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: Whether the amounts contributed to the XXXXXXXXXX allowance account are included in the cost of the license.
Position: Question of fact.
Reasons: To the extent that the amounts in the XXXXXXXXXX allowance account are used to purchase XXXXXXXXXX , they will qualify as part of the cost of the license.
XXXXXXXXXX 2004-010561
XXXXXXXXXX, 2004
Dear XXXXXXXXXX:
Re: Advance Income Tax Ruling
XXXXXXXXXX
This is in response to your XXXXXXXXXX request for amendments to advance income tax ruling #2003-005174, which was issued on XXXXXXXXXX, 2004 (the "Ruling").
Paragraph 12 of the Ruling is amended to add the following paragraph:
"As described above, PCo is responsible for providing everything XXXXXXXXXX necessary to complete the Facility. XXXXXXXXXX, PCo will deposit an amount of cash, as agreed to by PCo and TCo, into a separate account, hereinafter referred to as the "XXXXXXXXXX Allowance Account". This account will be in the name of TCo and will be the property of TCo. All interest earned and deposited in the XXXXXXXXXX Allowance Account will accrue to the benefit of TCo. As PCo purchases certain XXXXXXXXXX for the Facility, PCo will be entitled to make payments, on behalf of, and subject to certain approvals by, TCo, from the XXXXXXXXXX Allowance Account."
Paragraph 15 of the Ruling is amended to read:
15. It is anticipated that the initial cost incurred by PCo in respect of the Licence will be approximately $XXXXXXXXXX, XXXXXXXXXX.
Paragraph 18 of the Ruling is amended to read:
18. PCo will raise the funds it will need to fund the Project. The financing will include proceeds from the issuance of shares and bonds XXXXXXXXXX. PCo will incur financing costs in obtaining the PCo Debt. The PCo Debt will be issued at a discount and interest will be stipulated to be payable on the PCo Debt throughout the term of the XXXXXXXXXX Agreement. The PCo Debt will have normal commercial terms.
Paragraph 23 of the Ruling is amended to read:
23. Upon the execution and delivery of the XXXXXXXXXX Agreement, PCo will be required to pay TCo a fee (the "TCo Payment") of $XXXXXXXXXX, consisting of a payment of $XXXXXXXXXX at the time of Financial Close and a payment of $XXXXXXXXXX approximately XXXXXXXXXX months after Financial Close. The TCo Payment is a reimbursement of costs incurred by TCo in connection with the XXXXXXXXXX Agreement. XXXXXXXXXX.
The last paragraph of the Ruling is amended to read:
"Except as expressly stated, this advance income tax ruling does not imply acceptance, approval or confirmation of any income tax implications of the facts or proposed transactions. In particular, this advance income tax ruling does not address the application of the provisions of Part I XXXXXXXXXX to the Financial Institution."
Notwithstanding the amendments described above, the rulings given in the Ruling will continue to be binding on the Canada Revenue Agency provided that the proposed transactions are implemented on or before XXXXXXXXXX.
Yours truly,
XXXXXXXXXX
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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© Her Majesty the Queen in Right of Canada, 2004
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© Sa Majesté la Reine du Chef du Canada, 2004
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