2009 Ruling 2009-0329411R3 - DSU

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 deferred share unit plan satisfies the conditions in paragraph 6801(d)?

Position: Yes.

Reasons: Previous positions.

XXXXXXXXXX 								2009-032941

XXXXXXXXXX , 2009

Dear XXXXXXXXXX :

Re: Advance Income Tax Ruling
XXXXXXXXXX
Executive Deferred Share Unit Plan

This is in reply to your letter of XXXXXXXXXX , wherein you requested an advance income tax ruling on behalf of the above named taxpayer. We also acknowledge additional information you provided to us during various telephone conversations (XXXXXXXXXX ) and the various correspondence received in connection with your ruling request.

We understand that, to the best of your knowledge and that of XXXXXXXXXX , none of the issues involved in this ruling request are:

(i) dealt with in an earlier return of XXXXXXXXXX or a related person;
(ii) being considered by a tax services office or a taxation centre in connection with a previously filed tax return of XXXXXXXXXX or a related person;
(iii) under objection by XXXXXXXXXX or a related person;
(iv) before the courts, or if a judgment has been issued, the time limit for appeal to a higher court has expired, nor
(v) the subject of a previous ruling issued to XXXXXXXXXX or a related person by the Income Tax Rulings Directorate.

Unless otherwise stated, all references to a statute are to the Income Tax Act (Canada), R.S.C. 1985, c.1 (5th Supp.), as amended to the date of this letter (the "Act"), and all terms and conditions used herein that are defined in the Act have the meaning given in such definition unless otherwise indicated.

Our understanding of the facts, proposed transactions and the purpose of the proposed transactions is as follows:

Definitions and Abbreviations

a) "Account" means an account maintained for each Participant on the books of the Company, which will be credited with Deferred Share Units and Dividend Equivalents in accordance with the terms of the Plan;

b) "Administrator" means the Board, or committee or person appointed by the Board pursuant to XXXXXXXXXX hereof;

c) "Affiliate" means any related or associated corporation, or any corporation that is a member of a group of corporations that do not deal at arm's length, notwithstanding that they may not be related or associated for the purposes of the Act. For purposes of this definition, the terms "related", "associated" and "arm's length" have the meanings ascribed to such terms pursuant to subsections 251(2), 256(1) and 251(1), respectively;

d) "Annual Salary" means the annual base salary of a Participant, as determined at the inception of the Plan and adjusted every XXXXXXXXXX years thereafter (or at a later date, as the Administrator may determine in its discretion);

e) "Applicable Withholding Taxes" means any and all taxes and other source deductions or other amounts which the Company is required by law to withhold from any amounts paid or credited to an Account under the Plan;

f) "Award Date" means each date on which DSUs are credited to a Participant's Account, which shall be, unless otherwise determined by the Administrator, the last business day of each month of each Year; with respect to a bonus, the Award Date shall be the date on which the bonus is, or would otherwise be, paid to the Participant;

g) For XXXXXXXXXX Participants only, "Award Date" shall be the date on which a portion of their bonus is converted into DSUs and the balance is paid in cash;

h) "Beneficiaries" means such individuals who, on the date of a Participant's death, are the persons designated in accordance with the Plan and applicable laws to receive the value of the DSUs credited to the Participant on the date of death, or where no such individuals have been validly designated by the Participant, or where the individuals so designated do not survive the Participant, the Participant's legal representative;

i) "Board" means the Board of Directors of the Company;

j) "Broker" means a securities dealer, independent from the Company, who has been designated by the Company to purchase Shares in accordance with the Plan and who is a member of the Exchange;

k) "Company" means XXXXXXXXXX . and its subsidiaries and affiliated companies or, individually, any corporate entity included within such group, as the context indicates, whether by amalgamation, merger or otherwise;

l) "CRA" means the Canada Revenue Agency;

m) "Deferred Share Unit" or "DSU" means a unit credited by the Company to a Participant's Account by way of a bookkeeping entry in the books of the Company and administered pursuant to the terms of the Plan;

n) "Dividend Equivalent" means a bookkeeping entry equivalent in value to a dividend paid on a Share, credited to a Participant's Account in accordance with the Plan;

o) "DSU Value" means the greater of:

