2013 Ruling 2012-0449681R3 - Split-Up Butterfly - Farm

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 butterfly dividends are exempt from 55(2) as a result of qualifying under 55(3)(b)?

Position: Yes

Reasons: Proposed transactions meet the requirements of 55(3)(b).

XXXXXXXXXX
2012-044968

XXXXXXXXXX, 2013

Dear XXXXXXXXXX:

RE: XXXXXXXXXX

We are writing in response to your letter of XXXXXXXXXX and our subsequent communications, wherein you requested an advance income tax ruling on behalf of the above-referenced taxpayers and others herein referred to. The documents submitted as part of your request are only part of this document to the extent described herein.

To the best of your knowledge and that of the above-referenced taxpayers, none of the issues involved in this ruling is:

(a) in an earlier return of the above-referenced taxpayers or related person;
(b) being considered by a tax services office or taxation centre in connection with a previously filed tax return of the above-referenced taxpayers or a related person;
(c) under objection by the above-referenced taxpayers or a related person;
(d) before the courts; or
(e) the subject of a ruling previously issued by the Income Tax Rulings Directorate.

The above-referenced taxpayers have confirmed that the proposed transactions described herein will not affect their ability to pay any of their outstanding tax liabilities.

Unless otherwise stated, all statutory references herein are to provisions or parts of the Income Tax Act (Canada), R.S.C. 1985 (5th Supp.) c. 1, as amended to the date hereof (the "Act") and all references to monetary amounts are in Canadian dollars.

DEFINITIONS

In this letter, unless otherwise stated, the following terms have the meaning specified below:

"agreed amount" means the amount that a transferor and a transferee have agreed on in a joint election under subsection 85(1) in respect of the transfer of an Eligible Property.

"ACB" means adjusted cost base as that term is defined in section 54.

"approximate the proportion" means, for the purposes of Paragraphs 10 and 16, a discrepancy from that proportion, if any, that would not exceed 1%, determined as a percentage of the net FMV of each Type of Property which TC has received or DC has retained, as the case may be, as compared to what TC would have received or DC would have retained, as the case may be, if it had received or retained its appropriate pro rata share of the net FMV of that Type of Property.

"Aunt" means XXXXXXXXXX, deceased, an individual who was a resident of Canada at the time of her death on XXXXXXXXXX and who was the sister of the Father.

"BN" means the business number assigned by the CRA to a particular corporation for income tax purposes.

"CCPC" means Canadian-controlled private corporation as that term is defined in subsection 125(7).

"capital property" has the meaning assigned by section 54.

"CDA" means capital dividend account as that term is defined in subsection 89(1).

"Children" refers to the children of Ms. A, Mr. B, Ms. C and of another of their siblings. Each of the Children is a resident of Canada and owns preferred shares of DC.

"Class C Redemption Amount" means the amount equal to the excess of the aggregate FMV of each Type of Property transferred to TC as described in Paragraph 10 over the amount of DC's liabilities assumed by TC divided by the number of Class C preferred shares issued by TC.

XXXXXXXXXX.

"cost amount" has the meaning assigned by subsection 248(1).

"CRA" means the Canada Revenue Agency.

"DC" means XXXXXXXXXX, which is a taxable Canadian corporation and a CCPC that was incorporated on XXXXXXXXXX under the Business Corporations Act (XXXXXXXXXX) and whose taxation year ends on XXXXXXXXXX of every year.

The authorized capital of DC consists of:

(a) XXXXXXXXXX voting common shares without nominal or par value; and
(b) XXXXXXXXXX non-voting preferred shares that have a par value and stated redemption price of $XXXXXXXXXX each.

Certain particulars of the issued capital of DC are as follows:

Shareholder # Common $ ACB $ PUC # Pref $ ACB $ PUC

Ms. A XXXX XXXX XXXX XXXX XXXX XXXX
Mr. B XXXX XXXX XXXX XXXX XXXX XXXX
Ms. C XXXX XXXX XXXX XXXX XXXX XXXX
XCo XXXX XXXX XXXX XXXX XXXX XXXX
Children --- --- --- XXXX XXXX XXXX

Total XXXX $XXXX XXXX $XXXX

"depreciable property" has the meaning assigned by subsection 13(21).

