2009 Ruling 2007-0256411R3 - Public butterfly

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 distribution of Amalco's cash & near cash and investment property to TC1 qualifies for the butterfly exemption stated in paragraph 55(3)(b) of the Act

Position: The transactions to be completed prior to and after the distribution of Amalco's property will not be subject to subparagraph 55(3.1)(b)(ii) and paragraph 55(3.1)(c), and, as a result, will not taint the butterfly reorganization.

Reasons: (1) The acquisition of control resulting from Amalco's redemption of its preferred shares prior to the distribution will not be subject to subparagraph 55(3.1)(b)(ii) because they were shares of a "specified class", and their redemption qualifies as a permitted redemption as these terms are defined in subsection 55(1) of the Act. (2) The disposition of the common shares in TC1 in consideration for preferred shares in that corporation in the course of the estate freeze to take place after the distribution will not be subject to paragraph 55(3.1)(c) of the Act.

XXXXXXXXXX 									2007-025641

XXXXXXXXXX , 2009

Dear XXXXXXXXXX :

Re: Advance Income Tax Rulings
XXXXXXXXXX

We are writing in response to your request for an income tax ruling ("Ruling Request") dated XXXXXXXXXX , which was last amended on XXXXXXXXXX .

We also took into consideration: (i) the correspondence we exchanged throughout the review of the Ruling Request; (ii) your written submissions dated XXXXXXXXXX and (iii) XXXXXXXXXX submissions dated XXXXXXXXXX about the GRIP and LRIP implications arising from the butterfly reorganization.

PRELIMINARY MATTERS

To the best of your knowledge, none of the issues involved in this Ruling Request:

(a) is in an earlier return of DC, or a related person;
(b) is being considered by a tax services office or a taxation centre in connection with a previously filed tax return of DC or a related person;
(c) is under objection by DC or a related person;
is before the Courts or, if a judgment has been issued, the time limit for appeal to a higher court has expired; and
(d) is the subject of a ruling previously issued by the Income Tax Rulings Directorate.

DC has confirmed that the proposed transactions described herein will not affect its ability to pay any of its outstanding tax liabilities.

Unless otherwise indicated, all references to monetary amounts in this letter are in Canadian dollars.

DEFINITIONS

In this letter, unless the context otherwise requires, the following terms have the meanings specified below:

1. "Act" means the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, as amended;

2. "ACB" means adjusted cost base as that term is defined in section 54 of the Act;

3. "Amalco" means the new corporation formed by the Amalgamation as described in paragraph 66 below;

3.1 "Amalco Common Shares" means the common shares issued by Amalco pursuant to the Amalgamation Agreement as described in paragraph 67 below;

3.2 "Amalgamation" means the amalgamation described in paragraph 66 below;

3.3 "Amalgamation Agreement" means the agreement governing the Amalgamation;

3.4 "Amalco Notes" means the First Amalco Note and the Second Amalco Note issued by Amalco upon the purchase for cancellation of the Amalco common shares held by TC1 described in paragraph 71 below;

4. "Assessable Dividend" has the meaning assigned by subsection 186(3) of the Act;

5. "Butterfly Reorganization" means the reorganization described in paragraphs 69 to 75 below;

6. "Capital Property" has the meaning assigned by section 54 of the Act;

7. "Companies Act (XXXXXXXXXX )" means the XXXXXXXXXX ;

8. "Companies Act (XXXXXXXXXX )" means the XXXXXXXXXX ;

9. "CCPC" means a Canadian-controlled private corporation as that term is defined by subsection 125(7) of the Act;

9.1 "Class XXXXXXXXXX Preferred Shares" refers to the class of non-voting redeemable preference shares without par value having a redemption value equal to the FMV of the consideration received by TC1 and TC2 in the course of the Estate Freeze;

10. "Day 1" means the day on which the Amalgamation occurs;

10.1 "Day 2" means the day that follows Day 1;

11. "DC" means XXXXXXXXXX , which is a corporation described in paragraph 39 below;

11.1 "DC Obligation" means the debt in the amount of approximately $XXXXXXXXXX payable by DC to TC1 and TC2;

11.2 "DC Subco" means a corporation described in paragraph 41 below;

12. "Distribution" has the meaning assigned by subsection 55(1) of the Act;

12.1 "Dividend Rental Arrangement" has the meaning assigned by subsection 248(1) of the Act;

13. "Eligible Dividend" has the meaning assigned by subsection 89(1) of the Act;

14. "Eligible Property" has the meaning assigned by subsection 85(1.1) of the Act;

14.1 "Estate Freeze" means the transactions completed by Sibling 1 and Sibling 2 in respect of their respective interest in TC1 and TC2 described in paragraph 76 below;

15. "Excepted Dividend" has the meaning assigned by section 187.1 of the Act;

16. "Excluded Dividend" has the meaning assigned by subsection 191(1) of the Act;

16.1 "Financial Intermediary Corporation" has the meaning assigned by subsection 191(1) of the Act;

16.2 "First Amalco Note" means the non-interest-bearing Amalco Note issued in consideration for the redemption of the first tranche of the Amalco Common Shares as described in paragraph 71 below;

16.3 "First TC1 Subco Note" means a demand non-interest-bearing promissory note described in paragraph 69 below;

16.4 "FMV" means fair market value, which refers to the highest price available in an open and unrestricted market between informed and prudent parties acting at arm's length and under no compulsion to act, expressed in terms of cash;

17. "GRIP" means general rate income pool as that term is defined by subsection 89(1) of the Act;

17.1 "Guarantee Agreement" has the meaning assigned by subsection 112(2.2) of the Act;

18. "LRIP" means low rate income pool as that term is defined by subsection 89(1) of the Act;

18.1 "Net Capital Loss" has the meaning assigned by subsection 248(1) of the Act;

18.2 "New Public Preferred Shares" means the XXXXXXXXXX Preferred Shares, and the XXXXXXXXXX Preferred Shares issued by Amalco pursuant to the Amalgamation Agreement as described in paragraph 67 below;

18.3 "Non-Capital Loss" has the meaning assigned by subsection 248(1) of the Act;

19. "Permitted Redemption" has the meaning assigned by subsection 55(1) of the Act;

20. "Personal Trust" has the meaning assigned by subsection 248(1) of the Act;

21. "Predecessor Corporation" has meaning assigned by subsection 87(1) of the Act;