(i) the product arrived at by multiplying the number of DSUs credited to a Participant's Account at a particular date, by the Fair Market Value of the Shares; and
(ii) the portion of aggregate Annual Salary and bonus of a Participant converted into DSUs under the Plan as at a particular date;

p) "Effective Date" means the date on which a favourable advance tax ruling is received from the CRA confirming that the Plan is a "prescribed plan or arrangement" in accordance with paragraph 6801(d) of the Income Tax Regulations made under the Act;

q) "Election Notice" means an annual written notice to the Administrator, in prescribed form, by a Participant, other than a XXXXXXXXXX Participant, generally no later than XXXXXXXXXX prior to the start of a Year, confirming the Participant's election to receive a percentage of his Annual Salary and bonus in respect of such Year in the form of DSUs under the Plan;

r) "Election Date" means the date on which a Participant, other than a XXXXXXXXXX Participant, delivers an Election Notice to the Administrator;

s) "Eligible Executive" means an employee of the Company designated by the Administrator as an Eligible Executive, which designation shall include the Management Level of the Eligible Executive;

t) "Exchange" means the XXXXXXXXXX Stock Exchange or, in the event that the Shares are listed on another stock exchange in Canada or XXXXXXXXXX and not on the XXXXXXXXXX Stock Exchange, such other stock exchange, or, in the event that the Shares are listed on more than one stock exchange in Canada or XXXXXXXXXX and not on the XXXXXXXXXX Stock Exchange, such stock exchange as shall be designated by the Board;

u) "Fair Market Value" means, for a particular date, the weighted average trading price of the Shares on the Exchange for the five (5) consecutive trading days immediately preceding that particular date;

v) "XXXXXXXXXX Participant" means an Eligible Executive who is considered to be a current salaried employee belonging to the top management of the Company, or a corporate officer ("XXXXXXXXXX ") of the Company, and who in all cases is a tax resident of XXXXXXXXXX , and who participates in the Plan;

w) "Insiders" means, collectively, the directors and officers of the Company and any person holding more than ten percent (10%) of the issued and outstanding Shares or XXXXXXXXXX Voting Shares of the Company;

x) "Management Level" means any of the following categories: Executive Management, Corporate Executive, and Divisional Executive, as well as any other category as may be designated from time to time by the Board in its discretion;

y) "Maximum Commitment" means the maximum value that can exist at any time in a Participant's Account, calculated by reference to the Participant's Annual Salary, on the basis of the Fair Market Value as at the date of, or for Participants other than XXXXXXXXXX Participants, immediately prior to, the Election Date;

The Maximum Commitment is as follows:

Executive Management: XXXXXXXXXX times Annual Salary
Corporate Executive: XXXXXXXXXX times Annual Salary
Divisional Executive: XXXXXXXXXX times Annual Salary
Other Eligible Executive: XXXXXXXXXX time Annual Salary;

z) "Minimum Annual Commitment" means the lower of: (i) Share Ownership Value less Value of Shares Owned, and less DSU Value, all divided by the number of years remaining until achieving the Share Ownership Value for the Participant; and (ii) thirty percent (30%) of the Participant's bonus paid in that year;

aa) "Participant" means an Eligible Executive who executes an Election Notice and participates in the Plan and shall include a "XXXXXXXXXX Participant", except when the Plan specifically states that a provision is not applicable to a XXXXXXXXXX Participant;

bb) "Plan" means the XXXXXXXXXX , as it may be amended from time to time;

cc) "Redemption" means the settlement of a Participant's DSUs, in accordance with the Plan, in cash or in Shares, as determined by the Administrator in its discretion;

dd) "Redemption Date" with respect to a Participant regarding whom a Termination Date has occurred, means the day specified by the Participant as the day on which DSUs credited to the Participant's Account may be redeemed;

ee) "Redemption Notice" means a written notice delivered to the Administrator, in prescribed form, by the Participant of his decision to redeem the DSUs credited to the Participant's Account;

ff) "Share" means a XXXXXXXXXX Voting Share in the capital stock of the Company, without nominal or par value;

gg) "Share Ownership Value" means the minimum aggregate Value of Shares Owned and DSU Value required to be attained within XXXXXXXXXX years (as such period may be extended by the Board in its discretion) of the Effective Date, or of becoming an Eligible Executive, whichever falls later, by each Eligible Executive, and calculated as follows:

Executive Management: XXXXXXXXXX times Annual Salary
Corporate Executive: XXXXXXXXXX time Annual Salary
Divisional Executive: XXXXXXXXXX times Annual Salary
Other Eligible Executive: XXXXXXXXXX times Annual Salary;

hh) "Termination Date" in respect of a Participant other than a XXXXXXXXXX Participant or XXXXXXXXXX Participant, means the date on which the Participant has ceased to be an employee of the Company for any reason whatsoever;

ii) For XXXXXXXXXX Participants: "Termination Date" means the date of "separation from service", as such term is defined in XXXXXXXXXX

jj) For XXXXXXXXXX Participants: "Termination Date" means, in the case of a salaried employee, the date of the actual end of the employment relationship, or, in the case of a corporate officer, the date of termination of a corporate office; for XXXXXXXXXX Participants who are corporate officers having his/her employment contract suspended by virtue of this position, "Termination Date" means the later of the date of termination of the corporate office and the date of termination of the employment relationship;

kk) "XXXXXXXXXX Participant" means a Participant in the Plan who is a XXXXXXXXXX ;

ll) "Value of Shares Owned" means, for a Participant other than a XXXXXXXXXX Participant, the greater of:

(i) Fair Market Value of the Shares at the Election Date; and
(ii) the aggregate cost of the Shares to the Participant;

For a XXXXXXXXXX Participant, "Value of Shares Owned" means the greater of:

(i) Fair Market Value of the Shares on the last day of the month prior to the date of payment of his annual bonus; and
(ii) the aggregate cost of the Shares to the Participant; and

mm) "Year" means a fiscal year commencing on XXXXXXXXXX and ending on XXXXXXXXXX .

Facts

1. The Company was incorporated under the Laws of XXXXXXXXXX and its head office is located in XXXXXXXXXX , Canada. The Company is a taxable Canadian Corporation and a public Corporation. The expressions "taxable Canadian Corporation" and "public Corporation" have the meanings assigned by subsection 89(1).

2. The Company's common shares are listed and traded on the XXXXXXXXXX Stock Exchange and the XXXXXXXXXX Exchange.

3. The Company's address is as follows:

XXXXXXXXXX

4. The Company files its tax returns with the XXXXXXXXXX Tax Centre and is located within the area served by the XXXXXXXXXX Tax Services Office.

5. The Company's primary business is that of XXXXXXXXXX .

Proposed Transactions

6. The Company will establish the Plan for the benefit of Eligible Executives of the Company in various countries, including Canada.

7. The Plan shall be administered by the Board or, if so determined by the Board, by the Human Resources and Corporate Governance Committee of the Board, any other committee of the Board, or other person.

Participation in the Plan

8. As of the Effective Date, each Participant may elect on an annual basis to be paid a percentage of his Annual Salary and bonus in the form of DSUs, with the balance, if any, to be paid in cash, in order to meet the Minimum Annual Commitment and, ultimately, the Share Ownership Value requirements, without exceeding the Maximum Commitment.

9. Every Participant shall attain the Share Ownership Value within XXXXXXXXXX years (or by such later date as may be determined by the Board in its discretion) from the Effective Date or from becoming a Participant and cannot exceed the Maximum Commitment.

Share Ownership Value

10. In order to attain the Share Ownership Value, a Participant may elect to receive up to one hundred percent (100%) of his Annual Salary and/or bonus in the form of DSUs, may acquire Shares on the Exchange, or attain the Share Ownership Value through a combination of the foregoing.

11. Immediately before each Election Date, the Company shall determine if the Share Ownership Value has been attained, and so advise the Participant.

12. In order to determine whether the Share Ownership Value has been attained, the Company shall keep detailed records of ownership of Shares outside the Plan by each Participant, on an annual basis, based on information provided by the Participant or on public filings by the Participant.

13. If a Participant changes Management Level, the Share Ownership Value required for the Participant will change accordingly. If the Participant's Account does not meet the minimum required Share Ownership Value corresponding to the new Management Level, the Board in its discretion shall establish, at the time of the change in the Management Level, the period during which the Participant must attain the required Share Ownership Value.

