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: Request for confirmation from CRA that certain proposed changes to the facts of the Advance Tax Ruling 2011-043185 would not affect the rulings and the opinion given.
Position: Confirmation that, subject to the conditions, limitations, qualifications, and comments set out therein, the original Ruling No. 2011-043185 will continue to be binding on the CRA.
Reasons: The supplemental facts do not affect the validity of the previous Ruling given.
XXXXXXXXXX
2012-047215
Attention: XXXXXXXXXX
XXXXXXXXXX, 2013
Dear XXXXXXXXXX:
Re: Supplemental Advance Tax Ruling
XXXXXXXXXX
We are writing in response to your letter of XXXXXXXXXX, wherein you requested confirmation that certain supplemental facts, relating to the Advance Tax Ruling 2011-043185 (the "Original Ruling"), will not affect the validity of the Original Ruling.
Supplemental Facts
1) The supplemental facts relate to the sale of substantially all of XXXXXXXXXX's ("Lossco") XXXXXXXXXX and XXXXXXXXXX operations to XXXXXXXXXX (the "Sale").
2) The Sale XXXXXXXXXX and was for a cash consideration of $XXXXXXXXXX, subject to post-closing adjustments.
3) Assets acquired by XXXXXXXXXX included XXXXXXXXXX, as well as the XXXXXXXXXX.
4) Lossco retained all of its XXXXXXXXXX as well as the XXXXXXXXXX operations.
5) Following the sale, Lossco retained more than XXXXXXXXXX employees in XXXXXXXXXX and XXXXXXXXXX and had consolidated sales of $XXXXXXXXXX for the fiscal year ended XXXXXXXXXX.
6) The XXXXXXXXXX capitalization of Lossco was $XXXXXXXXXX as of XXXXXXXXXX.
7) Lossco realized a significant gain on the disposition of its XXXXXXXXXX businesses in its taxation year ending XXXXXXXXXX.
8) Lossco's Board of Directors had authorized a XXXXXXXXXX distribution of $XXXXXXXXXX per share which was paid on XXXXXXXXXX to shareholders of record on XXXXXXXXXX. XXXXXXXXXX.
9) As a result of the Sale, Lossco will use a significant portion, but not all, of its tax attributes to offset the realized gain.
10) Lossco's tax attributes following its taxation year ended XXXXXXXXXX are:
a) Non-Capital Losses
Year Incurred Amount
XXXXXXXXXX $XXXXXXXXXX
Subtotal $XXXXXXXXXX
Less: amount carried over to offset
XXXXXXXXXX taxable income: XXXXXXXXXX
Balance remaining $XXXXXXXXXX
b) Undeducted Scientific Research and Experimental Development Expense
Year Incurred Amount
XXXXXXXXXX $XXXXXXXXXX
Total $XXXXXXXXXX
c) Unused Investment Tax Credits
Year Incurred Amount
XXXXXXXXXX $XXXXXXXXXX
Subtotal $XXXXXXXXXX
Less: amount carried over from
XXXXXXXXXX to offset
XXXXXXXXXX taxable income. XXXXXXXXXX
Total $XXXXXXXXXX
11) Following the Sale, the credit facility of the affiliated group of Lossco remained unchanged. As of XXXXXXXXXX, the affiliated group of Lossco had access to over $XXXXXXXXXX of liquidity.
You state that, apart from the supplemental facts as set out above, there are no other changes to the Facts and Proposed Transactions as described in Ruling E2011-043185. As such you advise that the Facts, Proposed Transactions and Purpose of the Proposed Transactions described in the Original Ruling and combined with this letter constitute a complete and accurate disclosure of all relevant facts and transactions.
We note that this request for a Supplemental Ruling relates primarily to the application of Lossco's tax attributes, to offset the increase in taxable income, as a result of the Sale.
Confirmation
Provided that the preceding statements and the statements contained in the Original Ruling constitute a complete and accurate disclosure of all the relevant facts, Proposed Transactions and Purposes of the Proposed Transactions, we hereby confirm that subject to the conditions, limitations, qualifications and comments set out in Original Ruling, that the Original Ruling will continue to be binding on the Canada Revenue Agency.
Yours truly;
XXXXXXXXXX
for Director
Reorganizations Division
Income Tax Rulings Directorate
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