22. "Private Corporation" has the meaning assigned by subsection 89(1) of the Act;

23. "PUC" means paid-up capital as defined in subsection 89(1) of the Act;

24. "Public Corporation" has the meaning assigned by subsection 89(1) of the Act;

25. "RDTOH" means refundable dividend tax on hand as defined in subsection 129(3) of the Act;

26. "Regulations" mean the Income Tax Regulations, C.R.C., c. 945, as amended;

27. "Related Persons" has the meaning assigned by subsection 251(2) of the Act;

27.1 "RelatedCo" means XXXXXXXXXX ;

27.2 "Restricted Financial Institution" has the meaning assigned by subsection 248(1) of the Act

27.3 "Second Amalco Note" means the non-interest-bearing Amalco Note issued in consideration for the redemption of the second tranche of the Amalco Common Shares as described in paragraph 71 below;

27.4 "Second TC1 Subco Note" means a demand non-interest-bearing promissory note described in paragraph 70 below;

27.5 "Sibling 1" means XXXXXXXXXX , who is a resident of the province of XXXXXXXXXX ;

27.6 "Sibling 2" means XXXXXXXXXX , who is a resident of the province of XXXXXXXXXX ;

27.7 "Sibling 3" means XXXXXXXXXX , who is a resident of the province of XXXXXXXXXX ;

28. "Short-Term Preferred Share" has the meaning assigned by subsection 248(1) of the Act;

29. "Specified Class" has the meaning assigned by subsection 55(1) of the Act;

30. "Specified Financial Institution" has the meaning assigned by subsection 248(1) of the Act;

30.1 "Subject Assets" means the types of property owned by Amalco (cash & near cash and investment assets) immediately after the redemption of the New Public Preferred Shares on Day 1 that will be distributed to TC1 Subco in the proportion described in paragraph 69 below;

31. "Subject Corporation" has the meaning assigned by subsection 186(3) of the Act;

32. "Subsidiary Controlled Corporation" and "Subsidiary Wholly-Owned Corporation" have the meanings assigned by subsection 248(1) of the Act;

33. "Taxable Preferred Share" has the meaning assigned by subsection 248(1) of the Act;

34. "Taxable Canadian Corporation" has the meaning assigned by subsection 89(1) of the Act;

35. "Taxable Dividend" has the meaning assigned by subsection 89(1) of the Act;

35.1 "TC Voting Preferred Shares" means the voting preference shares with a par value of $XXXXXXXXXX per share respectively issued by TC1 and TC2 in the course of the Estate Freeze;

36. "TC1" means XXXXXXXXXX , which is a corporation described in paragraph 44 below;

37. "TC1 Subco" XXXXXXXXXX , which is a corporation described in paragraph 63 below;

38. "TC2" means XXXXXXXXXX , which is a corporation described in paragraph 43 below;

38.1 "Trust 1" means the XXXXXXXXXX , which is an irrevocable discretionary trust described in paragraph 76(a) below;

38.2 "Trust 2" means the XXXXXXXXXX , which is an irrevocable discretionary trust described in paragraph 76(b) below; and

38.3 "Type of Property" means each of the three types of property described in paragraph 77 below;

FACTS

The facts are as follows:

The participants to the proposed Butterfly Reorganization

39. DC is a Public Corporation and a Taxable Canadian Corporation. The voting preference shares of DC are widely held. DC is not controlled by any individual or group of related individuals and, as a result, is not a Subject Corporation. DC is in the business of holding, acquiring and disposing of investment assets.

40. The authorized and issued share capital of DC consists of:

(a) XXXXXXXXXX voting Preferred Shares with a par value of $XXXXXXXXXX per share listed on Tier 1 of the XXXXXXXXXX , of which XXXXXXXXXX are issued and outstanding as fully paid and non-assessable ("XXXXXXXXXX Preferred Shares");

(b) XXXXXXXXXX voting Preferred Shares with a par value of $XXXXXXXXXX per share listed on Tier 1 of the XXXXXXXXXX , of which XXXXXXXXXX are issued and outstanding as fully paid and non-assessable ("XXXXXXXXXX Preferred Shares"); and

(c) XXXXXXXXXX voting common shares with a par value of $XXXXXXXXXX per share, of which XXXXXXXXXX are issued and outstanding as fully paid and non-assessable.

All of the issued and authorized common and preference shares are fully voting. All but XXXXXXXXXX of the XXXXXXXXXX Preferred Shares and the XXXXXXXXXX Preferred Shares were issued by DC at a discount of between $XXXXXXXXXX and $XXXXXXXXXX per share pursuant to validly passed bylaws of DC. By the terms and conditions of the XXXXXXXXXX Preferred Shares and the XXXXXXXXXX Preferred Shares, the holders thereof have the right to payment in full of the par value thereof, together with accrued and unpaid dividends upon the winding-up of DC or other return of capital. The XXXXXXXXXX Preferred Shares and the XXXXXXXXXX Preferred Shares are not redeemable, convertible or exchangeable.

41. DC Subco is a Taxable Canadian Corporation and is a Subsidiary Controlled Corporation of DC. DC Subco is not a Subject Corporation. DC Subco is in the business of holding, acquiring and disposing of investment assets.

42. The authorized and issued share capital of DC Subco consists of:

(a) XXXXXXXXXX voting first preference shares with a par value of $XXXXXXXXXX per share, of which none are issued and outstanding;

(b) XXXXXXXXXX non-voting second preference shares with a par value and a redemption price of $XXXXXXXXXX per share, of which XXXXXXXXXX are issued and outstanding as fully paid and non-assessable; and

(c) XXXXXXXXXX common shares with a par value of $XXXXXXXXXX per share, of which XXXXXXXXXX are issued and outstanding as fully paid and non-assessable.

Each non-voting second preference share was issued for consideration, the FMV of which was equal to the cost of the share to the original owner at the time of its issuance. The PUC of the class of non-voting second preference shares is equal to the FMV of the consideration for which the outstanding shares were issued. The non-voting second preference shares are not convertible or exchangeable and do not entitle the holders thereof on redemption to any amount greater than the FMV of the consideration for which they were issued and the amount of any unpaid dividends thereon.