"distribution" has the meaning assigned by subsection 55(1).

"dividend rental arrangement" has the meaning assigned by subsection 248(1).

"Eligible Property" has the meaning assigned by subsection 85(1.1).

"Father" means XXXXXXXXXX, deceased, an individual who was a resident of Canada at the time of his death on XXXXXXXXXX and who was the father of Ms. A, Mr. B and Ms. C.

"FMV" means fair market value, which refers to the amount, expressed in money terms, that is the highest price available in an open and unrestricted market between informed and prudent parties dealing at arm's length.

"Forgiven Amount" has the meaning assigned by subsection 80(1) and 80.01(1).

"Mother" means XXXXXXXXXX, deceased, an individual who was a resident of Canada at the time of her death on XXXXXXXXXX and who was the wife of Father.

"Mr. B" means XXXXXXXXXX, an individual who is resident in Canada.

"Ms. A" means XXXXXXXXXX, an individual who is resident in Canada.

"Ms. C" means XXXXXXXXXX, an individual who is resident in Canada.

"Paragraph" means a numbered paragraph of this letter.

"PUC" means paid-up capital as that term is defined by subsection 89(1).

"private corporation" has the meaning assigned by subsection 89(1).

"Promissory Note #1" means the non-interest bearing demand promissory note issued by TC to DC on the redemption of the Class C preferred shares held by DC whose principal amount and FMV will be equal to the aggregate Class C Redemption Amount.

"Promissory Note #2" means the non-interest bearing demand promissory note issued by DC to TC on the purchase for cancellation of the XXXXXXXXXX common shares and redemption of the XXXXXXXXXX preferred shares in the capital stock of DC that are held by TC and whose principal amount and FMV is equal to the aggregate FMV of the said common shares and preferred shares at that time.

"Proposed Transactions" means the transactions described in the Proposed Transactions section of this letter.

"RDTOH" means refundable dividend tax on hand as this term is defined in subsection 129(3).

"restricted financial institution" has the meaning assigned by subsection 248(1).

"specified class" has the meaning assigned by subsection 55(1).

"specified financial institution" has the meaning assigned by subsection 248(1).

"specified investment business" has the meaning assigned by subsection 125(7).

"substantial interest" has the meaning assigned by subsection 191(2).

"taxable Canadian corporation" has the meaning assigned by subsection 89(1).

"taxable dividend" has the meaning assigned to that term by subsection 89(1).

"taxation year" has the meaning assigned by subsection 249(1).

"TC" means XXXXXXXXXX, a corporation that was incorporated by agents for Ms. A on XXXXXXXXXX as "XXXXXXXXXX" pursuant to the provisions of the Business Corporations Act (XXXXXXXXXX) and XXXXXXXXXX. Based on the foregoing and the proposal that the first issuance of shares of the corporation will be those described in Paragraph 9, TC is a taxable Canadian corporation and a CCPC.

The authorized capital of TC consists of:

(a) XXXXXXXXXX classes of voting common shares with one class being called the "Class A common shares";

(b) XXXXXXXXXX classes of non-voting common shares;

(c) XXXXXXXXXX classes of voting preferred shares, entitled to non-cumulative dividends, that are redeemable and retractable for an amount to be set by the Board of Directors of the corporation at the time of issuance with one of the classes being called the "Class A preferred shares" and another of the classes being called the "Class C preferred shares"; and

(d) XXXXXXXXXX classes of non-voting preferred shares, entitled to non-cumulative dividends, that are redeemable and retractable for an amount to be set by the Board of Directors of the corporation at the time of issuance.

Prior to commencement of the Proposed Transactions, no shares in the capital of TC will have been previously issued.

"Type of Property" means one of the following three (3) types of property into which DC's property may be classified:

(a) cash or near-cash property, consisting of all of the current assets of DC, including cash, accounts receivable, deposits, income tax receivable, GST receivable, advances receivable, deferred XXXXXXXXXX cheques, prepaid expenses and inventory (XXXXXXXXXX inventory);

(b) business property, consisting of all of the assets of DC, other than cash or near cash property, any income from which would, for the purposes of the Act, be income from a business of DC (other than a specified investment business); and

(c) investment property, consisting of all of the assets of DC, other than cash or near cash property, any income from which would, for the purposes of the Act, be income from property or from a specified investment business.

