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: Changes to ruling 2010-035799
Position: Ruling modified.
Reasons: Change in facts does not affect validity of rulings given.
XXXXXXXXXX
2011-043036
XXXXXXXXXX
XXXXXXXXXX , 2012
Dear XXXXXXXXXX :
Re: XXXXXXXXXX
Supplemental Advance Income Tax Ruling Request
This is in reply to your letters of XXXXXXXXXX , and is supplemental to our advance income tax ruling number 2010-035799 that was issued to the above-mentioned taxpayer on XXXXXXXXXX (the “Ruling”). All capitalized terms in this letter have the meanings assigned to them in the Ruling.
As requested, the following amendments are hereby made to the Ruling:
Replace the phrase “described in paragraphs 41 to 63” as described in the definition of Proposed Transactions with “described in paragraphs 41 to 63.2”.
In Paragraph 5(g) the phrase “L Holdco Special Shares” is deleted and replaced with “L Holdco Class D Special Shares”.
In Paragraph 41, XXXXXXXXXX is deleted as an income and capital beneficiary of the D Family Trust and Mr. M is deleted as an income and capital beneficiary of the L Family Trust.
In Paragraph 58 the last sentence of the second paragraph is deleted and replaced with “Opco will accept such note from D Newco 2, G Newco 2, L Newco 2, and T Newco 2, as the case may be, as full payment of the redemption price.”.
You have indicated that the number of Class B LP Units currently held by Opco is not divisible by four and fractional units are prohibited under the limited partnership agreement of LP. As a result, Paragraph 53.1 is added as follows:
53.1 Opco will sell 1 Class B LP Unit to D Newco 2 for cash proceeds equal to its fair market value.
In the original ruling the Transferred Real Estate would be transferred to each Newco 1 immediately followed by the transfer of the Class B LP Units to each Newco 2. However, you have indicated that the transfer of the Transferred Real Estate is more complicated and will take more time than the transfer of the Class B LP Units. As such, the transfer of the Class B LP Units will occur several months before the transfer of the Transferred Real Estate. As a result, you have requested the following changes to the Ruling:
Paragraph 59.1 is deleted and replaced with the following:
59.1 Opco will declare a dividend-in-kind of a XXXXXXXXXX % undivided interest in each of the D Newco 2 Redemption Note, G Newco 2 Redemption Note, L Newco 2 Redemption Note, and T Newco 2 Redemption Note to each Holdco.
Paragraph 59.11 is added as follows:
59.11 Opco will declare and pay a cash dividend to D Holdco, G Holdco, L Holdco, and T Holdco in the amount of $XXXXXXXXXX per share on the XXXXXXXXXX issued and outstanding Opco Class A Special Shares ($XXXXXXXXXX in aggregate).
Paragraph 59.12 is added as follows:
59.12 Opco will declare a dividend-in-kind of a XXXXXXXXXX % undivided interest in each of the D Newco 1 Redemption Note, G Newco 1 Redemption Note, L Newco 1 Redemption Note, and T Newco 1 Redemption Note to each Holdco.
Paragraph 59.2 is deleted and replaced with the following:
59.2 D Holdco will enter into an exchange agreement with G Holdco to exchange its XXXXXXXXXX % undivided interest in the G Newco 2 Redemption Note for G Holdco’s XXXXXXXXXX % undivided interest in the D Newco 2 Redemption Note. D Holdco will enter into an exchange agreement with L Holdco to exchange its XXXXXXXXXX % undivided interest in the L Newco 2 Redemption Note for L Holdco’s XXXXXXXXXX % undivided interest in the D Newco 2 Redemption Note. D Holdco will enter into an exchange agreement with T Holdco to exchange its XXXXXXXXXX % undivided interest in the T Newco 2 Redemption Note for T Holdco’s XXXXXXXXXX % undivided interest in the D Newco 2 Redemption Note.
Paragraph 59.21 is added as follows:
59.21 D Holdco will enter into an exchange agreement with G Holdco to exchange its XXXXXXXXXX % undivided interest in the G Newco 1 Redemption Note for G Holdco’s XXXXXXXXXX % undivided interest in the D Newco 1 Redemption Note. D Holdco will enter into an exchange agreement with L Holdco to exchange its XXXXXXXXXX % undivided interest in the L Newco 1 Redemption Note for L Holdco’s XXXXXXXXXX % undivided interest in the D Newco 1 Redemption Note. D Holdco will enter into an exchange agreement with T Holdco to exchange its XXXXXXXXXX % undivided interest in the T Newco 1 Redemption Note for T Holdco’s XXXXXXXXXX % undivided interest in the D Newco 1 Redemption Note.
