2017 Ruling 2017-0688351R3 - Loss Consolidation

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 loss consolidation arrangement among the related and affiliated group is acceptable

Position: Yes

Reasons: The transactions conforms to our requirements for such rulings

XXXXXXXXXX								2017-068835

XXXXXXXXXX, 2017

Dear XXXXXXXXXX:

Re: Advance Income Tax Ruling - XXXXXXXXXX (collectively known as the “Taxpayers”)

We are replying to your letter of XXXXXXXXXX, wherein you requested an advance income tax ruling on behalf of the above-referenced Taxpayers. We also acknowledge the information provided in correspondence and telephone conversations concerning your request.

To the best of your knowledge and that of the Taxpayers, none of the issues involved in the ruling request is:

i. in a previously filed tax return of the Taxpayers or a related person;

ii. being considered by a tax services office or tax centre in connection with a previously filed tax return of the Taxpayers or a related person;

iii. under objection by any of the Taxpayers or a related person;

iv. the subject of a current or completed court process involving the Taxpayers or a related person; or

v. the subject of a ruling request previously considered by the Directorate.

Unless specified otherwise, 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

“ACB” means adjusted cost base, as defined in section 54 of the Act;

“affiliated persons” has the meaning assigned by section 251.1 of the Act;

“agreed amount” means the amount that a transferor and transferee have agreed upon in a joint election under subsection 85(1) of the Act in respect of a transfer of eligible property;

“agreeing province” means a province that has entered into an agreement with the Government of Canada under which the Government of Canada will collect taxes payable under the income tax statute of that province and will make payments to that province in respect of the taxes so collected;

“arm’s length” has the meaning assigned by subsection 251(1) of the Act;

“CRA” means the Canada Revenue Agency;

“dividend rental arrangement” has the meaning assigned by subsection 248(1) of the Act;

“eligible property” has the meaning assigned by subsection 85(1.1) of the Act;

“excepted dividend” has the meaning assigned by section 187.1(c) of the Act;

“excluded dividend” has the meaning assigned by subsection 191(1) of the Act;

“fair market value” means the highest price available in an open and unrestricted market, between informed, prudent parties, acting at arm’s length and under no compulsion to act, expressed in terms of cash;

XXXXXXXXXX;

“forgiven amount” has the meaning assigned by subsections 80(1) and 80.01(1) of the Act;

“General Anti-avoidance Provision of an Agreeing Province” means:

XXXXXXXXXX

“guarantee agreement” has the meaning assigned by subsection 112(2.2) of the Act;

“HoldCo” means XXXXXXXXXX;

XXXXXXXXXX;

“Loan 1” means a loan made by LossCo to NewLossCo, as described in Paragraph 14;

“Loan 2” means a loan made by NewCo to LossCo, as described in Paragraph 16;

“LossCo” means XXXXXXXXXX;

“LossCo Loan” means a loan made by an unrelated, arm’s length XXXXXXXXXX to LossCo, as described in Paragraph 13;

XXXXXXXXXX;

XXXXXXXXXX;

“NewCo” is a corporation to be incorporated under the XXXXXXXXXX, as described in Paragraph 11;

“NewCo Common Shares” has the meaning assigned in Paragraph 11;

“NewCo Note” has the meaning assigned in Paragraph 23(a);

“NewCo Preferred Shares” means the preferred shares of NewCo described in Paragraph 12;

“NewLossCo” is a corporation to be incorporated under the XXXXXXXXXX, as described in Paragraph 10;

“NewLossCo Common Shares” has the meaning assigned in Paragraph 10;

“Non-capital loss” has the meaning assigned by subsection 111(8) of the Act;

XXXXXXXXXX;

“Paragraph” refers to a numbered paragraph in this advance income tax ruling application;

“Parent” means XXXXXXXXXX, a corporation governed by the XXXXXXXXXX;

“Parent Group” means Parent and its direct and indirect subsidiaries;

“principal amount” has the meaning assigned by subsection 248(1) of the Act;

“private corporation” has the meaning assigned by subsection 89(1) of the Act;

“Profitco” means XXXXXXXXXX, a corporation governed by the XXXXXXXXXX;

“Profitco Common Shares” has the meaning assigned in Paragraph 25;

“Proposed Transactions” means the transactions described in Paragraphs 10 to 29;

“PUC” means paid-up capital, as defined in subsection 89(1) of the Act;

“Regulations” means the Income Tax Regulations, C.R.C., c.945, as amended;

“related persons” has the meaning assigned by subsection 251(2) of the Act;

XXXXXXXXXX;

“taxable Canadian corporation” has the meaning assigned by subsection 89(1) of the Act;

“taxable dividend” has the meaning assigned by subsection 89(1) of the Act;

“term preferred share” has the meaning assigned by subsection 248(1) of the Act; and

“Unwind Year” has the meaning assigned by Paragraph 23.

