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, as a result of the proposed change in the terms of preferred shares, the shares will XXXXXXXXXX .
Position: Yes.
Reasons: The change in the terms will result in GAAP and IFRS classifying the preferred shares as liabilities. XXXXXXXXXX
XXXXXXXXXX
2011-041641
XXXXXXXXXX
XXXXXXXXXX , 2011
Dear XXXXXXXXXX :
Re: Supplemental Advance Income Tax Ruling
XXXXXXXXXX
This is in reply to your letter of XXXXXXXXXX , wherein you requested amendments to advance income tax ruling XXXXXXXXXX , which was issued on XXXXXXXXXX , 2011 (the “Ruling”). We also acknowledge our conversation XXXXXXXXXX . Unless otherwise defined, all capitalized terms in this letter have the meanings assigned to them in the Ruling.
You have requested that the Ruling be amended to change the terms of the Preferred Shares and the XXXXXXXXXX . You also advise us that the Proposed Transactions have not yet been completed and have requested an extension of the time allowed to complete the Proposed Transactions.
Consequently, we amend the Ruling as follows:
1. The first sentence in Paragraph XXXXXXXXXX is deleted and replaced with:
“The authorized capital of Newco will consist of two classes of shares: (i) a class of common shares; and (ii) a class of non-voting, preferential cumulative annual dividend, redeemable, retractable preferred shares, which will be mandatorily redeemable by Newco on a day that is prior to the XXXXXXXXXX anniversary of their issuance, and which, on liquidation, entitle the holder to the redemption price in priority to the holders of the common shares and which have a paid-up capital equal to the subscription price (the ‘Preferred Shares’).”
2. The first sentence of Paragraph XXXXXXXXXX is deleted and replaced with:
“XXXXXXXXXX ”
3. Paragraph (n) of the Definitions is deleted and replaced with:
“XXXXXXXXXX ;”
4. The following sentence is added to the end of Paragraph XXXXXXXXXX :
“You advise the Newco Preferred Shares will be recorded, in accordance with GAAP and IFRS, as a liability on Newco's financial statements. The liability will be described on the financial statements as XXXXXXXXXX ”
5. Paragraph XXXXXXXXXX is deleted and replaced with:
“Newco will deposit the total proceeds received on the issuance of the Newco Preferred Shares XXXXXXXXXX ”
6. The preamble to Paragraph XXXXXXXXXX is deleted and replaced with:
“The following transactions will occur prior to the XXXXXXXXXX anniversary of the day that XXXXXXXXXX :”
7. Paragraph 21 is deleted and replaced with:
“XXXXXXXXXX ”
8. References to “XXXXXXXXXX ” in Paragraphs 11, 20, 21 and 22 are deleted and replaced with “XXXXXXXXXX ”.
9. The following sentence will be added after Ruling G:
“XXXXXXXXXX ”
Provided that the preceding statements and the statements contained in the Ruling constitute a complete and accurate disclosure of all the relevant facts and proposed transactions and of the purposes of the proposed transactions and provided further that the Newco Preferred Shares will be recorded as a liability on Newco's financial statements for accounting purposes, we hereby confirm that the Ruling, as modified by this letter, will continue to be binding on the Canada Revenue Agency (“CRA”) subject to the same limitations and qualifications set out therein, except that the Ruling will continue to be binding on the CRA provided that the Proposed Transactions set out in the Ruling are completed by XXXXXXXXXX .
Yours truly,
XXXXXXXXXX
Manager
XXXXXXXXXX
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs
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© Her Majesty the Queen in Right of Canada, 2011
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