14. If the Share Ownership Value is attained, a Participant shall not be required to receive Annual Salary and/or bonus in the form of DSUs with respect to any future year. A new determination in this respect shall be made every year. For greater certainty, any such determination shall not affect an Election Notice that has been made for the then-current year or for any previous year.

15. If an Account contains an amount equal to, or in excess of, the Maximum Commitment, further payment of Annual Salary and/or bonus in the form of DSUs shall not be permitted, or, in the case of a XXXXXXXXXX Participant, required, regardless of the Fair Market Value thereafter, and redemptions for any excess will not be permitted prior to the Participant's Termination Date. For greater certainty, any such determination shall not affect an Election Notice that has been made for the then-current year or for any previous year.

16. The Share Ownership Value for any Participant shall be based on such Participant's Annual Salary at the Effective Date, or at his date of employment, whichever falls later.

17. The Share Ownership Value shall be revised every XXXXXXXXXX years (or at such later date as may be determined by the Board in its discretion), and will be based on the Annual Salary of each Participant at that time.

Election Notice

18. Each Election Notice (other than for a XXXXXXXXXX Participant) shall be substantially in the form set out in Schedule A to the Plan (as the same may be amended from time to time), each Election Notice for a XXXXXXXXXX Participant shall be substantially in the form set out in Schedule B to the Plan (as the same may be amended from time to time), and shall in all cases be signed by the Eligible Executive and delivered to the Vice-President, Finance of the Company.

19. An Eligible Executive shall not be entitled to participate in the Plan unless the Eligible Executive agrees to be bound by the provisions of the Plan.

20. By filing an Election Notice, an Eligible Executive shall be deemed conclusively to have accepted and consented to all terms of the Plan and all bona fide actions or decisions made by the Company, Board and Administrator, as the case may be, in relation to the Plan. Such terms and consent shall also apply to and be binding on the Beneficiaries of each Participant. The Administrator shall provide each Eligible Executive with a copy of the Plan.

21. For the first Year of the Plan, as of the Effective Date, Eligible Executives who wish to be Participants must file their Election Notices with the Vice-President, Finance of the Company as soon as possible and no later than thirty (30) days after the Effective Date.

22. For XXXXXXXXXX Participants only, the Election Notice must be filed with the Vice-President, Finance of the Company within thirty (30) days of becoming an "eligible participant" in the Plan, as defined by XXXXXXXXXX

23. In the case of a new Eligible Executive who wishes to be a Participant, the Election Notice must be filed with the Vice-President, Finance of the Company as soon as possible and no later than thirty (30) days after the commencement of the Eligible Executive's employment or appointment, as the case may be. The election shall be effective on the first business day following the date of the Company's receipt of the Election Notice until the final day of that Year.

24. For XXXXXXXXXX Participants, the Election Notice must be filed with the Vice-President, Finance of the Company within thirty (30) days of becoming an "eligible participant" in the Plan, as defined by XXXXXXXXXX

25. For any subsequent Year, an Eligible Executive who wishes to be a Participant must file his Election Notice with the Vice-President, Finance of the Company by no later than XXXXXXXXXX of the Year preceding the Year during which the Annual Salary and bonus to which such Election Notice shall apply will be earned.

26. Once a Participant's Account reaches an amount equal to, or in excess of, the Maximum Commitment, any Election Notice shall be deemed ineffective in its entirety, further payment of Annual Salary and/or bonus in the form of DSUs shall not be permitted, and redemptions for any excess over the Maximum Commitment will not be permitted prior to the Participant's Termination Date.

27. If an Eligible Executive does not deliver an Election Notice to the Administrator as described above, such Eligible Executive shall not be a Participant and shall receive his Annual Salary and bonus in cash as it becomes payable to him.

28. Once an Election Notice becomes effective, it shall be irrevocable for the relevant Year and no modifications to the Election Notice shall be permitted.

Calculation of DSUs

29. The number of DSUs, or fractions thereof, that a Participant is entitled to receive in any Year shall be equal to the number that results by dividing: (a) the portion of the Participant's Annual Salary and/or bonus that the Participant has elected to receive in DSUs, by (b) the Fair Market Value of a Share on each of the various Award Dates.

Award of DSUs

30. DSUs related to Annual Salary shall be credited to a Participant's Account on the last business day of each month of each Year. The portion of a Participant's Annual Salary payable in cash in respect of a month, if any, shall be paid on the last business day of the applicable month for each Year.