43. TC2 is a CCPC, a Taxable Canadian Corporation and is wholly-owned by Sibling 2. The authorized and issued share capital of TC2 consists of XXXXXXXXXX common shares with a par value of $XXXXXXXXXX per share and XXXXXXXXXX Class A preferred shares with a par value of $XXXXXXXXXX per share, of which XXXXXXXXXX common shares and XXXXXXXXXX Class A preferred shares are issued and outstanding as fully paid and non-assessable.

44. TC1 is a CCPC, a Taxable Canadian Corporation and is wholly-owned by Sibling 1. The authorized and issued share capital of TC1 consists of XXXXXXXXXX common shares with a par value of $XXXXXXXXXX per share and XXXXXXXXXX Class A preferred shares with a par value of $XXXXXXXXXX per share, of which XXXXXXXXXX common shares and XXXXXXXXXX Class A preferred shares are issued and outstanding as fully paid and non-assessable.

45. Sibling 2 and Sibling 1 are siblings.

History of DC's corporate reorganization

46. On XXXXXXXXXX , DC, DC Subco and RelatedCo completed a corporate reorganization, pursuant to an advance income tax ruling issued by Revenue Canada - Income Tax Rulings and Interpretations Directorate XXXXXXXXXX RelatedCo was a CCPC, a Taxable Canadian Corporation and was wholly-owned by Sibling 3, who is the brother of Sibling 1 and Sibling 2. The purpose of the butterfly reorganization was to permit RelatedCo to receive its proportionate interest in the assets of DC so that RelatedCo would have direct control over the investment policies to be applied to such assets.

DC and DC Subco's shareholding

47. On XXXXXXXXXX , DC issued XXXXXXXXXX common shares to TC2 and TC1 (XXXXXXXXXX each) at a subscription price of $XXXXXXXXXX per share. On XXXXXXXXXX , DC issued XXXXXXXXXX common shares to TC2 and TC1 (XXXXXXXXXX each) at a subscription price of $XXXXXXXXXX per share. The issuances of such shares were not connected in any way to the Butterfly Reorganization.

48. TC2 is the legal and beneficial owner of XXXXXXXXXX common shares in the capital stock of DC being XXXXXXXXXX of all issued and outstanding common shares in the capital stock of DC. TC1 is the legal and beneficial owner of XXXXXXXXXX common shares in the capital stock of DC being XXXXXXXXXX of all issued and outstanding common shares in the capital stock of DC.

49. TC2 is the legal and beneficial owner of XXXXXXXXXX non-voting second preference shares in the capital stock of DC Subco being XXXXXXXXXX of all issued and outstanding non-voting second preference shares in the capital stock of DC Subco, having an aggregate ACB of $XXXXXXXXXX and redemption value of $XXXXXXXXXX . TC1 is the legal and beneficial owner of XXXXXXXXXX non-voting second preference shares in the capital stock of DC Subco being XXXXXXXXXX of all issued and outstanding non-voting second preference shares in the capital stock of DC Subco, having an aggregate ACB of $XXXXXXXXXX and redemption value of $XXXXXXXXXX .

50. DC is the legal and beneficial owner of XXXXXXXXXX common shares in the capital stock of DC Subco being all of the issued and outstanding common shares in the capital stock of DC Subco.

51. Sibling 2 is the legal and beneficial owner of XXXXXXXXXX Preferred Shares and XXXXXXXXXX Preferred Shares in the capital stock of DC.

52. Sibling 1 is the legal and beneficial owner of XXXXXXXXXX Preferred Shares in the capital stock of DC.

The DC Obligation

53. The DC Obligation is not a current liability, and does not relate to a particular property or a particular type of property. Therefore, the DC Obligation will not be allocated to cash and near cash property, nor to a particular property or a particular Type of Property in the course of the Butterfly Reorganization.

DC and DC Subco's assets

54. The assets of DC consist of portfolio investments, cash, the XXXXXXXXXX common shares in the capital stock of DC Subco described in paragraph 50 above and a nominal amount of office furniture and computer equipment used for the purposes of earning property income. The assets of DC Subco consist of portfolio investments and cash.

Tax attributes of the DC and DC Subco shares

55. The following represents the shareholdings, ACB and PUC of the relevant shares of DC and DC Subco:

DC - Common

Shareholder
Number
ACB
PUC
TC2
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
TC1
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

DC - XXXXXXXXXX Preferred Shares
Shareholder
Number
ACB
PUC
Sibling 2
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Sibling 1
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Widely-Held
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

DC - XXXXXXXXXX Preferred Shares
Shareholder
Number
ACB
PUC
Sibling 2
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Widely-Held
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

DC Subco - Common
Shareholder
Number
ACB
PUC
DC
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

DC Subco - Non-Voting Second Preference Shares
Shareholder
Number
ACB
PUC
TC2
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
TC1
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

DC and DC Subco's tax accounts

56. As of XXXXXXXXXX (the most recent taxation year-end) neither DC Subco nor DC had any unutilized Net Capital Loss and Non-Capital Loss. As of XXXXXXXXXX , DC and DC Subco did not have an LRIP balance. As of XXXXXXXXXX , TC1 had a GRIP balance of $XXXXXXXXXX , and a RDTOH balance of $XXXXXXXXXX .

Other information

56.1 No changes to DC's share capital are contemplated before the date of the commencement of the proposed transactions described in paragraphs 63 to 76 below.

56.2 All the shares of DC, TC1 or TC1 Subco referred to in this letter are being held on capital account.

56.3 DC will not receive a dividend refund in the taxation year in which the Amalco Common Shares are purchased for cancellation as described in paragraph 71 below.

57. None of DC, TC1 or TC1 Subco is, or will be a Specified Financial Institution.

58. There are not, and will not be, at any time prior to the completion of the proposed transactions described below, any agreements (or undertakings) which constitute or include a Guarantee Agreement in respect of shares of DC, TC1 or TC1 Subco referred to in this letter.

None of the shares held by DC, TC1 or TC1 Subco referred to in this letter has been, or will be subject to a Dividend Rental Agreement.

59. None of the shares of DC, TC1 or TC1 Subco referred to in this letter has been, or will be, issued or acquired as part of a transaction or event or a series of transactions or events contemplated by subsection 112(2.5) of the Act.

59.1 None of DC, TC1 or TC1 Subco is, or will be a Restricted Financial Institution.

59.2 None of DC, TC1 or TC1 Subco is, or will be a corporation described in any of paragraphs (a) to (f) of the definition of Financial Intermediary Corporation.

