which such election shall apply. In the case of a new Eligible Director who wishes to be a Participant, the Election Notice must be filed with the Corporate Secretary of the Company as soon as possible and no later than (30) thirty days after the Eligible Director's appointment to the Board. The election shall be effective on the first day of the Quarter following the date of the Company's receipt of the Election Notice until the last day of that Year.
(e) If an Eligible Director does not deliver an Election Notice to the Corporate Secretary of the Company pursuant to (b) above, such Eligible Director will not be a Participant and will receive his Quarterly Remuneration in cash. Once an election becomes effective, no modifications to the Election Notice shall be permitted.
(f) The number of DSUs, or fractions thereof, that a Participant is entitled to receive in any Quarter is equal to the number that results by dividing (a) the portion of the Participant's Quarterly Remuneration payable at the end of the Quarter, that the Participant has elected to receive in DSUs by (b) the Fair Market Value of a XXXXXXXXXX Voting Share on the Award Date. DSUs will be credited to a Participant's Account on the last business day of the applicable Quarter. The portion of a Participant's Quarterly Remuneration payable in cash in respect of a Quarter, if any, shall be paid on the last business day of the applicable Quarter.
(g) Dividend Equivalents, in respect of DSUs, will be credited to a Participant's Account on the same day as dividends paid on XXXXXXXXXX Voting Shares as if the Participant was a shareholder of record of XXXXXXXXXX Voting Shares on the record date. No Dividend Equivalents will be credited to a Participant's Account after the Termination Date.
(h) Dividend Equivalents will be credited to a Participant's Account as additional DSUs, or fractions thereof, with the number of additional DSUs equal to the number that results by dividing (a) the actual amount of dividends that would have been paid if the Participant was a shareholder of record of the number of XXXXXXXXXX Voting Shares equal in number to the number of DSUs in the Participant's Account under the Plan on the record date by (b) the Fair Market Value of a XXXXXXXXXX Voting Share on the date on which the dividends on XXXXXXXXXX Voting Shares are payable.
(i) A Redemption Notice executed by a Participant, may be filed with the Corporate Secretary of the Company immediately after the Participant's Termination Date and not later than XXXXXXXXXX days before the end of the calendar year commencing immediately after the Participant's Termination Date, specifying the Participant's Redemption Date. A Redemption Notice shall be considered filed on the date the Redemption Notice is received by the Corporate Secretary of the Company.
(j) The Redemption Date shall be specified as not later than XXXXXXXXXX of the calendar year commencing immediately after the Participant's Termination Date and not before the Termination Date. Where a Participant fails to file a Redemption Notice in accordance with (i) above, the Participant's Redemption Date shall be XXXXXXXXXX of the calendar year commencing immediately after the Participant's Termination Date.
(k) The Board may, in its absolute discretion, elect to pay to the Participant or the Beneficiary, as the case may be, the DSUs credited to the Participant's Account, in XXXXXXXXXX Voting Shares from treasury, in XXXXXXXXXX Voting Shares purchased on the Exchange, in cash, or a combination thereof, net of Applicable Withholding Taxes;
(l) Subject to the receipt of any necessary shareholder and regulatory approvals, where the Company issues XXXXXXXXXX Voting Shares from treasury, the number of XXXXXXXXXX Voting Shares issued to a Participant will be equal to the number of DSUs credited to the Participant's Account as at the Termination Date, less the number of XXXXXXXXXX Voting Shares that results by dividing a) the Applicable Withholding Taxes by b) the Fair Market Value of a XXXXXXXXXX Voting Share as at the Redemption Date. Fractional XXXXXXXXXX Voting Shares shall not be issued and where a Participant would be entitled to receive a fractional XXXXXXXXXX Voting Share in respect of any fractional DSU credited to the Participant's Account, the Company will pay to such Participant, in lieu of such fractional XXXXXXXXXX Voting Share, cash equal to the Fair Market Value on the Redemption Date of such fractional XXXXXXXXXX Voting Share, net of Applicable Withholding Taxes.