"UCC" means undepreciated capital cost as that term is defined in subsection 13(21).

"XCo" means XXXXXXXXXX, which is a taxable Canadian corporation and a CCPC that was incorporated on XXXXXXXXXX under the Business Corporations Act (XXXXXXXXXX) and whose taxation year ends on XXXXXXXXXX of every year. The BN of XCo is XXXXXXXXXX. The issued shares of XCo are owned equally by XXXXXXXXXX of Mr. B's daughters, each of whom is a resident of Canada.

FACTS

The relevant facts are as follows:

1. Ms. A, Mr. B and Ms. C and another person are siblings.

2. Each of Ms. A, Mr. B, Ms. C and the Children is an individual resident in Canada and owns shares of DC. All of the shareholders of DC, including XCo, hold their shares in the capital stock of DC as capital property.

3. Early in XXXXXXXXXX, as a result of a settlement agreement dated XXXXXXXXXX, Ms. A, Mr. B and Ms. C acquired, in equal portions, the common and preferred shares that had been owned by Father at the time of his death.

4. DC's principal business is XXXXXXXXXX. It also XXXXXXXXXX. DC owns XXXXXXXXXX parcels of land in XXXXXXXXXX, comprising XXXXXXXXXX acres, together with related buildings, farming equipment and inventory.

The liabilities of DC consist of:

(a) amounts repayable on demand to related persons that are unsecured and non-interest bearing,
(b) loans secured by mortgages against the corporation's lands, and
(c) agricultural loans and equipment loans or finance contracts that are secured against related farm equipment.

5. Immediately before the transfers described in Paragraph 10, the net FMV of each Type of Property of DC will be determined. For this purpose and for the purposes of the definition of "distribution", each property of DC will be classified into one of the three Types of Property.

6. For greater certainty, for the purpose of determining the net FMV of each Type of Property of DC, the following principles will apply:

(a) deferred expenses, which were expenditures deferred and amortized for accounting purposes but fully deducted for tax purposes will not be considered property for purposes of the Proposed Transactions;

(b) any tax accounts, such as any non-capital loss, net capital loss, the balance of any RDTOH or capital dividend account of DC, will not be considered property; and

(c) no amount will be considered a liability unless it represents a true legal liability capable of quantification. For greater certainty, the amount of any deferred income taxes recorded in the financial statements of DC will not be considered a liability because such amount does not represent a legal obligation of DC.

7. In determining the net FMV of DC's cash or near-cash property, business property and investment property immediately before the transfers described in Paragraph 10, its liabilities will be allocated to, and deducted in, the calculation of the net FMV of each such type of property of DC in the following manner:

(a) current liabilities of DC will be allocated to the cash or near-cash property of DC in the proportion that the FMV of each such property is of the FMV of all cash or near-cash property owned by DC to the extent that such allocation does not exceed the aggregate FMV of all cash or near-cash property of DC. To the extent that the total amount of current liabilities so allocated exceeds the total FMV of DC's cash or near cash property, DC will be considered to have a negative amount of cash or near-cash property;

(b) liabilities, other than current liabilities, of DC that relate to a particular property will then be allocated to that particular property (and effectively to the type of property to which the property belongs) to the extent of its FMV. Any excess of such liabilities over the FMV of a particular property and liabilities that pertain to the same type of property, but not to a particular property, will then be allocated to that particular type of property, but not in excess of the total FMV of such type of property. To the extent that the liabilities pertaining to a particular type of property exceed the total FMV of that type of property of DC, DC will be considered to have a negative amount of property of that type; and

(c) if any liabilities remain after the allocations described in (a) and (b) are made ("excess DC unallocated liabilities"), such excess DC unallocated liabilities will then be allocated to the cash or near-cash property, investment property and business property, if any, of DC, based on the relative net FMV of each type of property prior to the allocation of such excess DC unallocated liabilities but after the allocations described in (a) and (b). However, where DC is considered to have a negative amount of a type of property because of (a) or (b), for the purposes of allocating such excess DC unallocated liabilities, the net FMV of that type of property will be deemed to be nil resulting in none of such excess DC unallocated liabilities being allocated to that type of property.

8. Neither DC nor TC will have a balance in its RDTOH account immediately before the commencement of the Proposed Transactions.