60. No assets have been, or will be acquired, and no liabilities have been, or will be, incurred or paid by Amalco, a corporation controlled by Amalco, or a corporate entity that is a Predecessor Corporation of Amalco in contemplation of and before the transfers of property described in paragraph 69 below other than in a transaction described in subparagraphs 55(3.1)(a)(i) to (iv) of the Act.

61. Except as described herein, none of the parties is contemplating a disposition of any of the shares of Amalco or TC1. None of the parties is contemplating an acquisition of control of Amalco or TC1 except as described herein. None of the Amalco shares have been or will be acquired by TC1 or TC2 in contemplation of Amalco's distribution described in paragraph 69 below.

62. It is not contemplated that TC1 will sell or transfer any property described in paragraph 69 below to a person who is not related to TC1 otherwise than as a result of a disposition in the ordinary course of TC1's business. It is also not contemplated that Amalco will sell or transfer any property that was not transferred to TC1 in the course of the Butterfly Reorganization to a person who is not related to Amalco otherwise than as a result of a disposition in the ordinary course of Amalco's business.

PROPOSED TRANSACTIONS

The proposed transactions will be implemented in the sequence described below:

Prior to the Butterfly Reorganization

Incorporation of TC1 Subco

63. TC1 will incorporate TC1 Subco pursuant to the Companies Act (XXXXXXXXXX ). TC1 will be the sole shareholder and no other shares of TC1 Subco will be issued other than as provided for herein.

64. The share capital of TC1 Subco will be amended by the creation of XXXXXXXXXX Class A preference shares having a par value of $ XXXXXXXXXX per share and an aggregate redemption price equal to the FMV of their issuance proceeds.

For the purposes of subsection 191(4) of the Act, the terms and conditions of the Class A preference shares described in this paragraph will specify a dollar amount for the redemption, acquisition and cancellation of each share. The amount to be specified will not exceed the FMV of the consideration for which the share is issued. For greater certainty, the specified amount will not be subject to adjustment or described by reference to a formula.

Redemption of DC Subco's preference shares

65. DC Subco will redeem and immediately cancel its XXXXXXXXXX non-voting second preference shares (being all the shares of that class) at their redemption price and will pay $XXXXXXXXXX in cash to each of TC1 and TC2. Following the redemption of DC Subco's non-voting second preference shares, DC Subco will be a Subsidiary Wholly-Owned Corporation of DC.

Amalgamation of DC and DC Subco

66. DC Subco will then be continued from XXXXXXXXXX to XXXXXXXXXX pursuant to section XXXXXXXXXX the Companies Act (XXXXXXXXXX ). Following the continuance, DC Subco and DC will amalgamate pursuant to section XXXXXXXXXX of the Companies Act (XXXXXXXXXX ) to form Amalco pursuant to the Amalgamation Agreement. The certificate of amalgamation will not specify a particular time for the Amalgamation.

Amalco will be a Taxable Canadian Corporation. The obligations and liabilities of DC and DC Subco shall become the obligations and liabilities of Amalco as a matter of law, including, without limitation, the DC Obligation. The Amalgamation Agreement will specify the composition of the board of directors of Amalco to hold office until the next annual general meeting of Amalco following the Amalgamation. The next annual meeting of Amalco will be held no later than XXXXXXXXXX following the date of the Amalgamation.

67. Upon Amalgamation, each holder of common shares in DC will receive an equal number of Amalco Common Shares with a par value of $XXXXXXXXXX per share. Moreover, each holder of XXXXXXXXXX Preferred Shares and XXXXXXXXXX Preferred Shares in DC will receive an equal number of XXXXXXXXXX Preferred Shares and XXXXXXXXXX Preferred Shares in Amalco with a par value of $XXXXXXXXXX per share as a result of the Amalgamation. The conditions attaching to Amalco's share capital will be as follows:

XXXXXXXXXX Preferred Shares

(a) The XXXXXXXXXX Preferred Shares shall confer a XXXXXXXXXX per annum preferential dividend payable, if declared, XXXXXXXXXX , in priority to the Amalco Common Shares and pari pasu with the XXXXXXXXXX Preferred Shares of Amalco. They shall also confer a further right on a winding-up or other return of capital to payment in full of the par value thereof, together with the dividends accrued and unpaid, whether declared, or not, to the date of such winding-up or other return of capital in priority to the Amalco Common Shares and pari pasu with the XXXXXXXXXX Preferred Shares of Amalco. The said XXXXXXXXXX Preferred Shares shall confer no further right to participation in profits or assets.

(b) The company shall have the right to redeem the XXXXXXXXXX Preferred Shares of Amalco on payment of the redemption price thereof in accordance with the Proposed Transactions. The redemption price of the XXXXXXXXXX Preferred Shares of Amalco will be $XXXXXXXXXX , together with dividends accrued and unpaid, whether declared or earned, or not, to the date of the redemption - the dividends payable on the said redemption shall include any dividends that had accrued but had not been paid on the XXXXXXXXXX Preferred Shares prior to the Amalgamation.

(c) The XXXXXXXXXX Preferred Shares of Amalco shall be non-voting in respect of the election of the Board of Directors but voting in all other respects and shall be entitled to notice of all meetings of shareholders, provided that, if the company fails to redeem the XXXXXXXXXX Preferred Shares of Amalco in accordance with the Proposed Transactions no later thanXXXXXXXXXX days following the date of the Amalgamation, then such failure shall be an event of failure or default under the conditions of the said shares which event or failure or default shall cause the XXXXXXXXXX Preferred Shares to have full voting rights including the right to vote in respect of the election of the Board of Directors.

XXXXXXXXXX Preferred Shares

(a) The XXXXXXXXXX Preferred Shares shall confer a XXXXXXXXXX per annum preferential dividend payable, if declared, on XXXXXXXXXX , in priority to the Amalco Common Shares and pari pasu with the XXXXXXXXXX Preferred Shares of Amalco. They shall also confer a further right on a winding-up or other return of capital to payment in full of the par value thereof, together with the dividends accrued and unpaid, whether declared or earned, or not, to the date of such winding-up or other return of capital in priority to the Amalco Common Shares and pari pasu with the XXXXXXXXXX Preferred Shares of Amalco. The said XXXXXXXXXX Preferred Shares shall confer no further right to participation in profits or assets.