(m) Where XXXXXXXXXX Voting Shares are purchased on the Exchange to be delivered to the Participant, the Company will remit, in cash, to the Broker, the product that results by multiplying (a) the number of DSUs credited to the Participant's Account as at the Termination Date and (b) the Fair Market Value of a XXXXXXXXXX Voting Share on the Redemption Date, net of Applicable Withholding Taxes. The Broker will be required to, within XXXXXXXXXX business days, use the amount to purchase XXXXXXXXXX Voting Shares on the Exchange. The actual number of XXXXXXXXXX Voting Shares purchased by the Broker will be that number that the Broker is able to purchase with the amount remitted to the Broker. Fractional XXXXXXXXXX Voting Shares shall not be issued and where the Participant would be entitled to receive a fractional XXXXXXXXXX Voting Share in respect of any fractional DSU credited to the Participant's Account, the Company will pay to such Participant, in lieu of such fractional XXXXXXXXXX Voting Share, cash equal to the Fair Market Value on the Redemption Date of such fractional XXXXXXXXXX Voting Share, net of Applicable Withholding Taxes.
(n) XXXXXXXXXX Voting Shares purchased by the Broker and any cash remaining therefrom shall be delivered to the Participant within XXXXXXXXXX days of the Redemption Date. The Company will pay all brokerage fees and commissions arising in connection with the purchase of XXXXXXXXXX Voting Shares by the Broker in accordance with the Plan.
(o) Where the Board elects to pay the DSUs in cash, the payment will be equal to the product that results by multiplying (a) the number of DSUs credited to the Participant's Account as at the Termination Date and (b) the Fair Market Value of a XXXXXXXXXX Voting Share on the Redemption Date, net of Applicable Withholding Taxes.
(p) Unless otherwise agreed to by the Participant and the Board, the Company will make the payment in cash, XXXXXXXXXX Voting Shares, or a combination thereof, as elected by the Board and calculated in accordance with (l) to (o) above, to the Participant within XXXXXXXXXX days of the Redemption Date. If the Participant and the Board agree to an alternate payment date, the payment date must be no later than the last day of the calendar year commencing immediately after the Participant's Termination Date.
(q) In the event of the death of a Participant, provided that a Redemption Notice is not filed with the Corporate Secretary of the Company in accordance with (i) above, the Company shall make a payment in cash, XXXXXXXXXX Voting Shares, or a combination thereof, as elected by the Board and calculated in accordance with (l) to (o) above, within XXXXXXXXXX days of the Participant's death, in each case to or for the benefit of the Beneficiary of the Participant.
(r) The Company shall maintain or cause to be maintained in its records an Account for each Participant recording at all times the number of DSUs credited to the Participant's Account. Upon payment in satisfaction of DSUs in accordance with (k) to (q), the Participant's entitlement to receive any and all amounts in respect of DSUs so paid shall be fully discharged and satisfied and such DSUs shall be cancelled and thereupon deleted from the Account of such Participant.
(s) The Company may withhold from any payment to or for the benefit of a Participant any amount required to comply with the applicable provisions of any federal, provincial, state or local law relating to the withholding of tax or the making of any other source deductions, including on the amount, if any, included in income of a Participant or Beneficiary, as the case may be, and may adopt and apply such rules and regulations that in its opinion will ensure that the Company will be able to so comply;
(t) Nothing in the Plan shall be construed as giving a Participant the right to be retained as a member of the Board, or an employee of the Company, or giving any Participant or any other person the right to receive any benefits not specifically expressly provided in the Plan, nor shall it interfere in any way with any other right of the Company to terminate the service or employment of any Participant at any time;
(u) Under no circumstances shall DSUs be considered XXXXXXXXXX Voting Shares nor shall they entitle any Participant to exercise voting rights or any other rights attaching to the ownership or control of XXXXXXXXXX Voting Shares, including, without limitation, rights on liquidation, nor shall any Participant be considered the owner of any XXXXXXXXXX Voting Shares to be delivered under the Plan until the date of purchase or issuance of such XXXXXXXXXX Voting Shares, as elected by the Board, for the Account of such Participant as specifically provided in the Plan.
(v) The rights or interests of a Participant under the Plan, including the DSUs, shall not be assignable or transferable, otherwise than in case of death as set out in the Plan, and such rights or interests shall not be encumbered by any means. Any attempt to so assign, transfer, or encumber any such amount, whether presently or thereafter payable, shall be void and of no force or effect.
(w) The Plan may be amended or terminated in whole or in part at any time by the Board, provided that no such amendment or termination shall, unless required by law, adversely affect the rights of any Participant with respect to DSUs to which he or she is then entitled under the Plan without the consent of the affected Participant and any amendment or termination shall be such that the Plan continuously meets the requirements of paragraph 6801(d) of the Regulations or any successor to such provision.