31. DSUs related to Bonus shall be credited to a Participant's Account on the day on which the bonus is, or would otherwise be, paid to the Participant. The portion of a Participant's bonus payable in cash shall be paid to the Participant on that day.

Dividend Equivalents

32. In the event that the Company pays a dividend on the Shares, Dividend Equivalents, in respect of DSUs, shall be credited to a Participant's Account on the dividend-payment date as if the Participant were a shareholder of record of the Shares on the record date for the payment of such dividends. No Dividend Equivalents shall be credited to a Participant's Account after the Termination Date.

33. Dividend Equivalents shall be credited to a Participant's Account as additional DSUs, or fractions thereof, with the number of additional DSUs equal to the number that results by dividing: (a) the actual amount of dividends that would have been paid if the Participant were a shareholder of record of the number of Shares equal in number to the number of DSUs in the Participant's Account on the record date, by (b) the Fair Market Value of a Share on the date on which the dividends on the Shares are payable.

34. For greater certainty, no DSUs representing Dividend Equivalents shall be credited to a Participant's Account in relation to DSUs that have been previously cancelled in accordance with the Plan.

Redemption Notice and Redemption Date

35. A Redemption Notice executed by a Participant, substantially in the form set out in Schedule C to the Plan (as the same may be amended from time to time), may be filed with the Administrator immediately after the Participant's Termination Date and not later than XXXXXXXXXX days before the end of the Year commencing immediately after the Year in which Participant's Termination Date occurs, specifying the Participant's Redemption Date. A Redemption Notice shall be considered filed on the date on which the Redemption Notice is received by the Vice-President, Finance of the Company. The US Participants do not file a Redemption Notice and the Redemption for US Participants shall take place as specified in the Election Notice.

36. The Redemption Date shall be specified as: (a) not later than XXXXXXXXXX of the Year commencing immediately after the Year in which Participant's Termination Date occurs; and (b) not before the Termination Date.

37. Where a Participant fails to file a Redemption Notice as described above, the Participant's Redemption Date shall be XXXXXXXXXX of the Year commencing immediately after the Year in which the Participant's Termination Date occurs.

Payment of the DSU Benefit

38. The Board may, in its discretion, elect to pay to a Participant or Beneficiaries, as the case may be, the DSUs credited to the Participant's Account, in Shares issued from treasury, in Shares purchased on the Exchange, in cash, or a combination thereof, net of Applicable Withholding Taxes.

Payment in Treasury Shares

39. The maximum number of Shares which may be issued from the Company's treasury in aggregate to all Participants pursuant to the Plan is XXXXXXXXXX . Subject to the receipt of any necessary shareholder and regulatory approvals, where the Company issues Shares from treasury, the number of Shares issued to a Participant shall be equal to:

[(The number of DSU's credited to the Participant's Account as at Termination Date X Fair Market Value of a Share as at Termination Date) - Applicable Withholding Taxes]/ Fair Market Value of a Share as at Redemption Date.

40. Fractional Shares shall not be issued and where a Participant would be entitled to receive a fractional Share in respect of any fractional DSU credited to the Participant's Account, the Company shall pay to such Participant, in lieu of such fractional Share, cash equal to the Fair Market Value on the Termination Date of such fractional Share, net of Applicable Withholding Taxes.

Payment in Shares Purchased on the Exchange

41. Where Shares are purchased on the Exchange to be delivered to a Participant, the Company shall remit, in cash, to the Broker, the product that results by multiplying: (a) the number of DSUs credited to the Participant's Account as at the Termination Date, by (b) the Fair Market Value of a Share on the Termination Date, net of Applicable Withholding Taxes.

42. Fractional Shares shall not be purchased and where a Participant would be entitled to receive a fractional Share in respect of any fractional DSU credited to the Participant's Account, the Company shall pay to such Participant, in lieu of such fractional Share, cash equal to the Fair Market Value on the Termination Date of such fractional Share, net of Applicable Withholding Taxes.

43. Shares purchased by the Broker and any cash remaining therefrom shall be delivered to the Participant within XXXXXXXXXX days of the Redemption Date, but in no case later than the last day of the Year commencing immediately after the Year in which Participant's Termination Date occurs.

44. The Company shall pay all brokerage fees and commissions arising in connection with the purchase of Shares by the Broker.