(b) The company shall have the right to redeem the XXXXXXXXXX Preferred Shares of Amalco on payment of the redemption price thereof in accordance with the Proposed Transactions. The redemption price of the XXXXXXXXXX Preferred Shares of Amalco will be $XXXXXXXXXX , together with dividends accrued and unpaid, whether declared or earned, or not, to the date of the redemption - the dividends payable on the said redemption shall include any dividends that had accrued but had not been paid on the XXXXXXXXXX Preferred Shares prior to the Amalgamation.

(c) The XXXXXXXXXX Preferred Shares of Amalco shall be non-voting in respect of the election of the Board of Directors but voting in all other respects and shall be entitled to notice of all meetings of shareholders, provided that, if the company fails to redeem the XXXXXXXXXX Preferred Shares of Amalco in accordance with the Proposed Transactions no later than XXXXXXXXXX days following the date of the Amalgamation, then such failure shall be an event of failure in default under the conditions of the said shares which event or failure in default shall cause the XXXXXXXXXX Preferred Shares to have full voting rights including the right to vote in respect of the election of the Board of Directors.

The Amalco Common Shares

(a) The Amalco Common Shares shall be non-voting in respect of the election of the Board of Directors but voting in all other respects and shall be entitled to notice of all meetings of shareholders accordingly. The Amalco Common Shares shall immediately upon the redemption of the New Public Preferred Shares become entitled to vote in respect of the election of the Board of Directors. Further, the Amalco Common Shares shall have full voting rights, and become entitled to vote in respect of the election of the Board of Directors in the event that Amalco fails to redeem the New Public Preferred Shares in accordance with the Proposed Transactions no later than XXXXXXXXXX days following the Amalgamation the holders of the Amalco Common Shares.

(b) The Amalco Common Shares shall rank behind the New Public Preferred Shares but the holders of the Amalco Common Shares shall be entitled to participate in all profits and assets of the Company remaining after payment to the holders of the New Public Preferred Shares of amounts due to them.

Following the Amalgamation, the issued and authorized share capital of Amalco shall be as follows:

(a) XXXXXXXXXX Preferred Shares with a par value of $XXXXXXXXXX per share, of which XXXXXXXXXX are issued and outstanding as fully paid and non-assessable;

(b) XXXXXXXXXX Preferred Shares with a par value of $XXXXXXXXXX per share, of which XXXXXXXXXX are issued and outstanding as fully paid and non-assessable; and

(c) XXXXXXXXXX Amalco Common Shares with a par value of $XXXXXXXXXX per share, of which XXXXXXXXXX are issued and outstanding as fully paid and non-assessable.

The XXXXXXXXXX Preferred Shares, and the XXXXXXXXXX Preferred Shares are referred to herein as the New Public Preferred Shares.

Amalco's redemption of the New Public Preferred Shares

68. Amalco will redeem for cash, at the redemption price of $XXXXXXXXXX per share plus any accrued and unpaid dividends, XXXXXXXXXX of its New Public Preferred Shares, being all those New Public Preferred Shares issued and outstanding at the time. Amalco will leave with the transfer agent XXXXXXXXXX prior to the redemption of the New Public Preferred Shares cash in the amount of $XXXXXXXXXX , which is equal to their aggregate redemption price. That will enable Amalco to redeem and cancel all of the XXXXXXXXXX New Public Preferred Shares that are issued and outstanding without further action on Day 1.

The Butterfly Reorganization

Distribution of Amalco's assets to TC1 Subco

69. Immediately following the redemption of the New Public Preferred Shares on Day 1, Amalco will transfer a proportionate amount of the Subject Assets it owned at that time to TC1 Subco such that the net FMV of each Type of Property received by TC1 Subco will be equal to or approximate the proportion of the net FMV of all property of the same Type of Property owned by Amalco immediately before the transfer that:

(a) the aggregate of the FMV, immediately before the transfer, of all shares of the capital stock of Amalco owned by TC1 at that time
is of:

(b) the FMV, immediately before the transfer, of all the issued shares of the capital stock of Amalco at that time.

For the purposes of this paragraph, the expression "approximate the proportion" means that the discrepancy of that proportion, if any, will not exceed one percent (1%), determined as a percentage of the net FMV of each Type of Property which TC1 will receive as compared to what TC1 would have received had it received its appropriate pro rata share of the net FMV of that Type of Property.

As consideration for the transfer of the Subject Assets, TC1 Subco will issue to Amalco XXXXXXXXXX Class A preference shares, which are redeemable for an amount equal to the FMV of the assets transferred to TC1 Subco minus the amount of the First TC1 Subco Note, and the First TC1 Subco Note. The principal and FMV of the First TC1 Subco Note will be equal to the sum of the amount of cash and the ACB of the Subject Assets, less $XXXXXXXXXX on account of the par value of the TC1 Subco's Class A preference shares.

Pursuant to the transfer, Amalco and TC1 Subco will jointly elect under the provisions of subsection 85(1) of the Act and within the time referred to in subsection 85(6) of the Act, such that the Subject Assets will be transferred to TC1 Subco at an agreed amount equal to the ACB of such assets, which amount will be less than or equal to the FMV of such assets. The aggregate par value of the Class A preference shares (which will constitute the paid-up capital for the purposes of the Companies Act (XXXXXXXXXX )) plus the amount of the First TC1 Subco Note will be equal to the agreed amount referred to herein. The aggregate par value of the Class A preference shares will be less than the redemption price thereof. It is anticipated that the Subject Assets will all be Eligible Property.

Amalco's redemption of TC1 Subco's Class A preference shares

70. On Day 1, immediately after TC1 Subco's issuance of the Class A preference shares to Amalco described in paragraph 69 above, Amalco will demand retraction of the Class A preference shares and such shares will be redeemed by TC1 Subco in consideration for the Second TC1 Subco Note having a principal amount and FMV equal to the aggregate redemption amount of the Class A preference shares issued to Amalco described in paragraph 69 above.