(x) Any obligation of the Company with respect to XXXXXXXXXX Voting Shares in accordance with the terms of the Plan is subject to compliance with all applicable laws, regulations, rules, orders of governmental or regulatory authorities and the requirements of any stock exchange upon which shares of the Company are listed or traded. Notwithstanding any other provision of the Plan, if the Company, in its sole discretion, determines that it is not desirable or feasible to provide for the settlement of DSUs in XXXXXXXXXX Voting Shares in accordance with either (l) or (m), including by reason of any such laws, regulations, rules, orders or requirements, such obligation shall be satisfied by means of a cash payment determined in accordance with (o) above, net of Applicable Withholding Taxes. Each Participant shall comply with all such laws, regulations, rules, orders and requirements, and shall furnish the Company with any and all information and undertakings as may be required to ensure compliance therewith.
(y) In the event of any stock dividend, stock split, combination or exchange of XXXXXXXXXX Voting Shares, merger, consolidation, spin-off or other distribution (other than normal cash dividends) of the Company's assets to shareholders, such proportionate adjustments, if any, as the Board in its discretion may deem appropriate to reflect such change shall be made with respect to the number of DSUs credited to the Accounts maintained for the Participants.
(z) No amount will be paid to, or in respect of, a Participant under the Plan or pursuant to any other arrangement, and no other DSUs will be granted to such Participants to compensate for a downward fluctuation in the price of a XXXXXXXXXX Voting Share, nor will any other form of benefit be conferred upon, or in respect of, a Participant for such purpose.
(aa) Subject to applicable law, a Participant may designate in writing a person who is a dependent or relation as a Beneficiary to receive any amount payable under the Plan on the death of such Participant, and may change such designation from time to time. Such designation shall be in such form and executed and filed in such manner as the Board may from time to time determine. If no Beneficiary is designated, the Participant's legal representative will receive any amount payable under the Plan.
(bb) Unless otherwise determined by the Board, the obligations of the Company under the Plan shall be general unsecured obligations of the Company.
Purpose of the Proposed Transactions
9. The purpose of the Plan is to assist the Company in attracting, retaining and motivating qualified individuals to serve as members of the Board and to promote a greater alignment of interests between Eligible Directors and the shareholders of the Company.
10. Specifically, the Plan is designed to defer the recognition of income to the Participant until the time of receipt of an amount from the Plan (i.e. when DSU's credited to a Participant's Account are redeemed for cash or shares of the Company) and to allow Participant to economically benefit from any future appreciation in the value of the Company's XXXXXXXXXX Voting Shares from the time the DSU's are credited to a Participant's Account until the time the DSU's are redeemed from a Participant's Account
Rulings Given
Provided that the preceding statements constitute a complete and accurate disclosure of all of the relevant facts, proposed transactions and purpose of the proposed transactions, and provided that the terms of the Plan are as described above, we rule as follows:
A. The Plan will be a prescribed plan or arrangement as described in paragraph 6801(d) of the Regulations and will therefore be excluded from the definition of a "salary deferral arrangement" as contained in subsection 248(1).
B. The Plan will not constitute an "employee benefit plan" as that term is defined in subsection 248(1).
C. Provided that the Plan remains unfunded, the Plan will not constitute a "retirement compensation arrangement" as that term is defined in subsection 248(1).
D. No amount will be included in the income of a Participant pursuant to subsection 5(1), section 6, section 7, paragraph 56(1)(a) or subparagraph 115(1)(a)(i), solely as a result of a credit of DSUs under the Plan to a Participant's Account.
E. Except to the extent that Ruling K applies, the amount to be included in the income of a resident Participant for a year under the Plan, where the Company issues XXXXXXXXXX Voting Shares from treasury to the resident Participant in satisfaction of the Participant's DSUs as described in 8(l) above, will consist of the aggregate of the following amounts:
a. under paragraph 6(1)(c), the amount paid by the Company to the resident Participant for the rights related to fractional XXXXXXXXXX Voting Shares as described in 8(l) above;
b. under paragraph 7(1)(a), the amount representing the aggregate Fair Market Value of the XXXXXXXXXX Voting Shares issued to the resident Participant as described in 8(l) above; and
c. under paragraph 6(1)(c), the amount of Applicable Withholding Taxes withheld by the Company as described in 8(l) above.