PROPOSED TRANSACTIONS

The Proposed Transactions will occur in the order presented unless otherwise indicated, with the exception of filing the applicable election forms, which will be filed within the applicable due dates following the completion of the Proposed Transactions.

9. Ms. A will transfer all of her XXXXXXXXXX common shares of the capital stock of DC to TC. Ms. A will jointly elect with TC in prescribed form and within the time limit referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfer. The agreed amount will be an amount equal to the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii), being $XXXXXXXXXX. Consideration for the transfer of the XXXXXXXXXX common shares of the capital stock of DC will consist of XXXXXXXXXX Class A common shares of the capital stock of TC with a FMV equal to the FMV of the XXXXXXXXXX common shares of the capital stock of DC transferred. TC will add an amount equal to the PUC of the XXXXXXXXXX common shares of the capital stock of DC transferred, being $XXXXXXXXXX, to the stated capital of the Class A common shares of the capital stock of TC.

At the same time, Ms. A will transfer all of her XXXXXXXXXX preferred shares of the capital stock of DC to TC. Ms. A will jointly elect with TC in prescribed form and within the time limit referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfer. The agreed amount will be an amount equal to the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii), being $XXXXXXXXXX. Consideration for the transfer of the XXXXXXXXXX preferred shares of the capital stock of DC will consist of XXXXXXXXXX Class A preferred shares of the capital stock of TC with a FMV equal to the FMV of the XXXXXXXXXX preferred shares of the capital stock of DC transferred. TC will add an amount equal to the PUC of the XXXXXXXXXX preferred shares of the capital stock of DC transferred, being $XXXXXXXXXX, to the stated capital of the Class A preferred shares of the capital stock of TC.

10. DC will transfer to TC property of each Type of Property owned by DC such that immediately after such property transfers and the corresponding liability assumptions, the net aggregate FMV of the property of each Type of Property so transferred to TC will approximate the proportion determined by the formula:

A x B/C

where:

A: is the net FMV, immediately before the transfer, of all property of that Type of Property owned at that time by DC;

B: is the aggregate FMV, immediately before DC's transfer of property to TC, of all of the shares of DC owned by TC at that time; and

C: is the aggregate FMV, immediately before DC's transfer of property to TC, of all of the issued and outstanding shares of the capital stock of DC.

11. As consideration for DC's transfer of property to TC:

(a) TC will assume such of DC's liabilities, if any, as are specifically secured by assets received by TC;

(b) TC will assume all amounts payable, if any, from DC to the shareholder of TC;

(c) TC will assume additional liabilities of DC so that on a net basis TC will receive a proportionate share of each Type of Property owned by DC, as set forth in Paragraph 10; and

(d) TC will issue Class C preferred shares, which will have a redemption amount and a FMV equal to the Class C Redemption Amount.

For greater certainty, the Class C preferred shares of the capital stock of TC that are issued to DC as described above will represent more than XXXXXXXXXX% of the issued share capital of TC having full voting rights in all circumstances. The Class C preferred shares will also represent more than XXXXXXXXXX% of the FMV of all the issued shares of the capital stock of TC.

12. In respect of the property transfers described in Paragraph 10, DC will jointly elect with TC in prescribed form and within the time allowed by subsection 85(6), to have the provisions of subsection 85(1) apply to the transfer of each property of DC that is an Eligible Property transferred to TC. The Agreed Amount in respect of each such Eligible Property will be as follows:

(a) in the case of capital property (other than depreciable property), an amount equal to the lesser of the amounts described in subparagraph 85(1)(c.1)(i) and (ii);

(b) in the case of depreciable property, an amount not less than the least of the amounts described in subparagraphs 85(1)(e)(i), (ii) and (iii);

(c) in the case of farm inventory owned in connection with the farming business carried on by DC, an amount determined in accordance with the formula set out in paragraph 85(1)(c.2) of the Act; and

(d) in the case of eligible capital property in respect of a business of DC, an amount not less than the least of the amounts described in subparagraphs 85(1)(d)(i), (ii) and (iii).

