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: Supplemental Ruling Request to 2007-023388 dated XXXXXXXXXX , 2007. Minor amendments to wording of several paragraphs.
Position: No effect on original rulings as issued.
XXXXXXXXXX 2008-026903
XXXXXXXXXX , 2008
Dear XXXXXXXXXX :
Re: Advance Income Tax Ruling
XXXXXXXXXX
This is in reply to your letter of XXXXXXXXXX wherein you requested amendments to the advance income tax ruling number 2007-023388 dated XXXXXXXXXX , 2007 as amended by document 2007-025635 dated XXXXXXXXXX , 2007 (the "Ruling"). As a result, the Ruling is amended to delete the first sentence of paragraph 26 and to substitute the following:
Each of Sibling 1 Co, Sibling 2 Co and Sibling 3 Co (collectively referred to as the "Sibling Cos" and any one in the singular as a "Sibling Co") and TPH will, pursuant to articles of amendment under the BCA, create and authorize an unlimited number of a new class of Special Shares (the "Special A Shares").
Paragraph 26 of the Ruling is further amended to delete the second sentence and to substitute the following:
The Special A Shares will be non-voting, and each of them will be redeemable and retractable for an amount (the "Special A Shares Redemption Amount") equal to the quotient obtained by dividing the fair market value of the property sold, or transferred to, or exchanged with each Sibling Co as consideration for the issue of the Special A Shares by such Sibling Co, by the total number of Special A Shares issued as consideration for such property sold or transferred to or exchanged with such Sibling Co. The aforesaid fair market value of the property sold or transferred to or exchanged with each Sibling Co shall be determined by the board of directors thereof as at the date of transfer of such property in accordance with generally accepted valuation principles and in reliance on such appraisal reports as it deems necessary or prudent. Each of the Special A Shares will have a non-cumulative dividend entitlement of XXXXXXXXXX % per annum calculated on the Special A Shares Redemption Amount. The Special A Shares will rank in priority to the shares of all other classes as regards dividends, payment on liquidation and in the event of contemporaneous retractions. These attributes of the Special A Shares extend to the Special A Shares authorized by TPH.
Paragraph 26 of the Ruling is further amended to add the following after the third paragraph thereof:
Each of the Sibling Cos will also, pursuant to articles of amendment under the BCA, create and authorize an unlimited number of a new class of Special Shares (the "Special C Shares"). Each Special C Share will be non-voting, and will be redeemable and retractable for an amount (the "Special C Shares Redemption Amount") equal to the quotient obtained by dividing the fair market value of the property in exchange for which such Special C Share is issued by the total number of Special C Shares to be issued in exchange for such property. The aforesaid fair market value of the property in exchange for which the Special C Shares are issued shall be determined by the board of directors thereof as at the date of exchange of such property in accordance with generally accepted valuation principles and in reliance on such appraisal reports as it deems necessary or prudent. Each of the Special C Shares will have a non-cumulative dividend entitlement of XXXXXXXXXX % per annum calculated on the Special C Shares Redemption Amount.
The articles of amendment for each of the Sibling Cos will also set out that, if any one of Sibling 1 Co, Sibling 2 Co and Sibling 3 Co, as the case may be, at any time, acquires any of its Special C Shares by way of a purchase, redemption or cancellation, such corporation will pay the lesser of:
1) the aggregate Special C Shares Redemption Amount of the shares to be purchased, redeemed or cancelled at that time, and
2) the net realizable value of the assets less the sum of the liabilities of the corporation immediately before such acquisition and the aggregate Special A Shares Redemption Amount of the Special A Shares issued,
divided by the number of Special C Shares purchased, redeemed or cancelled.
The terms of these Special C Shares will also state that no dividends will be paid on other classes of shares so as to reduce the value of the Special C Shares below the aggregate Special C Shares Redemption Amount of the Special C Shares issued. The Special C Shares shall have a provision that any preference, right, condition or limitation attaching to them can be amended only on a XXXXXXXXXX majority vote of the holders thereof and on a XXXXXXXXXX majority vote of the holders of the other classes of shares, each voting separately.
