7 July 2005 Income Tax Severed Letter 2005-0124152R3 - Trust variation—redemption rights

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: Trust variation—redemption rights—ITA-108(2), 132(6), 204.4(2)—Advance income tax ruling—Amendments to advance income tax rulingissued in 2005 and relating to the variation of redemption rights for a trust.

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 variation of a trust to provide for redemption rights would result: (i) in a disposition by the existing unit holders of their units; (ii) in a disposition by the trust of its assets or in a resettlement of the trust; (iii) in the trust qualifying as a “unit trust” under paragraph 108(2)(a) of the Act immediately; (iv) in the trust qualifying as a “mutual fund trust” within the meaning of subsection 132(6) of the Act; and (v) in the trust continuing to qualify as a “registered investment” under paragraph 204.4(2)(c) of the Act so that the units of the trust will not constitute “foreign property” within the meaning of subsection 206(1) of the Act. We are also asked to rule that: (vi) GAAR will not apply as a result of the proposed transactions.

POSITION: (i) and (ii) No; and (iii) to (vi) Yes.

REASONS: Previous rulings

XXXXXXXXXX

2005-012415

XXXXXXXXXX, 2005

Dear XXXXXXXXXX:

Re: XXXXXXXXXX

Amendment to Advance Income Tax Ruling

We are writing in response to our telephone conversation (XXXXXXXXXX) wherein you requested an amendment to the Advance Income Tax Ruling #2005-012415 [] dated XXXXXXXXXX, 2005 with respect to the above named taxpayers (the “Ruling”).

As a result, the following amendments are made to the Ruling:
• 1. Paragraph 8 is amended to replace the words “The REIT, directly and indirectly, owns” in the second sentence of that paragraph by: “At XXXXXXXXXX, the REIT, directly and indirectly, owned”.
• 2. Paragraph 10 is amended to replace the words “The REIT directly owns” in the first sentence of that paragraph by: “At XXXXXXXXXX, the REIT owned”.
• 3. Paragraph 24 is amended to replace the words “The REIT indirectly owns” by: “At XXXXXXXXXX, the REIT indirectly owned”.
• 4. Paragraph 28 is amended to replace the words “The REIT is” in the first sentence of that paragraph by: “At XXXXXXXXXX, the REIT was”.
• 5. Paragraph 33 is amended to replace the words “redeem any combination or part of the Series 1 Note and” in the second sentence of that paragraph by: “convert any part of the Series 1 Note and redeem any part of the”.
• 6. Paragraph 37(b) is amended to delete the words “a date to be set by the REIT Trustees, at the time the Series 3 Note is issued, which is not later than” in the second sentence of that paragraph.
• 7. Paragraph 37(c) is amended to delete the words “a date to be set by the REIT Trustees, at the time the Series 4 Note is issued, which is not later than” in the second sentence of that paragraph.

We confirm that the above changes will not affect the rulings given in the Ruling and they will continue to be binding on the Canada Revenue Agency as indicated therein.

Yours truly,

XXXXXXXXXX

Acting Manager

for Director

International & Trusts Division

Income Tax Rulings Directorate

Policy and Planning Branch