FACTS

1. Parent is a resident in Canada for purposes of the Act XXXXXXXXXX.

2. LossCo is a resident in Canada for purposes of the Act. LossCo is a taxable Canadian corporation and a private corporation. The taxation year of LossCo ends on XXXXXXXXXX. LossCo is a wholly-owned direct subsidiary of the Parent and earns XXXXXXXXXX. The authorized capital of LossCo consists of unlimited number of common shares without par value and unlimited number of Class A, redeemable shares without par value. LossCo’s head office is located at XXXXXXXXXX. LossCo files its tax and information returns with the XXXXXXXXXX Taxation Centre and deals with the XXXXXXXXXX Taxation Services Office.

3. Lossco has a XXXXXXXXXX taxation year-end and, but for the Proposed Transactions, is estimated to have a non-capital loss carryforward balance at XXXXXXXXXX of $XXXXXXXXXX, generated by year as follows:

Year of origin		Non-Capital Losses of Lossco
XXXXXXXXXX			XXXXXXXXXX

4. LossCo’s non-capital losses are XXXXXXXXXX% allocable to XXXXXXXXXX, as it only has a permanent establishment in the province of XXXXXXXXXX.

5. ProfitCo is a resident in Canada for purposes of the Act and was formed under the XXXXXXXXXX. ProfitCo is a taxable Canadian corporation and a private corporation. ProfitCo is a XXXXXXXXXX corporation and its primary business is XXXXXXXXXX. ProfitCo has a XXXXXXXXXX taxation year-end. The authorized capital of ProfitCo consists of common shares with par value of $XXXXXXXXXX each and redeemable preferred shares with a par value of $XXXXXXXXXX each. ProfitCo is a wholly-owned direct subsidiary of HoldCo. ProfitCo’s head office is located at XXXXXXXXXX. ProfitCo files its tax and information returns at the XXXXXXXXXX Taxation Centre and deals with the XXXXXXXXXX Taxation Services Office.

6. ProfitCo has permanent establishments in XXXXXXXXXX.

7. ProfitCo earned taxable income of $XXXXXXXXXX in its XXXXXXXXXX taxation year (after the utilization of non-capital loss carryforwards from earlier taxation years) and expects to earn taxable income of $XXXXXXXXXX and $XXXXXXXXXX in its XXXXXXXXXX and XXXXXXXXXX taxation years, respectively. But for the Proposed Transactions, ProfitCo is estimated to earn taxable income of $XXXXXXXXXX for the XXXXXXXXXX taxation year.

8. HoldCo is a resident in Canada for purposes of the Act. HoldCo is a taxable Canadian corporation and a private corporation. HoldCo has a XXXXXXXXXX taxation year-end. The authorized capital of HoldCo consists of unlimited number of common shares without par value. Parent owns XXXXXXXXXX% of the issued and outstanding common shares of HoldCo. XXXXXXXXXX. HoldCo’s head office is located at XXXXXXXXXX. HoldCo files its tax and information returns with the XXXXXXXXXX Taxation Centre and deals with the XXXXXXXXXX Taxation Services Office.

9. XXXXXXXXXX

PROPOSED TRANSACTIONS

The following transactions will be completed in the order described below.

10. HoldCo will incorporate NewLossCo. NewLossCo will be a taxable Canadian corporation and a private corporation. NewLossCo will have a XXXXXXXXXX taxation year-end. HoldCo will subscribe for common shares of NewLossCo on incorporation for $XXXXXXXXXX (the “NewLossCo Common Shares”). HoldCo will hold the NewLossCo Common Shares as capital property. NewLossCo will not carry on any business and its activities will be limited to investing the loan proceeds, received from LossCo as described in Paragraph 14, in the NewCo Preferred Shares, as described in Paragraph 15. NewLossCo will not be a XXXXXXXXXX.