Amalco's purchase for cancellation of its common shares held by TC1

71. On Day 1, immediately following TC1 Subco's redemption of the Class A preference shares described in paragraph 70, Amalco will purchase for cancellation XXXXXXXXXX of its common shares being all the Amalco Common Shares owned by TC1 in two tranches. The first tranche will include such number of Amalco Common Shares required to generate a dividend equivalent to the balance of the LRIP account of Amalco immediately before the redemption of the first tranche. As consideration, Amalco will issue to TC1 the First Amalco Note having a principal amount and FMV equal to the FMV of the Amalco Common Shares included in the first tranche. The second tranche will include the balance of the Amalco Common Shares owned by TC1, which will be purchased for cancellation in consideration for the Second Amalco Note having a principal amount and FMV equal to the FMV of the outstanding Amalco Common Shares included in the second tranche. Amalco will designate the dividend generated on the second tranche as an Eligible Dividend in accordance with subsection 89(14) of the Act. Immediately thereafter, Amalco will reduce its authorized share capital such that the authorized common share capital of Amalco will consist of XXXXXXXXXX common shares with a par value of $XXXXXXXXXX per share, of which XXXXXXXXXX will be issued and outstanding as fully paid and non-assessable and owned by TC2.

Amalco's election not to be a public corporation at the end of its first fiscal period

72. As a result of the redemption of the New Public Preferred Shares described in paragraph 68, Sibling 1 and Sibling 2 will acquire control of Amalco causing a taxation year-end of Amalco pursuant to subsection 249(4) of the Act. In the absence of a particular time specified in the certificate of amalgamation, and an election pursuant to subsection 256(9) of the Act, Amalco's first fiscal period will begin on the first moment of Day 1.

73. Amalco, following the acquisition of control described in paragraph 72, will adopt a period of one day to be its fiscal period, such that the taxation year in which the New Public Preferred Shares are redeemed will end at the end of Day 1. Amalco will not receive any Assessable Dividends other than as provided for herein during this taxation year. Upon redemption of the New Public Preferred Shares, Amalco will be de-listed from the XXXXXXXXXX . Following the redemption, Amalco will apply to cease to be a reporting issuer for securities law purposes. Amalco will make an election in accordance with subparagraph (c)(i) of the definition of public corporation in subsection 89(1) of the Act not to be a Public Corporation effective at the first moment on Day 2 to coincide with the commencement of Amalco's new year starting on Day 2. As a result of the application of subsection 249(3.1) of the Act, Amalco will have a taxation year- end immediately before that time.

Wind-up of TC1 Subco into TC1

74. On Day 2, TC1 Subco will commence to wind-up into its parent company, TC1, by passing the necessary shareholders resolutions and assigning all of its assets, including, without limitation, those assets received from Amalco in paragraph 69 above to TC1 and TC1 shall assume all obligations of TC1 Subco including, without limitation, the First TC1 Subco Note and the Second TC1 Subco Note. TC1 Subco will continue with the procedures necessary for its dissolution pursuant to the Companies Act (XXXXXXXXXX ) following the filing of all necessary elections and returns required to give effect to the proposed transactions described in paragraphs 63 to 76 otherwise required by the Act or by law.

Set-off of the TC1 Subco Notes against the Amalco Notes and the DC Obligation

75. On Day 2, following the assignment of assets and the assumption of obligations described in paragraph 74, the First TC1 Subco Note and the Second TC1 Subco Note will be set-off against the Amalco Notes, the DC Obligation and the assumption of XXXXXXXXXX of the remaining liabilities of Amalco (estimated to be approximately $XXXXXXXXXX ) pursuant to an agreement entered into by Amalco and TC1. Pursuant to that agreement, the set-off will be accepted as full and final payment of such obligations by each of them, in consequence of which the obligations under the First TC1 Subco Note, the Second TC1 Subco Note, the Amalco Notes and the DC Obligation will be extinguished. The transactions described in this paragraph will occur on Day 2.

After the Butterfly Reorganization

76. After the transactions described above, each of Sibling 1 and Sibling 2 will complete the Estate Freeze of their respective interest in TC1 and TC2 as follows:

(a) Trust 1 will be settled with $XXXXXXXXXX . The settlor of Trust 1 will be an as-yet unidentified individual who will be a resident of Canada and a person who is not and will not be a trustee or a beneficiary of Trust 1. The settlor of Trust 1 will not be compensated in any manner, for his or her gift of the trust property. Sibling 1, Sibling 1's adult child and another as-yet unidentified individual who will be a Canadian resident will act as trustees of Trust 1. The beneficiaries of Trust 1 will be Sibling 1, her children and other descendants of Sibling 1 to be born, as well as any private corporation constituted or to be constituted, the shares of which are held by or for the benefit of any one or more of the beneficiaries of Trust 1. The trustees shall have discretion over income and capital during the term of the trust, subject to a power of appointment in favour of Sibling 1, which may be exercised by Sibling 1 other than for her own benefit. At Sibling 1's death, the revenue and capital distribution directives may be established in her last will or pursuant to the power of appointment document. If there is no mention of Trust 1 in the will or in an exercise of the power of appointment, the trustees shall divide the revenue and capital of Trust 1 among Sibling 1's children, per stirpes.

(b) Trust 2 will be settled with $XXXXXXXXXX . The settlor of Trust 2 will be an as-yet unidentified individual who will be a resident of Canada and a person, other than a trustee of Trust 2, who is not be a beneficiary of Trust 2. The settlor of Trust 2 will not be compensated in any manner, for his or her gift of the trust property. Sibling 2, his spouse and another as-yet unidentified individual who will be a Canadian resident will act as trustees of Trust 2. The beneficiaries of Trust 2 will be Sibling 2, his spouse, his children and other descendents of Sibling 2 to be born, as well as any private corporation constituted or to be constituted, the shares of which are held by or for the benefit of any one or more of the beneficiaries of Trust 2. The trustees shall have discretion over income and capital during the term of the trust, subject to a power of appointment in favour of Sibling 2, which may be exercised by Sibling 2 other than for his own benefit. On Sibling 2's death, the revenue and capital distribution directives may be established in his last will or pursuant to his power of appointment. If there is no mention of Trust 2 in the will or in an exercise of the power of appointment, the trustees shall employ the revenue and capital of Trust 2 for the benefit of Sibling 2's spouse and at her death, the remainder of the Trust will be divided among Sibling 2's children, per stirpes.