TC will add to the stated capital maintained for the Class C preferred shares an amount equal to the amount by which the aggregate of the Agreed Amounts, in the case of each Eligible Property, and the FMV, in the case of other properties, in respect of the properties transferred to TC exceeds the liabilities assumed by TC. For greater certainty, the amount added to the stated capital account for the Class C preferred shares to be issued by TC as partial consideration for the transferred property will not exceed the maximum amount that could be added to the PUC of the Class C preferred shares without a reduction taking place pursuant to subsection 85(2.1).

The Agreed Amount in respect of each of the properties so transferred will be less than or equal to its FMV at the time of the transfer. The amount of the liabilities to be allocated to the property that is subject to the election under subsection 85(1) will not exceed the Agreed Amount elected for that property. The amount of liabilities to be allocated to the property that is not subject to the election under 85(1) will not exceed the FMV of any such property.

13. Immediately after the transfer to TC of the property of DC as described in Paragraph 10, TC will redeem all the issued Class C preferred shares held by DC at the Class C Redemption Amount in exchange for Promissory Note #1. DC will accept Promissory Note #1 as payment in full for the Class C preferred shares so redeemed.

14. DC will then purchase for cancellation the XXXXXXXXXX common shares of its capital stock held by TC. At the same time, DC will also redeem the XXXXXXXXXX preferred shares in the capital stock of DC that are held by TC. As a consideration for the purchase for cancellation of the common shares and redemption of the preferred shares of its capital stock held by TC, DC will issue the Promissory Note #2 as payment in full for such purchase for cancellation and redemption.

15. The principal amount owing by TC to DC under Promissory Note #1 will be set-off against the principal amount owing by DC to TC under Promissory Note #2 such that each such note will be cancelled in full satisfaction of their respective underlying obligations.

16. Immediately following completion of the Proposed Transactions described above, the net fair market value of each Type of Property retained by DC, determined in the manner described in Paragraph 7, will approximate the proportion of the aggregate net fair market value of that Type of Property of DC, determined immediately before the transfers described in Paragraph 10, that:

(a) the aggregate fair market value, immediately before the transfers of property described in Paragraph 10, of the common and preferred shares in the capital stock of DC owned by all shareholders of DC other than TC,

is of

(b) the aggregate fair market value, immediately before the transfers of property, of all of the issued and outstanding shares of DC.

ADDITIONAL INFORMATION

17. No property has or will become property of DC and no liabilities have been or will be incurred or discharged by DC in contemplation of and before the Proposed Transactions, except as described in the Proposed Transactions.

18. There will not be any material change in the composition of DC's assets or liabilities (except as contemplated in the Proposed Transactions) from the date of this letter until the date the Proposed Transactions described herein are completed.

19. Neither DC nor TC is, or will be at any time during the series of transactions or events that includes the Proposed Transactions, a specified financial institution, a restricted financial institution or a corporation described in any of paragraphs (a) to (f) of the definition of "financial intermediary corporation" in subsection 191(1).

20. None of the shares of DC or TC is, or will be at any time during the series of transactions or events that includes the Proposed Transactions:

(a) the subject of any undertaking or agreement that is a guarantee agreement, within the meaning referred to in subsection 112(2.2);

(b) the subject of a dividend rental arrangement; or

(c) issued or acquired as part of a transaction or event or series of transactions or events of the type described in subsection 112(2.5).

21. Each of DC and TC will have the financial capacity to honour, upon presentation for payment, the amount payable under the promissory note issued by it as part of the Proposed Transactions.

22. The preferred shares in the capital of DC are each a share of a specified class.

23. There has never been and there is not currently a shareholders' agreement binding the shareholders of DC.

PURPOSE OF THE PROPOSED TRANSACTIONS

24. Ms. A wishes to carry on a farming business separate and independent from that of the other shareholders of DC. The Proposed Transactions will allow Ms. A and her immediate family to have direct and separate ownership and control over her pro rata share of DC's property so she can operate a farming business independently from that of DC.

RULINGS

Provided that the above statements of facts, Proposed Transactions and purpose of the Proposed Transactions are accurate and constitute complete disclosure of all relevant facts and proposed transactions, our rulings are as follows:

A. Provided that as part of the series of transactions or events that includes the Proposed Transactions, there is not:

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

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

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

(d) an acquisition of shares of DC as described in subparagraph 55(3.1)(b)(iii);

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

(f) an acquisition of property in the circumstances described in paragraph 55(3.1)(d),

which has not been described herein, then by virtue of paragraph 55(3)(b), subsection 55(2) will not apply to the taxable dividends referred to in the rulings given in respect of C and D below and, for greater certainty, subsection 55(3.1) will not apply to deny the exemption under paragraph 55(3)(b).

