7 July 2005 Income Tax Severed Letter 2005-0113591R3 - Supplemental ruling to 2004-009908

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.

SUMMARY: Supplemental ruling to 2004-009908—ITA-248(1)(k)(ii), 248(25.2)—Advance income tax ruling—Amendments to advance income tax ruling 2004-009908 issued in 2004.

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: Changes to facts; revised draft agreements submitted.

POSITION: Will not impact original rulings given but some corrections and clarifications.

REASONS: Changes to Facts and proposed transactions are for clarification only; revised draft agreements not substantively different from draft agreements submitted with original ruling.

XXXXXXXXXX 2005-011359

XXXXXXXXXX, 2005

Dear XXXXXXXXXX:

Re: XXXXXXXXXX

Advance Income Tax Ruling Request 2004-009908, dated XXXXXXXXXX, 2004

We are writing in response to your request dated XXXXXXXXXX (the “Request”) on behalf of the above taxpayer for a Supplemental Ruling to Advance Income Tax Ruling number 2004-009908 (the “Ruling”) issued to the above taxpayer on XXXXXXXXXX, 2004. We also acknowledge the information provided during our various telephone conversations in connection with your request (XXXXXXXXXX). Terms referred to herein are as defined in the Ruling.

The supplemental ruling given herein is based solely on the facts, proposed transactions and purposes of the proposed transactions described in the Ruling as amended by the Request. Facts and proposed transactions in the documents submitted with the Request not described below or in the Ruling do not form part of the facts and proposed transactions on which this supplemental ruling is based and any reference to these documents is provided solely for the convenience of the reader. Furthermore, the supplemental ruling is based on our understanding that the facts and proposed transactions set out in the Ruling will be in accordance with the final documents and agreements with respect to those facts and proposed transactions and to the additional facts and proposed transactions set out below. A material difference between the final wording of one or more of the relevant documents and those mentioned in the Ruling and this supplemental ruling will render the supplemental ruling given null and void.

The affected paragraphs of the Facts and Proposed Transactions in the Ruling will now read as follows:

Paragraph 2(b):

All of Canco's outstanding shares (other than shares of dissenting shareholders, shares owned by non-residents or shares owned by residents who elect to receive Mergeco shares) will be exchanged for shares of Exchangeco (the “Exchangeable Shares”) and ancillary rights (the “Ancillary Rights”) including in particular the voting rights (the “Voting Rights”) described in paragraph 7. Xco will elect to receive a small number of Mergeco shares.

Paragraph 11:

Pursuant to the XXXXXXXXXX Voting Trust Agreement, Xco and XSubco will transfer all of their Class XXXXXXXXXX Exchangeable Shares and Ancillary Rights into a voting trust that is a trust governed by the laws of the Province of XXXXXXXXXX (the “XXXXXXXXXX Voting Trust”).

Paragraph 12:

The J-Trust has also agreed to enter into a voting trust agreement, governed by the laws of the State of XXXXXXXXXX and having substantially similar terms to the XXXXXXXXXX Voting Trust Agreement (the “XXXXXXXXXX Voting Trust Agreement”), pursuant to which the J-Trust will transfer all of its Class XXXXXXXXXX Common Stock of USco into a voting trust that is a trust governed by the laws of the State of XXXXXXXXXX (the “XXXXXXXXXX Voting Trust”). Xco will also transfer the Mergeco shares received by Xco as described in paragraph 2(b) above, to the XXXXXXXXXX Voting Trust.

Paragraph 13:

The transfers by Xco and XSubco of the property described in paragraph 11 above are mainly intended to assure the performance of Xco's and XSubco's obligations, as set forth in an agreement (the “Underlying Voting Agreement”) between Xco, XSubco and the J-Trust, concerning the manner in which the Voting Rights related to such property shall be exercised.

Paragraph 18:

Deleted.

Paragraph 19:

Pursuant to the XXXXXXXXXX, the Canco shares will be exchanged by Xco and XSubco into a combination of Class XXXXXXXXXX Exchangeable Shares and Class XXXXXXXXXX Exchangeable Shares. Coincident therewith and as additional consideration, Xco and XSubco will become entitled to the Ancillary Rights.

Paragraph 20:

Deleted.

In the Request, you indicated that a number of minor changes have been made to the XXXXXXXXXX Voting Trust Agreement since the date of the Ruling, at the request of the Trustee, which will be the XXXXXXXXXX. Corresponding changes will be made to the XXXXXXXXXX Voting Trust Agreement, the trustee of which will be the XXXXXXXXXX. These changes deal with the administration of the trust, not substantive matters. You provided us with a black-lined version of the XXXXXXXXXX Voting Trust Agreement indicating the changes to the version of the XXXXXXXXXX Voting Trust Agreement we received at the time of the Ruling. You also indicated that minor changes have been made to the Underlying Voting Agreement to reflect the fact that XSubco is extant. You provided us with a black-lined version of the Underlying Voting Trust Agreement indicating the changes to the version of the Underlying Voting Trust Agreement we received at the time of the Ruling.

Ruling Given

Notwithstanding the above additional facts and proposed transactions and amendments to the documents described above, we hereby confirm that, subject to the conditions set out in the Rulings, the rulings given therein continue to be binding on the CRA provided that the proposed transactions are completed within 6 months of the date of the issuance of the Ruling.

Yours truly,

XXXXXXXXXX

Section Manager

For Division Director

International & Trusts Division

Income Tax Rulings Directorate

Policy and Planning Branch