(c) The share capital of each of TC2 and TC1 will be reorganized to create a class of XXXXXXXXXX Preferred Shares, and XXXXXXXXXX TC Voting Preferred Shares;

(d) Sibling 1 will exchange her XXXXXXXXXX common shares of TC1 for XXXXXXXXXX Preferred Shares of TC1;

(e) Sibling 1 will subscribe for XXXXXXXXXX Voting Preferred Shares of TC1;

(f) Trust 1 will subscribe for XXXXXXXXXX common shares of TC1 for an aggregate subscription price of $XXXXXXXXXX with funds borrowed from a third-party lender;

(g) The loan described in paragraph (f) above will be repaid by Trust 1 following the declaration and payment of a dividend on the common shares of TC1 to Trust 1;

(h) Sibling 2 will exchange his XXXXXXXXXX common shares of TC2 for XXXXXXXXXX Preferred Shares of TC2;

(i) Sibling 2 will subscribe for XXXXXXXXXX Voting Preferred Shares of TC2;

(j) Trust 2 will subscribe for XXXXXXXXXX common shares of TC2 for an aggregate subscription price of $XXXXXXXXXX with funds borrowed from a third-party lender; and

(k) The loan described in paragraph (j) above will be repaid by Trust 2 following the declaration and payment of a dividend on the common shares of TC2 to Trust 2.

The Estate Freeze will be completed by Sibling 1 and Sibling 2 for estate planning purposes and would be completed whether or not the Butterfly Reorganization is undertaken or contemplated.

ADDITIONAL INFORMATION

77. Immediately before the transfer of property described in paragraph 69, the property of Amalco will be classified into three Types of Property for the purposes of section 55 of the Act, as follows:

(a) Cash or near-cash property, consisting of all of the current assets of Amalco, including cash, deposits, temporary investments, accounts receivable, amounts due from affiliates in which Amalco does not have significant influence, prepaid expenses, the current portion of any loans and notes receivable;

(b) Investment property, consisting of all of the assets of Amalco other than cash or near-cash property and business property, any income from which would, for the purposes of the Act, constitute income from property income from a specified investment business. For greater certainty the office furniture and computer equipment owned by Amalco will be classified as investment property; and

(c) Business property, consisting of all of the assets of Amalco other than property described in (a) or (b) above, any income from which would, for the purposes of the Act, be income from a business (other than a specified investment business).

78. In determining the net FMV of each of the three Types of Property of Amalco immediately before the transfer of property described in paragraph 69, the liabilities of Amalco will be allocated to, and will be deducted in the calculation of the net FMV of each Type of Property of Amalco as follows:

(a) Current liabilities of Amalco will be allocated to each cash or near-cash property in the proportion that the FMV of each such property is of the FMV of all cash or near-cash property. The allocation of current liabilities as described herein will not, however, exceed the total FMV of the cash or near cash property of Amalco;

(b) Liabilities (other than current liabilities) of Amalco will be first allocated to the specific properties to which they relate, if any, and then to other properties of the same Type of Property, to the extent of the net FMV of that particular Type of Property; and

(c) Excess unallocated liabilities (including current liabilities remaining unallocated after step (a) above), if any, will be allocated on a pro rata basis to the cash or near-cash property, investment property and business property, if any, of Amalco, based on the relative net FMV of each Type of Property prior to the allocation of such excess unallocated liabilities.

It is anticipated that Amalco will only have cash or near-cash property and investment property at the time of the distribution described in paragraph 69. For greater certainty, any cash placed with the transfer agent on the redemption of the New Public Preferred Shares will not be considered an asset of Amalco for the purposes of the distribution.

PURPOSE OF THE PROPOSED TRANSACTIONS

79. The primary purpose of the Butterfly Reorganization is to permit TC1 to separate its proportionate interest in the assets of DC and DC Subco from the remaining DC and DC Subco assets so that TC1 has direct control over the investment policies to be applied to such assets.

80. In furtherance of the overall purpose of the Butterfly Reorganization, the secondary purposes of the Proposed Transactions are:

(a) to make DC Subco a wholly-owned subsidiary of DC for securities law purposes in order to facilitate the Amalgamation described in paragraph 66;

(b) to enable DC and DC Subco to consolidate their investment holdings, to de-list from the XXXXXXXXXX , to reduce the costs associated with compliance with securities laws and stock exchange listing requirements and to increase managerial flexibility and efficiency over the investment policies to be applied to its assets.

(c) to convert Amalco into a private corporation to simplify its corporate structure, and facilitate its management by Sibling 2 and his heirs; and

(d) to manage the taxation year-ends created in the course of the proposed transactions in order to provide for the proper allocation of RDTOH, GRIP and LRIP accounts and to reduce costs associated with multiple taxation year-ends.

RULINGS

Provided that the preceding statements constitute a complete and accurate disclosure of all the relevant facts, the proposed transactions, the additional information and the purpose of the proposed transactions, and the proposed transactions described in paragraphs 63 to 76 are completed in the manner contemplated above, our rulings are as follows:

A. Provided that the appropriate joint elections are filed in the prescribed form and manner within the time limits specified in subsection 85(6), the provisions of subsection 85(1) of the Act will apply to Amalco's transfer of the Subject Assets that are Eligible Property to TC1 Subco as described in paragraph 69 above, such that the agreed amounts in respect of each property will be deemed to be the transferor's proceeds of disposition and the transferee's cost thereof pursuant to paragraph 85(1)(a) of the Act, and, for greater certainty, paragraph 85(1)(e.2) of the Act will not apply to the transfers referred to herein.

B. As a result of Amalco's retraction of the Class A preference shares as described in paragraph 70 above and the consequential purchase for cancellation of the common shares of Amalco as described in paragraph 71 above, by virtue of paragraphs 84(3)(a) and (b) of the Act:

(a) TC1 Subco will be deemed to have paid, and Amalco will be deemed to have received, a Taxable Dividend equal to the amount by which the amount paid by TC1 Subco upon the retraction of the Class A preference shares exceeds the PUC of the Class A preference shares immediately before their retractation; and

(b) Amalco will be deemed to have paid and TC1 will be deemed to have received, a Taxable Dividend equal to the amount by which the amount paid in respect of the purchase for cancellation of the common shares of Amalco exceeds the PUC of the Amalco common shares that are so purchased.

