7 July 2006 Income Tax Severed Letter 2006-0212581R3 - Change in facts to ruling 2005-016295

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: Change in facts to ruling 2005-016295—ITA-55(3)(b)—Advance income tax ruling—Amendments to advance income tax rulingdue to a change in facts.

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: Change in facts to Ruling 2005-016295 [].

POSITION: Accepted.

REASONS: No impact on rulings given.

XXXXXXXXXX 2006-021258

XXXXXXXXXX, 2006

Dear XXXXXXXXXX:

Subject: XXXXXXXXXX—Change in Facts to Advance

Income Tax Ruling #2005-016295 [] (the “Ruling”)

This is in reply to your facsimile of XXXXXXXXXX wherein you requested certain amendments to the Ruling that was issued to the above-noted taxpayer on XXXXXXXXXX. Unless otherwise defined, all capitalized terms have the meanings assigned to them in the Ruling and all references to paragraph numbers are to those in the Ruling. You also confirm that none of the Proposed Transactions, described in the Ruling (with the exception of Paragraph 15) have been entered into.

We hereby confirm that the Ruling is amended as follows:

In the DEFINITIONS section of the Ruling, definition (hh) is replaced as follows:
• (hh)“Proposed Transactions”means the transactions described in Paragraphs 16 to 24;

Paragraph 15, which will now be included in the FACTS section of the Ruling, is replaced as follows:

15. On XXXXXXXXXX Individual2 incorporated a new taxable Canadian corporation (“TC”) under the provisions of the BCA. The authorized share capital of TC consists of the following classes of shares:
• (a) XXXXXXXXXX common shares with each issued common share entitling the holder to one vote per share;
• (b) XXXXXXXXXX voting Class A preferred shares (“Class A Shares”) without par or nominal value; entitling a holder to fixed non-cumulative dividends as and when declared by the board of directors in an amount determined by the board of directors in their absolute discretion; redeemable and retractable for an amount equal to the FMV of the consideration for which such shares are issued plus all declared and unpaid dividends, and on dissolution entitling the holder to receive the redemption amount per Class A Share plus all declared and unpaid dividends; and
• (c) XXXXXXXXXX voting Class B preferred shares (“Class B Shares”) without par or nominal value; entitling a holder to fixed non-cumulative dividends as and when declared by the board of directors in an amount determined by the board of directors in their absolute discretion. For the purposes of subsection 191(4), the terms and conditions of the Class B Shares will specify an amount (the “Redemption Amount”) in respect of each share for which the share is to be redeemed, acquired or cancelled. The Redemption Amount in respect of each share, at the time of issuance thereof, will be expressed as a fixed dollar amount that will not be determined by formula or subject to change thereafter and will not exceed the fair market value of the consideration for which such share is issued. None of the Class B Shares of TC will be issued for consideration that includes a taxable preferred share.

One common share of TC was issued to Individual2 for nominal consideration on incorporation.

Notwithstanding the above, in accordance with the practice outlined in Information Circular 70-6R5, dated May 17, 2002, we confirm that subject to the conditions and time limit set out in the Ruling, the Ruling, as amended by the above, will continue to be binding on the Canada Revenue Agency as described therein.

Yours truly,

XXXXXXXXXX

Industry Sector Specialist

Corporate Reorganizations Section II

Reorganizations and Resources Division

Income Tax Rulings Directorate

Legislative Policy and Regulatory Affairs Branch