11. LossCo will incorporate NewCo. NewCo will be a taxable Canadian corporation and a private corporation. NewCo will have a XXXXXXXXXX taxation year-end. LossCo will subscribe for common shares of NewCo on incorporation for $XXXXXXXXXX (the “NewCo Common Shares”). NewCo will not carry on any business and its activities will be limited to investing the proceeds received on the issuance of the NewCo Preferred Shares to NewLossCo, as described in Paragraph 15, in a non-interest bearing loan to LossCo, as described in Paragraph 16. NewCo will not be a XXXXXXXXXX.

12. The authorized capital of NewCo will consist of two classes of shares, NewCo Common Shares and preferred shares (the “NewCo Preferred Shares”). Each NewCo Preferred Share will be non-voting and redeemable and retractable for the amount for which it was issued. Dividends on the NewCo Preferred Shares will accrue at a fixed rate on a daily basis and will be payable each calendar year on the earliest of XXXXXXXXXX, the time at which any NewCo Preferred Shares are redeemed or retracted or another date agreed upon. The dividend rate, expressed as a percentage of the amount for which a NewCo Preferred Share is issued, will be equal to the sum of XXXXXXXXXX% plus the interest rate on Loan 1.

13. At an agreed upon date that is on or before XXXXXXXXXX, LossCo will borrow from an unrelated, arm’s length XXXXXXXXXX on a daylight loan basis (the “LossCo Loan”) on arm’s-length commercial terms customary for this type of loan. The principal amount of LossCo Loan is estimated to be $XXXXXXXXXX. The exact principal amount of LossCo Loan will be finalized when the Proposed Transactions are implemented. The principal amount of the LossCo Loan will not exceed the amount that LossCo could reasonably be expected to borrow from an arm’s length XXXXXXXXXX and will not cause LossCo to contravene any debt covenants. LossCo will fund any fees or costs associated with the LossCo Loan with existing cash or by borrowing from one or more of its affiliates in the Parent Group.

14. LossCo will use the total proceeds received under the LossCo Loan, described in Paragraph 13, to make an interest bearing loan (“Loan 1”) to NewLossCo. The principal amount will equal the principal amount of the LossCo Loan. Loan 1 will bear interest at an annual rate, based on market conditions at the time the loan is granted, which will not exceed what would be a reasonable commercial rate in these circumstances. The estimated interest rate on Loan 1 will be XXXXXXXXXX%. The principal amount of Loan 1 will not exceed the amount that LossCo and NewLossCo could reasonably be expected to borrow from an arm’s length XXXXXXXXXX and will not cause LossCo or NewLossCo to contravene any debt covenants in existence. Interest on Loan 1 will be payable each calendar year on the earliest of XXXXXXXXXX, the time at which Loan 1 is repaid or another date agreed upon.

15. NewLossCo will use the total proceeds received under Loan 1 to subscribe for NewCo Preferred Shares having an aggregate redemption amount and fair market value equal to the total amount of the subscription proceeds. The full amount of the subscription proceeds will be added to the stated capital of the NewCo Preferred Shares and will form part of the permanent capital of NewCo. The PUC and ACB of each NewCo Preferred Share issued will be equal to its redemption amount. The estimated dividend rate on the NewCo Preferred Shares will be XXXXXXXXXX%.

16. NewCo will use the total proceeds received from the NewCo Preferred Share subscription, described in Paragraph 15, to make a non-interest bearing loan (“Loan 2”) to LossCo, the principal amount of which will equal the principal amount of LossCo Loan.

17. LossCo will use the total proceeds received from Loan 2 to repay the LossCo Loan.

18. LossCo and NewCo will enter into a capital support agreement. The agreement will provide for the contribution of capital by LossCo to NewCo in a manner that allows NewCo to satisfy its dividend obligations on the NewCo Preferred Shares.