C. The Taxable Dividends deemed to be paid by TC1 Subco, and received by Amalco as a result of the redemption of the Class A preference shares as described in paragraph 70 above:

(a) Will be included in computing the income of Amalco pursuant to subsection 82(1) and paragraph 12(1)(j) of the Act;

(b) Will be deductible by Amalco in computing its taxable income for the year in which such a dividend is deemed to have been received pursuant to subsection 112(1) of the Act. For greater certainty, the deduction of the dividend deemed to have been received by Amalco will not be prohibited by subsections 112(2.1), (2.2), (2.3) or (2.4) of the Act;

(c) Will be excluded in determining the proceeds of disposition of the Class A preference shares held by Amalco pursuant to paragraph (j) of the definition of proceeds of disposition in section 54 of the Act;

(d) Will reduce the loss, if any, realized by Amalco in respect of the disposition of the Class A preference shares held by Amalco pursuant to subsection 112(3) of the Act;

(e) Will not be subject to Part IV tax except to the extent that TC1 Subco is entitled to a dividend refund under subsection 129(1) of the Act for the taxation year in which TC1 Subco is deemed to have paid such a dividend; and

(f) Will not be subject to Part IV.1 or VI.1 since the dividend deemed to be paid by TC1 Subco and received by Amalco respectively qualifies as an excluded dividend and an excepted dividend as defined in subsections 191(1) and section 187.1 of the Act.

D. The Taxable Dividends deemed to be paid by Amalco, and received TC1 as a result of the purchase for cancellation of the common shares of Amalco described in paragraph 71:

(a) Will be included in computing the income of TC1 pursuant to subsection 82(1) and paragraph 12(1)(j) of the Act;

(b) Will be deductible by TC1 in computing its taxable income for the year in which such a dividend is deemed to have been received pursuant to subsection 112(1) of the Act. For greater certainty, the deduction of the dividend deemed to have been received by TC1 will not be prohibited by subsections 112(2.1), (2.2), (2.3) or (2.4) of the Act;

(c) Will be excluded in determining the proceeds of disposition of the common shares of Amalco held by TC1 pursuant to paragraph (j) of the definition of proceeds of disposition in section 54 of the Act;

(d) Will reduce the loss, if any, realized by TC1 in respect of the disposition of the common shares of Amalco held by TC1 pursuant to subsection 112(3) of the Act;

(e) Will not be subject to Part IV tax except to the extent that Amalco is entitled to a dividend refund under subsection 129(1) of the Act for the taxation year in which Amalco is deemed to have paid such a dividend; and

(f) Will not be subject to Part IV.1 or VI.1 since the dividend deemed to be paid by Amalco and received by TC1 respectively qualifies as an excluded dividend and an excepted dividend as defined in subsections 191(1) and section 187.1 of the Act.

E. Provided that, as part of the series of transactions or events that include the proposed transactions described in paragraphs 63 to 76 above, there is not:

(a) an acquisition of property in circumstances described in paragraph 55(3.1)(a) of the Act;

(b) a disposition of property in the circumstances described in subparagraph 55(3.1)(b)(i) of the Act;

(c) an acquisition of control in the circumstances described in subparagraph 55(3.1)(b)(ii) of the Act;

(d) an acquisition of shares of a distributing corporation in the circumstances described in subparagraph 55(3.1)(b)(iii) of the Act; or

(e) an acquisition of property in the circumstances described in subparagraph 55(3.1)(c) or 55(3.1)(d)of the Act;

which has not been described herein, then by virtue of paragraph 55(3)(b) of the Act, subsection 55(2) of the Act will not apply to the Taxable Dividends described in Ruling B above, and for greater certainty, subsection 55(3.1) of the Act will not apply to deny the exemption under paragraph 55(3)(b) of the Act.

F. The redemption of the non-voting second preferred shares of DC Subco as described in paragraph 65 above, the redemption of the New Public Preferred Shares as described in paragraph 68 above, and the purchase for cancellation of the common shares of Amalco held by TC1 described in paragraph 71 above will not, in and of themselves, cause subsection 87 of the Act not to apply to the Amalgamation.

G. The Amalgamation and the acquisition of control resulting from Amalco's redemption of its New Public Preferred Shares described in paragraph 68 above will be deemed to occur at the earliest time in Day 1. Amalco's first taxation year-end will come to an end at the end of Day 1, and a new taxation year will be deemed to have commenced at the earliest time in Day 2 pursuant to subsection 249(3.1) of the Act.

H. The purchase for cancellation of the Amalco common shares in two tranches as described in paragraph 71 above to will not cause paragraph (c) of the definition of "excessive eligible dividend designation" in subsection 89(1) of the Act to apply.

I. The cancellation of the First TC1 Subco Note, the Second TC1 Subco Note, and the Amalco Notes by way of set-off as described in paragraph 75 above will not, in and of itself, result in a forgiven amount within the meaning of subsection 80(1) of the Act.

J. The provisions of subsections 15(1), 56(2), 69(1), 69(4) and 246(1) of the Act will not apply to the Butterfly Reorganization.

K. The provisions of subsection 245(2) of the Act will not be applied as a result of the proposed transactions described in paragraphs 63 to 76 above, in and by themselves, to re-determine the tax consequences confirmed in the rulings given above.

The above rulings are subject to the limitations and qualifications set out in Information Circular 70-6R5 issued by the Canada Revenue Agency ("CRA") on May 17, 2002, and are binding on the CRA provided that the steps described in the proposed transactions described in paragraphs 63 to 76 above are completed within 6 months of the date of this letter.

Moreover, the above rulings are based on the law as it presently reads, and do not take into account any proposed amendments to the Act which, if enacted, could have an effect on the rulings provided herein.

OPINION

If enacted in the same form as proposed in Bill C-10 of the 39th Parliament, the amendments to subsection 55(1), paragraphs 55(3.1)(b) and 55(3.2)(h) and the proposed additions of subsections 55(3.4), 55(3.5) and 55(6) would not affect the rulings given above.

OTHER COMMENTS

Nothing in this letter should be construed as implying that the CRA has confirmed, reviewed or made any determination in respect of:

(a) The FMV or the ACB of any particular asset, the PUC of any share, and the outstanding balance of various tax accounts such as GRIP, LRIP and RDTOH for any of the corporate entities described herein;

(b) Any other tax consequences relating to the facts, and proposed transactions other than those specifically described in the above rulings; and

(c) The related transactions to be included in the series of transactions that includes the receipt of a dividend deemed to be paid and received in the course to the Butterfly Reorganization.

An invoice for our fees in connection with this Ruling Request will be forwarded to you under separate cover.

For Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Legislation Branch