F. Except to the extent that Ruling K applies, the amount to be included in the income of a non-resident Participant for the year under the Plan, where the Company issues XXXXXXXXXX Voting Shares from treasury to the non-resident Participant in satisfaction of the non-resident Participant's DSUs as described in 8(l) above, will consist of the aggregate of the following amounts:
a. under paragraph 6(1)(c) and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services performed in Canada, paid by the Company to the non-resident Participant for the rights related to fractional XXXXXXXXXX Voting Shares as described in 8(l) above;
b. under paragraph 7(1)(a) and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services performed in Canada, representing the aggregate Fair Market Value of the XXXXXXXXXX d Voting Shares issued to the non-resident Participant as described in 8(l) above; and
c. under paragraph 6(1)(c) and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services rendered in Canada, of Applicable Withholding Taxes withheld by the Company as described in 8(l) above.
G. Except to the extent Ruling K applies, the amount to be included in the income of a resident Participant for a year under the Plan, where the Participant has received XXXXXXXXXX Voting Shares that were purchased by the Broker on the open market in satisfaction of the Participant's DSUs as described in 8(m) above, will consist of the aggregate of the following amounts:
a. under paragraph 6(1)(c), the amount paid by the Company to the resident Participant for the rights related to fractional XXXXXXXXXX Voting Shares as described in 8(m) above;
b. under paragraph 6(1)(c), the amount paid by the Company to the Broker (excluding brokerage fees or commission fees) to acquire the XXXXXXXXXX Voting Shares that will be distributed to the resident Participant as described in 8(m) above;
c. under paragraph 6(1)(c), the amount of Applicable Withholding Taxes withheld by the Company as described in 8(m) above; and
d. under paragraph 6(1)(a), the amount of the brokerage fees or commission fees paid by the Company to the Broker for the acquisition of the XXXXXXXXXX Voting Shares distributed by the Broker to the resident Participant as described in 8(n) above.
H. Except to the extent Ruling K applies, the amount to be included in the income of a non-resident Participant for the year under the Plan, where the non-resident Participant has received XXXXXXXXXX Voting Shares that were purchased by the Broker on the open market in satisfaction of the non-resident Participant's DSUs as described in 8(m) above, will consist of the aggregate of the following amounts:
a. under paragraph 6(1)(c) and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services rendered in Canada, paid by the Company to the non-resident Participant for the rights related to the fractional XXXXXXXXXX Voting Shares as described in 8(m) above;
b. under paragraph 6(1)(c) and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services rendered in Canada, paid by the Company to the Broker (excluding brokerage fees or commission fees) to acquire the XXXXXXXXXX Voting Shares that will be distributed to the non-resident Participant as described in 8(m) above;
c. under paragraph 6(1)(c) and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services rendered in Canada, of Applicable Withholding Taxes withheld by the Company as described in 8(m) above; and
d. Under paragraph 6(1)(a) and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services rendered in Canada, of the brokerage fees or commission fees paid by the Company to the Broker for the acquisition of the XXXXXXXXXX Voting Shares distributed by the Broker to the non-resident Participant as described in 8(n) above.
I. Except to the extent that Ruling K applies, when cash is received in satisfaction of a resident Participant's DSUs as described in 8(o) above, the resident Participant will include the amount paid by the Company, before any Applicable Withholding Taxes, in his or her income for the year under paragraph 6(1)(c).
J. When cash is received in satisfaction of a non-resident Participant's DSUs as described in 8(o) above, the non-resident Participant will include the amount, to the extent it is attributable to services rendered in Canada, paid by the Company, before any Applicable Withholding Taxes, in his or her income for the year under paragraph 6(1)(c) and subparagraph 115(1)(a)(i).
K. All amounts payable under the Plan to the Beneficiary, as a result of the Participant's death, will constitute a right or thing held by the deceased Participant at the time of death for the purposes of subsections 70(2) and 70(3).
L. Subject to paragraph 18(1)(a) and section 67, any amounts referred to rulings Ea., Ec., Fa., Fc., G, H, and I above that are paid by the Company in a particular year in respect of Participants, will be deductible by Company in accordance with section 9.
The above advance income tax rulings, which are based on the Act in its present form and do not take into account any proposed amendments thereto, are given subject to the general limitations and qualifications set out in Information Circular 70-6R5 Advance Income Tax Rulings, dated May 17, 2002, and are binding on the CRA provided the proposed Plan is implemented before XXXXXXXXXX.
Yours truly,
XXXXXXXXXX
Section Manager
For Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Planning Branch
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