19. All of the transactions described in Paragraphs 13 to 18 will take place on the same day and in the order described.

20. Subsequent to the transactions described in Paragraphs 13 to 18, on XXXXXXXXXX (or another date agreed upon by LossCo, NewCo and NewLossCo) of each fiscal year until the loss consolidation arrangement is unwound, as described in Paragraph 23, while Loan 1 is outstanding, LossCo will make a contribution of capital to NewCo in an amount equal to the accrued dividends payable, as at that time, on the NewCo Preferred Shares. No shares will be issued by NewCo with respect to the contribution of capital and no amount will be added to the stated capital of any class of shares of NewCo, and, for greater certainty, to the PUC of any class of shares of NewCo. For accounting purposes, the amount of the contribution of capital will be recorded as contributed surplus and will not be income of NewCo pursuant to XXXXXXXXXX.

21. Immediately, upon receipt of the contribution of capital, described in Paragraph 20, NewCo will pay all dividends on the NewCo Preferred Shares that are accrued and unpaid as at that time.

22. Immediately, upon receipt of the payment of the dividends, described in Paragraph 21, NewLossCo will pay all interest on Loan 1 that is accrued and unpaid as at that time, pursuant to the terms of Loan 1.

23. The following transactions will occur on or before XXXXXXXXXX of the year in which the loss consolidation arrangement will be unwound (the “Unwind Year”) (or such earlier date as LossCo, NewCo and NewLossCo may have agreed upon):

(a) NewCo will redeem the NewCo Preferred Shares held by NewLossCo in consideration for a non-interest bearing promissory note issued by NewCo (the “NewCo Note”);

(b) The NewCo Note will have a principal amount and fair market value equal to the redemption amount and fair market value of the NewCo Preferred Shares redeemed;

(c) NewLossCo will repay Loan 1 by assigning the NewCo Note to LossCo in full satisfaction of the amount due under Loan 1. Loan 1 will be cancelled; and

(d) NewCo and LossCo will agree to set off the amount due under Loan 2 against the amount due under the NewCo Note as payment in full. The obligations under Loan 2 and the NewCo Note will be cancelled.

24. All of the transactions described in Paragraph 23 will take place on the same day and in the order described.

25. Immediately following completion of the transactions described in Paragraph 23 and prior to XXXXXXXXXX of the Unwind Year, HoldCo will transfer all of its NewLossCo Common Shares to ProfitCo in exchange for additional common shares of ProfitCo (the “ProfitCo Common Shares”). The ProfitCo Common Shares issued to HoldCo by ProfitCo will have a fair market value equal to the fair market value of the NewLossCo Common Shares transferred.

26. HoldCo will jointly elect with ProfitCo, in prescribed form and within the time allowed by subsection 85(6), to have the rules of subsection 85(1) apply to the transfer of the NewLossCo Common Shares to ProfitCo as described in Paragraph 25. The agreed amount in respect of the NewLossCo Common Shares transferred will be the lesser of the fair market value of the NewLossCo Common Shares transferred and $XXXXXXXXXX, being the ACB of the NewLossCo Common Shares owned by HoldCo.

27. ProfitCo will add to its stated capital account maintained for its common shares the agreed amount pursuant to subsection 85(1) referred to in Paragraph 26. For greater certainty, the increase to the PUC of the common shares of ProfitCo will not exceed the maximum amount that could be added to the PUC of such shares, having regard to subsection 85(2.1).

28. In the taxation year in which ProfitCo acquires the NewLossCo Common Shares described in Paragraph 25, ProfitCo, as sole shareholder of NewLossCo, will pass a resolution authorizing and requiring NewLossCo to be wound up into ProfitCo. In addition, a general conveyance of the assets of NewLossCo and assumption of liabilities of NewLossCo will be executed between ProfitCo and NewLossCo. NewLossCo will file articles of dissolution with the appropriate corporate registry within a reasonable time after the winding-up resolution is passed. It is expected that NewLossCo will be formally dissolved before the end of the first taxation year of ProfitCo commencing after the commencement of the winding-up of NewLossCo.

29. Immediately after the resolution to wind up NewLossCo into ProfitCo, LossCo, as sole shareholder of NewCo, will pass a resolution authorizing and requiring NewCo to be wound up into LossCo. In addition, a general conveyance of assets of NewCo and assumption of liabilities of NewCo will be executed between LossCo and NewCo. NewCo will file articles of dissolution with the appropriate corporate registry within a reasonable time after the winding-up resolution is passed.