B. Provided that the requisite joint elections are filed in prescribed form and within the prescribed time, and subject to the application of subsection 69(11), the provisions of subsection 85(1) will apply to:

(a) the transfer of the common and preferred shares of DC held by Ms. A to TC as described in Paragraph 9; and

(b) the transfer of Eligible Property by DC to TC as described in Paragraph 10, such that the agreed amounts in respect of each such transfer shall be deemed to be the transferor's proceeds of disposition and the transferee's cost thereof pursuant to paragraph 85(1)(a). For greater certainty, the provisions of paragraph 85(1)(e.2) will not apply in respect of those transfers.

For the purposes of the joint election described in Paragraph 12, the reference to "the UCC to the taxpayer of all of the property of that class immediately before the disposition …" in subparagraph 85(1)(e)(i) shall mean the proportion of the UCC to DC of all the property of that class immediately before the transfer that the FMV at that time of the property that is transferred is of the FMV of all the property of that class at that time.

C. As a result of the redemption by TC of its Class C preferred shares as described in Paragraph 13, TC will be deemed by the provisions of paragraph 84(3)(a) to have paid, and DC will be deemed by the provisions of paragraph 84(3)(b) to have received, a taxable dividend at that time equal to the amount by which the amount paid by TC to DC on the redemption of its Class C preferred shares exceeds the paid-up capital of such Class C preferred shares immediately before the redemption.

D. As a result of the purchase for cancellation or redemption, as the case may be, by DC of its common and preferred shares as described in Paragraph 14, DC will be deemed by the provisions of paragraph 84(3)(a) to have paid at that time, and TC will be deemed by the provisions of paragraph 84(3)(b) to have received at that time,

(a) a taxable dividend equal to the amount by which the amount paid by DC to TC on the purchase for cancellation of its common shares exceeds the paid-up capital of such common shares immediately before the purchase for cancellation, and

(b) a taxable dividend equal to the amount by which the amount paid by DC to TC on the redemption of its preferred shares exceeds the paid-up capital of such preferred shares immediately before the redemption.

E. The taxable dividends described in Rulings C and D above:

(a) will not be subject to tax under Part IV.1 by virtue of paragraph (c) of the definition of "excepted dividend" in subsection 187.1; and

(b) will not be subject to tax under Part VI.1 by virtue of paragraph (a) of the definition of "excluded dividend" in subsection 191(1) because DC will have a substantial interest in TC and TC will have a substantial interest in DC.

F. The extinguishment of the debt obligations of DC and TC as a result of the cancellation of the promissory notes issued by them, all as described in Paragraph 15, will not give rise to a Forgiven Amount.

G. The provisions of subsections 15(1), 56(2) and 246(1) will not apply to the Proposed Transactions, in and of themselves.

H. As a result of the Proposed Transactions, in and of themselves, subsection 245(2) will not be applied to redetermine the tax consequences confirmed in the rulings given herein.

These rulings are given subject to the limitations and qualifications set forth in Information Circular 70-6R5 issued on May 17, 2002, and are binding on the CRA, provided that the Proposed Transactions are completed not later than six months of the date of this letter.

The above rulings are based on the Act in its present form and do not take into account any proposed amendments to the Act, which if enacted, could have an effect on the rulings provided herein.

COMMENTS

Nothing in this ruling should be construed as implying that the CRA has agreed to or reviewed:

a) the determination of the amount of the ACB, PUC or FMV of any shares or other property referred to herein;

b) the amount to be added to the stated capital of a class of shares issued as consideration for any property;

c) the balance of RDTOH of any corporation; or

d) any other tax consequences relating to the Definitions, Facts, Proposed Transactions and Additional Information described herein, other than those described in the rulings given above, including whether any subsequent transaction or event is or is not considered to be part of the series of transactions or events described herein.

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

Yours truly,

XXXXXXXXXX
Reorganizations Division
Income Tax Ruling Directorate
Legislative Policy and Regulatory Affairs Branch