Paragraph 59.3 is deleted and replaced with the following:
59.3 G Holdco will enter into an exchange agreement with L Holdco to exchange its XXXXXXXXXX % undivided interest in the L Newco 2 Redemption Note for L Holdco’s XXXXXXXXXX % undivided interest in the G Newco 2 Redemption Note. G Holdco will enter into an exchange agreement with T Holdco to exchange its XXXXXXXXXX % undivided interest in the T Newco 2 Redemption Note for T Holdco’s XXXXXXXXXX % undivided interest in the G Newco 2 Redemption Note.
Paragraph 59.31 is added as follows:
59.31 G Holdco will enter into an exchange agreement with L Holdco to exchange its XXXXXXXXXX % undivided interest in the L Newco 1 Redemption Note for L Holdco’s XXXXXXXXXX % undivided interest in the G Newco 1 Redemption Note. G Holdco will enter into an exchange agreement with T Holdco to exchange its XXXXXXXXXX % undivided interest in the T Newco 1 Redemption Note for T Holdco’s XXXXXXXXXX % undivided interest in the G Newco 1 Redemption Note.
Paragraph 59.4 is deleted and replaced with the following:
59.4 L Holdco will enter into an exchange agreement with T Holdco to exchange its XXXXXXXXXX % undivided interest in the T Newco 2 Redemption Note for T Holdco’s XXXXXXXXXX % undivided interest in the L Newco 2 Redemption Note.
Paragraph 59.41 is added as follows:
59.41 L Holdco will enter into an exchange agreement with T Holdco to exchange its XXXXXXXXXX % undivided interest in the T Newco 1 Redemption Note for T Holdco’s XXXXXXXXXX % undivided interest in the L Newco 1 Redemption Note.
Paragraph 60 is deleted and replaced with the following:
60. Opco will distribute the D Newco 2 Redemption Note to D Holdco as a dividend-in-kind payable on the Opco Common Shares.
Paragraph 60.1 is added as follows:
60.1 Opco will distribute the D Newco 1 Redemption Note to D Holdco as a dividend-in-kind payable on the Opco Common Shares.
Paragraph 61 is deleted and replaced with the following:
61. Opco will distribute the G Newco 2 Redemption Note to G Holdco as a dividend-in-kind payable on the Opco Common Shares.
Paragraph 61.1 is added as follows:
61.1 Opco will distribute the G Newco 1 Redemption Note to G Holdco as a dividend-in-kind payable on the Opco Common Shares.
Paragraph 62 is deleted and replaced with the following:
62. Opco will distribute the L Newco 2 Redemption Note to L Holdco as a dividend-in-kind payable on the Opco Common Shares.
Paragraph 62.1 is added as follows:
62.1 Opco will distribute the L Newco 1 Redemption Note to L Holdco as a dividend-in-kind payable on the Opco Common Shares.
Paragraph 63 is deleted and replaced with the following:
63. Opco will distribute the T Newco 2 Redemption Note to T Holdco as a dividend-in-kind payable on the Opco Common Shares.
Paragraph 63.1 is added as follows:
63.1 Opco will distribute the T Newco 1 Redemption Note to T Holdco as a dividend-in-kind payable on the Opco Common Shares.
Paragraph 63.2 is added as follows:
63.2 The proposed transactions described in paragraphs 51 through 63.1 will occur in the following order:
Paragraph 53.1, 54, 55, 56, 58, 59, 59.1, 59.2, 59.3, 59.4, 60, 61, 62, 63, 51, 52, 53, 57, 59.11, 59.12, 59.21, 59.31, 59.41, 60.1, 61.1, 62.1, 63.1.
Replace the phrase “as described in Paragraph 59”, as described in Paragraph 71, with “as described in Paragraphs 59 and 59.11”.
Replace the phrase “as described in Paragraphs 60 to 63”, as described in Paragraphs 71, 72, Ruling C, and Ruling E, with the phrase “as described in Paragraphs 60 to 63.1”.
Replace the phrase “in Paragraph 59”, as described in Ruling G, with “in Paragraphs 59 and 59.11”.
Confirmation
Provided that the preceding statements and the statements contained in the Ruling constitute a complete and accurate disclosure of all the relevant facts, transactions, and purposes of the Proposed Transactions, notwithstanding the amendments described herein and the preceding statements, we hereby confirm that, subject to the conditions, limitations, qualifications and comments set out in the Ruling, the Ruling will continue to be binding on the CRA.
Yours truly,
XXXXXXXXXX
for Division Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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