OTHER REPRESENTATIONS

30. It is understood that any rulings provided will only be binding in respect of individual Proposed Transaction(s) to the extent those specific transaction(s) occur on or before the day that is XXXXXXXXXX years subsequent to the date that CRA issues the final ruling.

31. At the time of the Proposed Transactions, LossCo will have the financial capacity to make capital contributions to NewCo described in Paragraph 20. LossCo may obtain the funds to make capital contributions to NewCo by borrowing from one or more of its affiliates, or by borrowing from an arm’s-length XXXXXXXXXX on a daylight loan basis. LossCo will have the borrowing capacity to borrow the amount of the required capital contributions from an arm’s-length XXXXXXXXXX.

32. At the time of the Proposed Transactions, NewCo will have the financial capacity to satisfy XXXXXXXXXX required to pay the dividends on the NewCo Preferred Shares described in Paragraph 21.

33. LossCo and ProfitCo are affiliated persons and related persons. NewLossCo and NewCo will be affiliated persons and related persons with respect to LossCo, ProfitCo, and each other.

34. ProfitCo is a XXXXXXXXXX. HoldCo, LossCo, NewLossCo and NewCo will also be a XXXXXXXXXX at all material times.

35. The NewCo Preferred Shares and NewLossCo Common Shares will be term preferred shares.

36. The NewCo Preferred Shares that will be acquired by NewLossCo will not be acquired in the ordinary course of NewLossCo’s business.

37. The NewLossCo Common Shares that will be acquired by HoldCo will not be acquired in the ordinary course of HoldCo’s business.

38. The NewLossCo Common Shares and the NewCo Preferred Shares will not, at any time during the implementation of the Proposed Transactions described herein, be:

(a) the subject of any undertaking that is a guarantee agreement as contemplated in subsection 112(2.2);

(b) the subject of a dividend rental arrangement as contemplated in subsection 112(2.3);

(c) the subject of any secured undertaking of the type described in paragraph 112(2.4)(a);

(d) issued for consideration that is or includes:

(i) an obligation of the type described in subparagraph 112(2.4)(b)(i), or

(ii) any right of the type described in subparagraph 112(2.4)(b)(ii).

39. LossCo, HoldCo and ProfitCo are not financial institutions, as defined in subsection 190(1), for purposes of Part VI tax. NewLossCo and NewCo will not be financial institutions, as defined in subsection 190(1), for purposes of Part VI tax.

PURPOSE OF THE PROPOSED TRANSACTIONS

40. The purpose of the Proposed Transactions is to consolidate profits and losses within a group of affiliated persons (comprised of related corporations which are wholly owned by such corporations) through the transfer of certain tax attributes, enabling ProfitCo to utilize the losses that LossCo has incurred and is expected to incur. The purpose of the tax consolidation is not to shift income to a lower rate province. Any shift of income between provinces will be incidental to the Proposed Transactions.

41. The tax attributes of LossCo and ProfitCo remain the same except for the transfer of the loss. The Proposed Transactions are not being undertaken to refresh non-capital losses or facilitate the use of such losses in a taxation year subsequent to the taxation year in which the losses would have otherwise expired in the hands of LossCo.

42. Due to XXXXXXXXXX, it is not feasible from a business perspective to have LossCo make Loan 1 directly to ProfitCo. Instead, Loan 1 is being made to NewLossCo to ensure that ProfitCo does not incur debt in the course of executing the loss consolidation.

43. The purpose of incorporating NewCo is to have NewCo issue the NewCo Preferred Shares to NewLossCo, rather than having LossCo issue preferred shares directly to NewLossCo which would result in corporate incest and contravene corporate law constraints.

44. The dividend paid by Newco (and received by NewLossCo) on the Newco Preferred Shares, as described in Paragraph 21, has no purpose other than the purposes described in Paragraph 40.

RULINGS

Provided that the above Facts, Proposed Transactions, Other Representations and Purpose of the Proposed Transactions constitute a complete and accurate disclosure of all of the information relevant to the ruling request, we rule as follows, in reliance on the above information, in respect of the Proposed Transactions that will occur up to XXXXXXXXXX:

A. Provided that ProfitCo and HoldCo jointly file an election pursuant to subsection 85(1) within the time allowed by subsection 85(6), and subject to the application of subsection 69(11), the provisions of subsection 85(1), other than paragraph 85(1)(e.2), will apply so that the agreed amount in respect of HoldCo’s transfer of the NewLossCo Common Shares to ProfitCo, described in Paragraph 25, will be deemed to be HoldCo’s proceeds of disposition and ProfitCo’s cost of the NewLossCo Common Shares pursuant to paragraph 85(1)(a).