Payment in Cash

45. Where the Board elects to pay the DSUs in cash, the payment shall be equal in amount to the product that results by multiplying: (a) the number of DSUs credited to the Participant's Account as at the Termination Date, by (b) the Fair Market Value of a Share on the Termination Date, net of Applicable Withholding Taxes.

Timing of Payment

46. The Company shall make the payment in cash, Shares, or a combination thereof, as determined by the Board and calculated as described above, to the Participant within XXXXXXXXXX days of the Redemption Date. In any circumstances, the payment date shall be no later than the last day of the Year commencing immediately after the Year in which Participant's Termination Date occurs.

47. For XXXXXXXXXX Participants only, the Company shall make the payment in cash, Shares, or a combination thereof, as determined by the Board and calculated as described above, to the Participant within XXXXXXXXXX days of the Redemption Date, but in no case later than the end of the Participant's taxation year in which the Redemption Date occurs.

Plan amendment and termination

48. The Plan may be amended or terminated in whole or in part at any time by the Board, subject to applicable regulatory approval and the terms of the Plan, provided that no such amendment or termination shall, unless required by law, adversely affect the rights of any Participant with respect to DSUs to which the Participant is then entitled under the Plan without the consent of the Participant and any amendment or termination shall be such that the Plan continuously meets the requirements of paragraph 6801(d) of the Regulations under the Act or any successor to such provision, and the requirements of XXXXXXXXXX .

Fluctuation in Share Price

49. No amount will be paid to, or in respect of, a Participant under the Plan or pursuant to any other arrangement, and no other DSUs will be granted to such Participants to compensate for a downward fluctuation in the price of a Share, nor will any other form of benefit be conferred upon, or in respect of, a Participant for such purpose.

Unfunded Plan

50. Unless otherwise determined by the Board, the Plan will at all times remain unfunded and the obligations of the Company under the Plan shall be general unsecured obligations of the Company and any amounts due to Participants under the Plan shall be paid out of the general assets of the Company.

Purpose of the Proposed Transactions

51. The purpose of the Plan is to assist the Company in attracting, retaining and motivating executives from various countries, to promote a greater alignment of interests between the executives and shareholders of the Company, and to ensure that the executives participating in the Plan attain certain share ownership levels as required by the Company;

Rulings Given

Provided that the preceding statements constitute a complete and accurate disclosure of all of the relevant facts, proposed transactions and purpose of the proposed transactions, and provided that the terms of the Plan are as described above, we rule as follows:

A. The Plan will be a prescribed plan or arrangement as described in paragraph 6801(d) of the Regulations and will therefore be excluded from the definition of a "salary deferral arrangement" as contained in subsection 248(1).

B. The Plan will not constitute an "employee benefit plan" as that term is defined in subsection 248(1).

C. Provided that the Plan remains unfunded, the Plan will not constitute a "retirement compensation arrangement" as that term is defined in subsection 248(1).

D. No amount will be included in the income of a Participant pursuant to subsection 5(1), section 6, section 7, paragraph 56(1)(a) or subparagraph 115(1)(a)(i), solely as a result of a credit of DSUs under the Plan to a Participant's Account.

E. The amount to be included in the income of a Canadian resident Participant for a year under the Plan where the Company issues Shares from treasury to the Canadian resident Participant in satisfaction of the Participant's DSUs as described in 39 and 40 above, will consist of the aggregate of the following amounts:

a. under paragraph 6(1)(c) or 6(1)(a), the amount paid by the Company to the Canadian resident Participant for the rights related to fractional Shares as described in 40 above;

b. under paragraph 7(1)(a), the amount representing the aggregate Fair Market Value of the Shares issued to the resident Participant as described in 39 above; and

c. under paragraph 6(1)(c) or 6(1)(a), the amount of Applicable Withholding Taxes withheld by the Company as described in 39 and 40 above.