Paragraph 28 of the Ruling is amended to delete the current paragraph and to substitute the following:
TG II will, pursuant to articles of amendment under the BCA, create and authorize an unlimited number of a new class of Special Shares (the "Special C Shares"). Each Special C Share will have one vote, and will be redeemable and retractable for an amount (the "Special C Shares Redemption Amount") equal to the quotient obtained by dividing the fair market value of the property sold or transferred to or exchanged with TG II as consideration for the issue of the Special C Shares by TG II by the number of Special C Shares issued as consideration for such property sold or transferred to or exchanged with TG II. The aforesaid fair market value of the property sold or transferred to or exchanged with TG II shall be determined by the board of directors of TG II as at the date of transfer of such property in accordance with generally accepted valuation principles and in reliance on such appraisal reports as it deems necessary or prudent. The Special C Shares will have a non-cumulative dividend entitlement of XXXXXXXXXX % per annum calculated on the Special C Shares Redemption Amount.
The articles of amendment of TG II will also set out that if TG II acquires any of its Special C Shares by way of a purchase, redemption or cancellation, it will pay the lesser of the aggregate Special C Shares Redemption Amount of the shares to be purchased, redeemed or cancelled at that time and the net realizable value of the assets less liabilities of the corporation immediately before such acquisition divided by the number of Special C shares purchased, redeemed or cancelled. The terms of these Special C Shares will also state that no dividends will be paid on other classes of shares so as to reduce the value of the Special C Shares below the aggregate Special C Shares Redemption Amount. The Special C Shares shall have a provision that any preference, right, condition or limitation attaching to them can be amended only on a XXXXXXXXXX majority vote of the holders thereof and on a XXXXXXXXXX of majority vote of the holders of the other classes of shares, each voting separately.
Paragraphs 29, 30, and 31 of the Ruling are amended to delete the words in parentheses indicating the approximate fair market value of the BL, DC and OL common shares.
Paragraph 29 of the Ruling is also amended to delete the second sentence and to substitute the following:
As consideration therefor, Sibling 3 Co will issue XXXXXXXXXX Special A Shares to Sibling 3.
Paragraph 30 of the Ruling is also amended to delete the second sentence and to substitute the following:
As consideration therefor, Sibling 1 Co will issue XXXXXXXXXX Special A Shares to Sibling 1.
Paragraph 31 of the Ruling is also amended to delete the second sentence and to substitute the following:
As consideration therefor, Sibling 2 Co will issue XXXXXXXXXX Special A Shares to Sibling 2.
Paragraph 36 of the Ruling is amended to delete the second sentence and to substitute the following:
As consideration therefor, TG II will issue XXXXXXXXXX Special C Shares to DE.
Paragraph 46 of the Ruling is amended to delete the third, fourth, fifth, sixth, and seventh sentences and to substitute the following:
In addition, pursuant to the articles of amendment filed to create the new share classes as provided in paragraph 26, Sibling 1 will exchange his XXXXXXXXXX common shares of Sibling 1 Co for XXXXXXXXXX Special C Shares of Sibling 1 Co. Similarly, Sibling 2 Co will exchange his XXXXXXXXXX common shares of Sibling 2 Co for XXXXXXXXXX Special C Shares of Sibling 2 Co and Sibling 3 will exchange his XXXXXXXXXX common shares of Sibling 3 Co for XXXXXXXXXX Special C Shares of Sibling 3 Co. No joint election will be filed under subsection 85(1) in respect of these share exchanges.
The addition to the stated capital, under the BCA, of the Special C Shares issued by Sibling 1 Co on the share exchange described above, will not exceed the aggregate paid-up capital of the common shares of Sibling 1 Co so exchanged. Similarly, the addition to the stated capital, under the BCA, of the Special C Shares issued by Sibling 2 Co on the share exchange described above, will not exceed the aggregate paid-up capital of the common shares of Sibling 2 Co so exchanged and the addition to the stated capital, under the BCA, of the Special C Shares issued by Sibling 3 Co on the share exchange described above, will not exceed the aggregate paid-up capital of the common shares of Sibling 3 Co so exchanged.
We hereby confirm that, subject to the conditions, limitations, qualifications and comments set out in the Ruling, amended as described above, the rulings given therein will continue to be binding on the Canada Revenue Agency until XXXXXXXXXX .
Yours truly,
XXXXXXXXXX
Manager
Corporate Reorganizations Section II
Reorganizations and Resources Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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