B. Provided that NewLossCo has a legal obligation to pay interest on Loan 1 and NewLossCo continues to hold the NewCo Preferred Shares it acquires in the manner described in Paragraph 15, for the purpose of gaining or producing income from property, NewLossCo will, pursuant to paragraph 20(1)(c), be entitled to deduct, in computing its income for a taxation year (depending on the method regularly followed by NewLossCo in computing its income for the purposes of the Act), the lesser of

(a) the interest paid or payable on Loan 1 in respect of that taxation year; and

(b) a reasonable amount in respect thereof.

C. No amount will be included in the income of NewCo pursuant to section 9, paragraphs 12(1)(c) or 12(1)(x) in respect of the contributions of capital to be made by LossCo as described in Paragraph 20.

D. The dividends received by NewLossCo on its NewCo Preferred Shares, as described in Paragraph 21, will be taxable dividends that will be deductible pursuant to subsection 112(1) in computing the taxable income of NewLossCo for the taxation year in which the dividends are received, and for greater certainty, such deduction will not be precluded by any of subsections 112(2.1), 112(2.2). 112(2.3), or 112(2.4).

E. Provided that the Purpose of the dividends in Paragraph 21 is what is described in the “Purposes of the Proposed Transactions” above and the Proposed Transactions are undertaken in the manner described above, subsection 55(2) will not apply in respect of the dividends described in Paragraph 21 above.

F. Provided that the requirements of paragraphs 88(1.1)(a) and (b) are satisfied, subsection 88(1.1) will apply after the winding-up of NewLossCo into ProfitCo, described in Paragraph 28, to permit ProfitCo to deduct the non-capital losses of NewLossCo in computing its taxable income for a taxation year commencing after the commencement of the winding-up, subject to the limitations in paragraph 88(1.1)(e) and section 111.

G. Neither Part IV.1 nor Part VI.1 will apply to the dividends described in Ruling D, as the dividends will be excepted dividends and excluded dividends, respectively.

H. The set-off and cancellation of Loan 2 and the NewCo Note held by NewCo and LossCo, respectively, as described in Paragraph 23, will not give rise to a forgiven amount and neither LossCo nor NewCo will realize any gain or incur any loss therefrom.

I. The provisions of subsections 15(1), 56(2), 69(4), 69(11) and 246(1) will not apply as a result of the Proposed Transactions in and by themselves.

J. Subsection 245(2) will not be applicable as a result of the Proposed Transactions, in and by themselves, to re-determine the tax consequences confirmed in the rulings given above.

K. The General Anti-avoidance Provision of an Agreeing Province will not be applied, as a result of the Proposed Transactions, in and by themselves, to re-determine the tax consequences confirmed in the rulings given above, in respect of a taxation year for which such province was an agreeing province.

The above rulings are given subject to the general limitations and qualifications set out in Information Circular 70-6R7 dated April 22, 2016, and are binding on the CRA provided that the Proposed Transactions, other than the transactions described in paragraph 23 to 29 above, are commenced and entered into on or before XXXXXXXXXX. The above rulings are based on the Act in its present form and do not take into account the effect of any proposed amendments to the Act which, if enacted, could have an effect on the rulings provided herein.

COMMENTS

Nothing in this letter should be construed as implying that the CRA has agreed to, reviewed or has made any determination in respect of:

(a) the fair market value or adjusted cost base of any property or the paid up capital of any shares referred to herein;

(b) the amount of any non-capital loss, net capital loss or any other amount of any corporation referred to herein;

(c) the provincial income tax implications relating to the allocation of income and expenses under the Proposed Transactions;

(d) subject to Ruling K, the application or non-application of a general anti-avoidance provision of any province;

(e) any transactions contemplated herein that occur after XXXXXXXXXX; and

(f) any tax consequences relating to the Facts and Proposed Transactions described herein, other than those specifically described in the rulings given above.

Yours sincerely,

XXXXXXXXXX
for Director
Partnerships and Corporate Financing Section
Reorganizations Division
Income Tax Rulings Directorate