F. The amount to be included in the income of a Canadian non-resident Participant for the year under the Plan where the Company issues Shares from treasury to the Canadian non-resident Participant in satisfaction of the Canadian non-resident Participant's DSUs as described in 39 and 40 above, will consist of the aggregate of the following amounts:

a. under paragraph 6(1)(c) or 6(1)(a) respectively and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services performed in Canada, paid by the Company to the Canadian non-resident Participant for the rights related to fractional Shares as described in 40 above;

b. under paragraph 7(1)(a) and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services performed in Canada, representing the aggregate Fair Market Value of the Shares issued to the Canadian non-resident Participant as described in 39 above; and

c. under paragraph 6(1)(c) or 6(1)(a) respectively and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services performed in Canada, of Applicable Withholding Taxes withheld by the Company as described in 39 and 40 above.

G. The amount to be included in the income of a Canadian resident Participant for a year under the Plan, where the Participant has received Shares that were purchased by the Broker on the open market in satisfaction of the Canadian resident Participant's DSUs as described in 41, 42, 43 and 44 above, will consist of the aggregate of the following amounts:

a. under paragraph 6(1)(c) or 6(1)(a), the amount paid by the Company to the Canadian resident Participant for the rights related to fractional Shares as described in 42 above;

b. under paragraph 6(1)(c) or 6(1)(a), the amount paid by the Company to the Broker (excluding brokerage fees or commission fees) to acquire the Shares that will be distributed to the Canadian resident Participant as described in 41 above;

c. under paragraph 6(1)(c) or 6(1)(a), the amount of Applicable Withholding Taxes withheld by the Company as described in 41 and 42 above; and

d. under paragraph 6(1)(c) or 6(1)(a), the amount of the brokerage fees or commission fees paid by the Company to the Broker for the acquisition of the Shares distributed by the Broker to the Canadian resident Participant as described in 41, 42, 43 and 44 above.

H. The amount to be included in the income of a Canadian non-resident Participant for the year under the Plan, where the Canadian non-resident Participant has received Shares that were purchased by the Broker on the open market in satisfaction of the Canadian non-resident Participant's DSUs as described in 41, 42, 43 and 44 above, will consist of the aggregate of the following amounts:

a. under paragraph 6(1)(c) or 6(1)(a) respectively and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services performed in Canada, paid by the Company to the Canadian non-resident Participant for the rights related to the fractional Shares as described in 42 above;

b. under paragraph 6(1)(c) or 6(1)(a) respectively and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services performed in Canada, paid by the Company to the Broker (excluding brokerage fees or commission fees) to acquire the Shares that will be distributed to the Canadian non-resident Participant as described in 41 above;

c. under paragraph 6(1)(c) or 6(1)(a) respectively and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services performed in Canada, of Applicable Withholding Taxes withheld by the Company as described in 41 and 42 above; and

d. Under paragraph 6(1)(c) or 6(1)(a) and subparagraph 115(1)(a)(i), the amount, to the extent it is attributable to services performed in Canada, of the brokerage fees or commission fees paid by the Company to the Broker for the acquisition of the Shares distributed by the Broker to the Canadian non-resident Participant as described in 41, 42, 43 and 44 above.

I. When cash is received in satisfaction of a Canadian resident Participant's DSUs as described in 45 above, the Canadian resident Participant will include the amount paid by the Company, before any Applicable Withholding Taxes, in his or her income for the year under paragraph 6(1)(c) or 6(1)(a).

J. When cash is received in satisfaction of a Canadian non-resident Participant's DSUs as described in 45 above, the Canadian non-resident Participant will include the amount, to the extent it is attributable to services performed in Canada, paid by the Company, before any Applicable Withholding Taxes, in his or her income for the year under paragraph 6(1)(c) or 6(1)(a) respectively and subparagraph 115(1)(a)(i).

K. All amounts payable under the Plan to the Beneficiaries, as a result of the Participant's death, shall constitute a right or thing held by the deceased Participant at the time of death for the purposes of subsections 70(2) and 70(3).

L. Subject to paragraph 18(1)(a) and section 67, any amounts referred to rulings Ea., Ec., Fa., Fc., G, H, I and J above that are paid by the Company in a particular year in respect of Participants, will be deductible by Company in accordance with section 9.

The above advance income tax rulings, which are based on the Act in its present form and do not take into account any proposed amendments thereto, are given subject to the general limitations and qualifications set out in Information Circular 70-6R5 Advance Income Tax Rulings, dated May 17, 2002, and are binding on the CRA provided the proposed Plan is implemented before XXXXXXXXXX .

Yours truly,

XXXXXXXXXX
Section Manager
For Director
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch