2025 Ruling 2024-1002891R3 - Multi-wing split-up net asset butterfly

Unedited CRA Tags

55(2), 55(3)(b)

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Text of Severed Letter

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 exception to the application of subsection 55(2) provided in paragraph 55(3)(b) will apply to the proposed transactions.

Position: Yes.

Reasons: Conditions for application have been met and the "butterfly denial rules" in subsection 55(3.1) do not apply.

XXXXXXXXXX									2024-100289

Dear XXXXXXXXXX:

Re: Advance Income Tax Ruling
XXXXXXXXXX

This is in reply to your letter dated XXXXXXXXXX, in which you requested an advance income tax ruling on behalf of the Taxpayers described herein.

This letter is based solely on the facts, proposed transactions, additional information and purposes of the proposed transactions described below. Any documentation submitted in respect of your request does not form part of the facts, proposed transactions or additional information unless specifically reproduced therein and any references to documentation are provided solely for the convenience of the reader.

We understand that to the best of your knowledge and that of the Taxpayers, none of the proposed transactions and/or issues involved in this ruling are the same as, or substantially similar to, transactions and/or issues that are:

(a) in a previously filed tax return of the Taxpayer or a related person and;

i. being considered by the CRA in connection with such return;

ii. under objection by the Taxpayer or a related person; or

iii. the subject of a current or completed court process involving the Taxpayer or a related person; and

(b) the subject of an advance income tax ruling request previously considered by the Income Tax Rulings Directorate of the CRA in connection with the Taxpayer or a person related to the Taxpayer.

The tax account numbers, Tax Services Offices and the Tax Centres and addresses of the Taxpayers involved are as follows:

XXXXXXXXXX

Unless otherwise stated:

(a) each reference herein to a part, section, subsection, paragraph or subparagraph is a reference to the relevant provision of the Income Tax Act, R.S.C. 1985 c.1 (5th Supp.) (the “Act”), as amended to the date of this letter;

(b) all terms and conditions used in this letter that are defined in the Act have the meaning given in such definition;

(d) the singular should be read as plural and vice versa where the circumstances so require.

DEFINITIONS

The following abbreviations, terms and expressions have the meanings specified, and the relevant parties to the Proposed Transactions (as defined below) will be referred to as follows:

“Aco” means XXXXXXXXXX, a corporation incorporated under Act 1;

“Act 1” means the XXXXXXXXXX Act XXXXXXXXXX;

“adjusted cost base” or “ACB” means “adjusted cost base” as defined in section 54;

“agreed amount” means the amount agreed to by the transferor and the transferee in respect of the transfer of eligible property in a joint election filed pursuant to subsection 85(1);

“Amalgamation” refers to the amalgamation of Aco, Corporation 1 and Corporation 2 to form DC as described in Paragraph 37;

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

“Bank indebtedness” refers to a credit facility with a third-party lender;

“capital dividend” has the meaning assigned by subsection 83(2);

“capital property” has the meaning assigned by section 54;

“CCPC” means “Canadian-controlled private corporation” as that term is defined in subsection 125(7);

“CDA” means “capital dividend account” as that term is defined in subsection 89(1);

“Child 1” means XXXXXXXXXX, an individual who is resident in Canada for purposes of the Act. Child 1 is the child of Parent 1 and Parent 2 and is the sibling of Child 2, Child 3 and Child 4;

“Child 2” means XXXXXXXXXX, an individual who is resident in Canada for purposes of the Act. Child 2 is the child of Parent 1 and Parent 2 and is the sibling of Child 1, Child 3 and Child 4;

“Child 3” means XXXXXXXXXX, an individual who is resident in Canada for purposes of the Act. Child 3 is the child of Parent 1 and Parent 2 and is the sibling of Child 1, Child 2 and Child 4;

“Child 4” means XXXXXXXXXX, an individual who is resident in Canada for purposes of the Act. Child 4 is the child of Parent 1 and Parent 2 and is the sibling of Child 1, Child 2 and Child 3;

“Children Trust” means XXXXXXXXXX, as described in Paragraph 23;

“Corporation 1” means XXXXXXXXXX, a corporation incorporated under Act 1;

“Corporation 1 Common Shares” means the Common shares of Corporation 1, as described in Paragraph 9a;

“Corporation 1 Class A Special Shares” means the Class A Special shares of Corporation 1, as described in Paragraph 9b;

“Corporation 1 Class B Special Shares” means the Class B Special shares of Corporation 1, as described in Paragraph 9c;

“Corporation 1 Class C Special Shares” means the Class C Special shares of Corporation 1, as described in Paragraph 9d;

“Corporation 2” means XXXXXXXXXX, a corporation incorporated under Act 1;

“Corporation 2 Common Shares” means the Common shares of Corporation 2, as described in Paragraph 17a;

“Corporation 2 Class A Special Shares” means the Class A Special shares of Corporation 2, as described in Paragraph 17b;

“Corporation A” means XXXXXXXXXX, a corporation incorporated under Act 1, as described in Paragraph 21;

“Corporation A Loan Receivable” means the interest-free amount receivable by Aco and owing from Corporation A, in the amount of $XXXXXXXXXX;

“CRA” means Canada Revenue Agency;

“DC” means the corporation to be formed as a result of the Amalgamation, as described in Paragraph 37;

“DC CDA Redemption Note” means the non-interest bearing demand promissory note to be issued by DC to TC3 on the redemption of the DC Class J Preferred Shares owned by TC3, as described in Paragraph 82;

“DC Class A Common Shares” means the Class A Common shares of DC, as described in Paragraph 38a;

“DC Class B Common Shares” means the Class B Common shares of DC, as described in Paragraph 38b;

“DC Class D Preferred Shares” means the Class D Preferred shares of DC, as described in Paragraph 38c;

“DC Class E Preferred Shares” means the Class E Preferred shares of DC, as described in Paragraph 38d;

“DC Class F Preferred Shares” means the Class F Preferred shares of DC, as described in Paragraph 38e;

“DC Class G Preferred Shares” means the Class G Preferred shares of DC, as described in Paragraph 38f;

“DC Class H Preferred Shares” means the Class H Preferred shares of DC, as described in Paragraph 38g;

“DC Class J Preferred Shares” means the Class J Preferred shares of DC, as described in Paragraph 38h;

“DC Transfer 1” refers to the transfer of property by DC to TC1 as described in Paragraph 67 to Paragraph 69;

“DC Transfer 2” refers to the transfer of property by DC to TC2 as described in Paragraph 70 to Paragraph 72;

“DC Transfer 3” refers to the transfer of property by DC to TC3 as described in Paragraph 73 to Paragraph 75;

“DC Transfer 4” refers to the transfer of property by DC to TC4 as described in Paragraph 76 to Paragraph 78;

“DC Transfers” means the DC Transfer 1, DC Transfer 2, DC Transfer 3 and DC Transfer 4, collectively;

“distribution” has the meaning assigned by subsection 55(1);

“dividend refund” has the meaning assigned by subsection 129(1);

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

“Effective Date” means the effective date of the Proposed Transactions;

“eligible dividend” has the meaning assigned by subsection 89(14);

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

“ERDTOH” means “eligible refundable dividend tax on hand” which has the meaning assigned by subsection 129(4);

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

“financial intermediary corporation” has the meaning assigned by subsection 191(1);

“GRIP” means “general rate income pool” as that expression is defined in subsection 89(1);

“NERDTOH” means “non-eligible refundable dividend tax on hand” which has the meaning assigned by subsection 129(4);

“paid-up capital” or “PUC” means “paid-up capital” as defined in subsection 89(1);

“Paragraph” means a numbered paragraph in this letter;

“Parent 1” refers to XXXXXXXXXX, an individual who is resident in Canada for purposes of the Act. Parent 1 is the spouse of Parent 2 and the parent of Child 1, Child 2, Child 3 and Child 4;

“Parent 2” refers to XXXXXXXXXX, an individual who is resident in Canada for purposes of the Act. Parent 2 is the spouse of Parent 1 and the parent of Child 1, Child 2, Child 3 and Child 4;

“Parent 1 Loan” means the sum of the amounts owing by Aco to Parent 1 of $XXXXXXXXXX, and owing by Holdco to Parent 1 of $XXXXXXXXXX as long-term financing and that, upon the Amalgamation described in Paragraph 37, will aggregate to become an amount owing by DC to Parent 1 of $XXXXXXXXXX;

“Pre-1972 CSOH” means “pre-1972 capital surplus on hand” and has the meaning assigned by subsection 88(2.1);

“Predecessor Corporation” means any one of Aco, Corporation 1 and Corporation 2;

“Predecessor Corporations” means Aco, Corporation 1 and Corporation 2, collectively;

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

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

“proceeds of disposition” or “POD” means “proceeds of disposition” as defined in section 54;

“Property 1” means the XXXXXXXXXX property located at XXXXXXXXXX, which was transferred from Aco to Subco, as described in Paragraph 27;

“Property 2” means the XXXXXXXXXX property located at XXXXXXXXXX, which was transferred from Aco to Subco, as described in Paragraph 27;

“Property 3” means the XXXXXXXXXX property XXXXXXXXXX, and located at XXXXXXXXXX which, prior to being transferred to Subco, as described in Paragraph 27 and Paragraph 29, was owned by Aco (XXXXXXXXXX%) and Corporation 2 (XXXXXXXXXX%);

“Proposed Transactions” means the proposed transactions described in Paragraphs 33 to Paragraph 97;

“related person” has the meaning assigned by subsection 251(2);

“restricted financial institution” has the meaning assigned by subsection 248(1);

“specified financial institution” has the meaning assigned by subsection 248(1);

“Subco” means XXXXXXXXXX, a corporation incorporated under Act 1;

“Subco Class A Common Shares” means the Class A Common shares of Subco, as described in Paragraph 26a;

“Subco Class B Common Shares” means the Class B Common shares of Subco, as described in Paragraph 26b;

“Subco Class C Common Shares” means the Class C Common shares of Subco, as described in Paragraph 26b;

“Subco Class A Preference Shares” means the Class A Preference shares of Subco, as described in Paragraph 26c;

“Subco Class B Preference Shares” means the Class B Preference shares of Subco, as described in Paragraph 26d;

“Subco Class C Preference Shares” means the Class C Preference shares of Subco, as described in Paragraph 26d;

“Subco Class D Preference Shares” means the Class D Preference shares of Subco, as described in Paragraph 26d;

“Subco Class E Preference Shares” means the Class E Preference shares of Subco, as described in Paragraph 26d;

“Subco Class F Preference Shares” means the Class F Preference shares of Subco, as described in Paragraph 26d;

“Subco Class G Preference Shares” means the Class G Preference shares of Subco, as described in Paragraph 26d;

“Subco Loan Receivable” means the non-interest bearing, demand loan made by Aco to Subco, as described in Paragraph 31;

“taxable Canadian corporation” has the meaning assigned in subsection 89(1);

“taxable preferred share” has the meaning assigned by subsection 248(1);

“taxation year” has the meaning assigned by subsection 249(1);

“TCs” means TC1, TC2, TC3 and TC4, collectively;

“TC1” means a corporation to be incorporated under Act 1, as described in Paragraph 35;

“TC1 Class A Common Shares” means the Class A Common shares of TC1, as described in Paragraph 36a;

“TC1 Class B Common Shares” means the Class B Common shares of TC1, as described in Paragraph 36b;

“TC1 Class D Preferred Shares” means the Class D Preferred shares of TC1, as described in Paragraph 36c;

“TC1 Class E Preferred Shares” means the Class E Preferred shares of TC1, as described in Paragraph 36d;

“TC1 Class F Preferred Shares” means the Class F Preferred shares of TC1, as described in Paragraph 36e;

“TC1 Class G Preferred Shares” means the Class G Preferred shares of TC1, as described in Paragraph 36f;

“TC1 Class H Preferred Shares” means the Class H Preferred shares of TC1, as described in Paragraph 36g;

“TC1 Redemption Note” means the non-interest bearing demand promissory note to be issued by TC1 to DC on the redemption of the TC1 Class D Preferred Shares owned by DC, as described in Paragraph 79;

“TC2” means a corporation to be incorporated under Act 1, as described in Paragraph 35;

“TC2 Class A Common Shares” means the Class A Common shares of TC2, as described in Paragraph 36a;

“TC2 Class B Common Shares” means the Class A Common shares of TC2, as described in Paragraph 36b;

“TC2 Class D Preferred Shares” means the Class D Preferred shares of TC2, as described in Paragraph 36c;

“TC2 Class E Preferred Shares” means the Class E Preferred shares of TC2, as described in Paragraph 36d;

“TC2 Class F Preferred Shares” means the Class F Preferred shares of TC2, as described in Paragraph 36e;

“TC2 Class G Preferred Shares” means the Class G Preferred shares of TC2, as described in Paragraph 36f;

“TC2 Class H Preferred Shares” means the Class H Preferred shares of TC2, as described in Paragraph 36g;

“TC2 Redemption Note” means the non-interest bearing demand promissory note to be issued by TC2 to DC on the redemption of the TC2 Class D Preferred Shares owned by DC, as described in Paragraph 79;

“TC3” means a corporation to be incorporated under Act 1, as described in Paragraph 35;

“TC3 Class A Common Shares” means the Class A Common shares of TC3, as described in Paragraph 36a;

“TC3 Class B Common Shares” means the Class B Common shares of TC3, as described in Paragraph 36b;

“TC3 Class D Preferred Shares” means the Class D Preferred shares of TC3, as described in Paragraph 36c;

“TC3 Class E Preferred Shares” means the Class E Preferred shares of TC3, as described in Paragraph 36d;

“TC3 Class F Preferred Shares” means the Class F Preferred shares of TC3, as described in Paragraph 36e;

“TC3 Class G Preferred Shares” means the Class G Preferred shares of TC3, as described in Paragraph 36f;

“TC3 Class H Preferred Shares” means the Class H Preferred shares of TC3, as described in Paragraph 36g;

“TC3 Redemption Note” means the non-interest bearing demand promissory note to be issued by TC3 to DC on the redemption of the TC3 Class D Preferred Shares owned by DC, as described in Paragraph 79;

“TC4” means a corporation to be incorporated under Act 1, as described in Paragraph 35;

“TC4 Class A Common Shares” means the Class A Common shares of TC4, as described in Paragraph 36a;

“TC4 Class A Common Shares” means the Class B Common shares of TC4, as described in Paragraph 36b;

“TC4 Class D Preferred Shares” means the Class D Preferred shares of TC4, as described in Paragraph 36c;

“TC4 Class E Preferred Shares” means the Class E Preferred shares of TC4, as described in Paragraph 36d;

“TC4 Class F Preferred Shares” means the Class F Preferred shares of TC4, as described in Paragraph 36e;

“TC4 Class G Preferred Shares” means the Class G Preferred shares of TC4, as described in Paragraph 36f;

“TC4 Class H Preferred Shares” means the Class H Preferred shares of TC4, as described in Paragraph 36g;

“TC4 Redemption Note” means the non-interest bearing demand promissory note to be issued by TC4 to DC on the redemption of the TC4 Class D Preferred Shares owned by DC, as described in Paragraph 79;

“Trust Agreement” means the Agreement between Parent 1, as settlor, and Parent 1 and Parent 2, as the Trustees, dated XXXXXXXXXX, setting forth the terms and conditions of the Children Trust;

“Trustees” has the meaning described under Paragraph 23 and Paragraph 24;

“Trust 1” means the XXXXXXXXXX as described in Paragraph 24;

“Trust 2” means the XXXXXXXXXX as described in Paragraph 24;

“Trust 3” means the XXXXXXXXXX as described in Paragraph 24;

“Trust 4” means the XXXXXXXXXX as described in Paragraph 24; and

“winding-up dividend” means the dividend arising on the winding-up of DC by virtue of subsection 84(2) and paragraph 88(2)(b), as described in Paragraphs 83 to 86.

FACTS

Aco

1. Aco is a taxable Canadian corporation and a CCPC that was created by an amalgamation of XXXXXXXXXX, under Act 1. Aco has a taxation year and fiscal period end of XXXXXXXXXX.

2. Aco’s authorized share capital consists of an unlimited number of Common Shares, Class A Special Shares and Class B Special Shares, with the following rights, privileges and conditions:

(a) Aco Common Shares are voting, participating shares, and include the right to receive dividends as and when declared by the board of directors, and to receive the remaining property of Aco on a liquidation, dissolution or on the winding-up of Aco.

(b) Aco Class A Special Shares are non-voting, non-participating, redeemable and retractable for an amount equal to the FMV of the consideration received upon issuance (“Redemption Amount”), plus any declared and unpaid dividends thereon. These shares have a non-cumulative cash dividend entitlement of up to XXXXXXXXXX% per annum of the Redemption Amount of the shares. These shares rank ahead of the Aco Common Shares and Aco Class B Special Shares in regards to any return of capital and on the liquidation, dissolution or winding-up of Aco.

(c) Aco Class B Special Shares are non-voting, non-participating, redeemable and retractable for an amount equal to the FMV of the consideration received upon issuance (“Redemption Amount”), plus any declared and unpaid dividends thereon. These shares have a non-cumulative cash dividend entitlement of up to XXXXXXXXXX% per annum of the Redemption Amount of the shares. These shares rank ahead of the Aco Common Shares in regards to any return of capital and on the liquidation, dissolution or winding-up of Aco.

3. The issued and outstanding shares of Aco are as follows:

		Shareholder		Class				ACB		PUC		FMV
		Children Trust	XXXX Common			XXXX		XXXX		XXXX
		Corporation 2	XXXX Class B Special	XXXX		XXXX		XXXX
		Parent 1		XXXX Class A Special	XXXX		XXXX		XXXX

4. The shareholders of Aco hold their shares of Aco as capital property.

5. Aco carries on the business of XXXXXXXXXX.

6. According to its balance sheet as at XXXXXXXXXX, Aco’s principal assets and liabilities consist of:

Assets

(a) Cash, XXXXXXXXXX, accounts receivable, prepaid expenses, amount receivable XXXXXXXXXX; and

(b) Corporation A Loan Receivable, XXXXXXXXXX in Corporation A, investment in Subco and an amount receivable from Subco.

Liabilities

(a) Bank indebtedness, accounts payable, income taxes payable, deferred revenue, XXXXXXXXXX; and

(b) Amounts due to related parties and to Parent 1.

There have not been any material change in the composition of Aco’s assets and liabilities since XXXXXXXXXX.

7. As at XXXXXXXXXX, Aco had the following tax balances:

(a) ERDTOH – $XXXXXXXXXX;
(b) NERDTOH – $XXXXXXXXXX;
(c) GRIP – $XXXXXXXXXX; and
(d) CDA – $XXXXXXXXXX.

Corporation 1

8. Corporation 1 is a taxable Canadian corporation and a CCPC that was created by an amalgamation of XXXXXXXXXX, under Act 1. Corporation 1 is a taxable Canadian corporation and a CCPC that has a taxation year and fiscal period end on XXXXXXXXXX.

9. Corporation 1’s authorized share capital consists of an unlimited number of the following classes of shares:

(a) Common Shares that are voting, participating shares, and include the right to receive dividends as and when declared by the board of directors, and to receive the remaining property of Corporation 1 on a liquidation, dissolution or on the winding-up of Corporation 1.

(b) Class A Special Shares that are non-voting, non-participating, redeemable and retractable for an amount equal to the FMV of the consideration received upon issuance (“Redemption Amount”), plus any declared and unpaid dividends thereon. These shares have a non-cumulative cash dividend entitlement of up to XXXXXXXXXX% per annum of the Redemption Amount of the shares. These shares rank ahead of all the other classes of shares in regards to any return of capital and in regards to the right to receive the remaining property of Corporation 1 on the liquidation, dissolution or winding-up of Corporation 1.

(c) Class B Special Shares that are non-voting, non-participating, redeemable and retractable for an amount equal to the FMV of the consideration received upon issuance (“Redemption Amount”), plus any declared and unpaid dividends thereon. These shares have a non-cumulative cash dividend entitlement of up to XXXXXXXXXX% per annum of the Redemption Amount of the shares. These shares rank ahead of the Corporation 1 Common Shares and Corporation 1 Class C Special Shares in regards to any return of capital and in regards to the right to receive the remaining property of Corporation 1 on the liquidation, dissolution or winding-up of Corporation 1.

(d) Class C Special Shares that are non-voting, non-participating, redeemable and retractable for an amount equal to the FMV of the consideration received upon issuance (“Redemption Amount”), plus any declared and unpaid dividends thereon. These shares have a non-cumulative cash dividend entitlement of up to XXXXXXXXXX% per annum of the Redemption Amount of the shares. These shares rank ahead of the Corporation 1 Common Shares in regards to any return of capital and in regards to the right to receive the remaining property of Corporation 1 on the liquidation, dissolution or winding-up of Corporation 1.

10. The issued and outstanding shares of Corporation 1 are as follows:

		Shareholder		Class				ACB		PUC		FMV
		Trust 1		XXXX Common			XXXX		XXXX		XXXX
		Trust 2		XXXX Common			XXXX		XXXX		XXXX
		Trust 3		XXXX Common			XXXX		XXXX		XXXX
		Trust 4		XXXX Common			XXXX		XXXX		XXXX
		Parent 1		XXXX Class B Special	XXXX		XXXX		XXXX
		Parent 2		XXXX Class A Special	XXXX		XXXX		XXXX

11. The shareholders of Corporation 1 hold their shares of Corporation 1 as capital property.

12. Corporation 1 is a holding corporation and does not carry on any commercial activities other than those relating to XXXXXXXXXX.

13. According to its balance sheet as at XXXXXXXXXX, Corporation 1’s principal assets and liabilities consist of:

Assets

a) Cash;
b) Investment in Subco and amount receivable from Aco; and
c) Taxes receivable

Liabilities

d) Amounts due to Parent 1.

There have not been any material change in the composition of Corporation 1’s assets and liabilities since XXXXXXXXXX.

14. As at XXXXXXXXXX, Corporation 1 had the following tax balances:

(a) ERDTOH – XXXXXXXXXX;
(b) NERDTOH – $XXXXXXXXXX;
(c) GRIP – $XXXXXXXXXX; and
(d) CDA – $XXXXXXXXXX.

Corporation 2

15. Corporation 2 is a taxable Canadian corporation and a CCPC that was incorporated on XXXXXXXXXX under Act 1. Corporation 2 has a taxation year and fiscal period end on XXXXXXXXXX.

16. Corporation 2 is a holding corporation and does not carry on any commercial activities other than those relating to its investment in Aco.

17. Corporation 2’s authorized share capital consists of an unlimited number of the following classes of shares:

(a) Common Shares that are voting, participating shares, and include the right to receive the remaining property of Corporation 2 on a liquidation, dissolution or on the winding-up of Corporation 2.

(b) Class A Special Shares that are voting, non-participating shares, and include the right to receive an amount equal to their stated capital on liquidation, dissolution or on the winding-up of Corporation 2 in priority to the Common Shares. The Class A Special Shares do not have a dividend entitlement.

18. The issued and outstanding shares of Corporation 2 are as follows:

		Shareholder		Class				ACB		PUC		FMV
		Child 1		XXXX Common			XXXX		XXXX		XXXX
		Child 2		XXXX Common			XXXX		XXXX		XXXX
		Child 3		XXXX Common			XXXX		XXXX		XXXX
		Child 4		XXXX Common			XXXX		XXXX		XXXX
		Children Trust	XXXX Class A Special	XXXX		XXXX		XXXX

19. According to its balance sheet for the period ended XXXXXXXXXX, Corporation 2’s principal assets and liabilities consist of:

Assets

a) Investment in Aco.

Liabilities

b) Amounts due to related parties.

There have not been any material change in the composition of Corporation 2’s assets and liabilities since XXXXXXXXXX.

20. As at XXXXXXXXXX, Corporation 2 had the following tax balances:

(a) ERDTOH – $XXXXXXXXXX;
(b) NERDTOH – $XXXXXXXXXX;
(c) GRIP – $XXXXXXXXXX; and
(d) CDA – $XXXXXXXXXX.

Corporation A

21. Corporation A is a taxable Canadian corporation and a CCPC. Corporation A has assets consisting of cash and XXXXXXXXXX, located at XXXXXXXXXX. XXXXXXXXXX percent of the issued and outstanding voting shares of Corporation A are held by Aco. XXXXXXXXXX percent of the issued and outstanding voting shares of Corporation A are held by a corporation controlled by Child 3. The remaining XXXXXXXXXX percent of the issued and outstanding voting shares of Corporation A are held by a company that deals at arm’s length with Aco and the corporation controlled by Child 3.

22. Aco holds its shares of Corporation A as capital property.

Children Trust

23. The Children Trust is resident in Canada and is a “personal trust” as defined in subsection 248(1). The Children Trust was settled by Parent 1 under the laws of XXXXXXXXXX. Parent 1 and Parent 2 are the trustees of the Children Trust (the “Trustees”). Decisions of the Trustees will be made by majority vote. The beneficiaries are the children of Parent 1 and Parent 2 (i.e. Child 1, Child 2, Child 3 and Child 4) and their issue.

The Trusts

24. Each of Trust 1, Trust 2, Trust 3 and Trust 4 (collectively “the Trusts”) is a resident in Canada and is a “personal trust” as defined in subsection 248(1). The Trusts were settled by Parent 1 under the laws of XXXXXXXXXX. Parent 1 and Parent 2 are the trustees of the Trusts (the “Trustees”). Decisions of the Trustees will be made by majority vote. The beneficiaries of Trust 1 are the issue of Child 1. The beneficiaries of Trust 2 are the issue of Child 2. The beneficiaries of Trust 3 are the issue of Child 3. The beneficiaries of Trust 4 are the issue of Child 4.

COMPLETED TRANSACTIONS

25. On XXXXXXXXXX, Subco was incorporated under Act 1. Aco subscribed for XXXXXXXXXX Class A Common Shares of Subco for $XXXXXXXXXX. Subco is a taxable Canadian corporation and a CCPC that has a taxation year and fiscal period end on XXXXXXXXXX.

26. Subco’s authorized share capital consists of an unlimited number of the following classes of shares:

(a) Class A Common Shares that are voting, participating shares, and include the right to receive dividends as and when declared by the board of directors, and to receive the remaining property of Subco on a liquidation, dissolution or on the winding-up of Subco.

(b) Class B and Class C Common Shares that are non-voting, participating shares, and include the right to receive dividends as and when declared by the board of directors, and to receive the remaining property of Subco on a liquidation, dissolution or on the winding-up of Subco.

(c) Class A Preference Shares that are voting, non-participating, and are redeemable and retractable for an amount equal to $XXXXXXXXXX per share (“Redemption Amount”). These shares are not entitled to dividends and rank ahead of all other classes of shares in regards to any return of capital and in regards to the right to receive the remaining property of Subco on the liquidation, dissolution or winding-up of Subco.

(d) Class B, Class C, Class D and Class E Preference Shares that are non-voting, non-participating, and are redeemable and retractable for an amount equal to the FMV of the consideration received upon issuance (“Redemption Amount”), plus any declared and unpaid dividends thereon. These shares have a non-cumulative cash dividend entitlement of up to XXXXXXXXXX% per annum of the Redemption Amount of the shares. These shares rank ahead of the Subco Class A, Class B and Class C Common Shares in regards to any return of capital and in regards to the right to receive the remaining property of Subco on the liquidation, dissolution or winding-up of Subco. On the liquidation, dissolution or winding-up of Subco, the Class B Preference are entitled to receive the Redemption Amount plus any unpaid dividends in priority to the Class C Preference Shares, the Class C Preference Shares are entitled to receive the Redemption Amount plus any unpaid dividends in priority to the Class D Preference Shares, and the Class D Preference Shares are entitled to receive the Redemption Amount plus any unpaid dividends in priority to the Class E Preference Shares.

(e) Class F Preference Shares that are non-voting, non-participating, and are redeemable and retractable for $XXXXXXXXXX per share (“Redemption Amount”), plus any declared and unpaid dividends thereon. These shares have a non-cumulative cash dividend entitlement of up to XXXXXXXXXX% per annum of the Redemption Amount of the shares. On liquidation, dissolution or wind-up of Subco, these shares rank ahead of the Subco Class A, Class B and Class C Common Shares, shall rank behind the Class A, Class B, Class C, Class D and Class E Preference shares, and shall rank pari passu with the Class G Preference Shares in regards to any return of capital and in regards to the right to receive the remaining property of Subco on the liquidation, dissolution or winding-up of Subco.

(f) Class G Preference Shares that are non-voting, non-participating, and are redeemable and retractable for $XXXXXXXXXX per share (“Redemption Amount”), plus any declared and unpaid dividends thereon. These shares have a non-cumulative cash dividend entitlement of up to XXXXXXXXXX% per annum of the Redemption Amount of the shares. On liquidation, dissolution or wind-up of Subco, these shares rank ahead of the Subco Class A, Class B and Class C Common Shares, shall rank behind the Class A, Class B, Class C, Class D and Class E Preference shares, and shall rank pari passu with the Class F Preference Shares in regards to any return of capital and in regards to the right to receive the remaining property of Subco on the liquidation, dissolution or winding-up of Subco.

27. On XXXXXXXXXX, Aco transferred Property 1, Property 2 and its beneficial interest in Property 3 to Subco. As consideration for such transfers, Subco issued XXXXXXXXXX Subco Class A Common Shares to Aco with an aggregate FMV equal to the aggregate FMV of the properties so transferred. As a result of these transfers, Aco realized a taxable capital gain of approximately $XXXXXXXXXX.

28. Aco and Subco will jointly elect, in prescribed form and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of the properties of Aco to Subco as described in Paragraph 27.

The agreed amount will be the FMV of the properties so transferred such that the transfer is fully taxable. The amount added to the stated capital account of the Subco Class A Common Shares issued to Aco, in Paragraph 27, will be an amount equal the aggregate of the agreed amounts, in the case of each property so transferred.

The amount added to the stated capital account for the Subco Class A Common Shares issued, will not exceed the maximum amount that could be added to the aggregate PUC of such shares without a reduction taking place pursuant to subsection 85(2.1).

29. On XXXXXXXXXX, Corporation 1 transferred its beneficial interest in Property 3 to Subco. As consideration for such transfer, Subco issued XXXXXXXXXX Class B Preference Shares to Corporation 1 with an aggregate FMV equal to the aggregate FMV of Corporation’s portion of Property 3 so transferred.

30. Corporation 1 and Subco will jointly elect, in prescribed form, and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfer of Property 3 to Subco as described in Paragraph 29.

The agreed amount will be the FMV of the property so transferred such that the transfer is fully taxable. The amount added to the stated capital account of the Class B Preference Shares of Subco issued to Corporation 1, in Paragraph 29, will be an amount equal the agreed amount of the property so transferred.

The amount added to the stated capital account for the Class B Preference Shares issued, will not exceed the maximum amount that could be added to the aggregate PUC of such shares without a reduction taking place pursuant to subsection 85(2.1).

31. Aco made a cash advance of $XXXXXXXXXX to Subco (“Subco Loan Receivable”) for purposes of paying the XXXXXXXXXX Land Transfer Tax pertaining to the transfer of Property 1, Property 2 and Property 3 to Subco.

32. On XXXXXXXXXX, Aco declared and paid a $XXXXXXXXXX taxable cash dividend on the Class A Special Shares held by Parent 1.

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.

Payment of Dividends

33. Aco will declare and pay a $XXXXXXXXXX taxable cash dividend on the Common Shares held by the Children Trust.

34. Corporation 1 will declare and pay a $XXXXXXXXXX taxable cash dividend to each holder of the Common Shares, being Trust 1, Trust 2, Trust 3 and Trust 4.

Incorporation of TCs

35. Each of Trust 1, Trust 2, Trust 3 and Trust 4 will respectively incorporate TC1, TC2, TC3 and TC4 under Act 1 and subscribe for XXXXXXXXXX Class G Preferred Shares of each of the TCs, for $XXXXXXXXXX. The TCs will be taxable Canadian corporations and CCPCs.

36. The authorized share capital of each of the TCs will consist of an unlimited number of:

(a) Class A Common Shares that carry XXXXXXXXXX vote per share and are participating shares. These shares will include the right to participate in and receive the remaining property of the corporation on a liquidation, dissolution or on the winding-up of the corporation, pari passu with the Class B Common Shares. These shares are entitled to discretionary dividends. Dividends may be paid on this class of shares to the exclusion of all other classes.

(b) Class B Common Shares are non-voting, are participating shares, and include the right to receive dividends as and when declared by the board of directors. Dividends may be paid on the Class B Common Shares to the exclusion of the Class A Common Shares. These shares will receive the remaining property of DC on a liquidation, dissolution or on the winding-up of DC, pari passu with the Class A Common Shares.

(c) Class D Preferred Shares that carry XXXXXXXXXX vote per share, are non-participating shares and are redeemable and retractable for the amount of consideration received by the corporation upon issuance of the shares (“Redemption Amount”), plus any declared and unpaid dividends thereon. Dividends may be paid on the Class D Preferred Shares to the exclusion of any other class. These shares will have a non-cumulative dividend right of up to XXXXXXXXXX% per annum on the Redemption Amount. These shares rank ahead of the Class A Common Shares and Class B Common Shares in regards to any return of capital and on the liquidation, dissolution or winding-up of each TC. On liquidation, dissolution or wind-up of a TC, these shares rank ahead of the Class E, F, G, and H Preferred Shares, in regards to any return of capital and in regards to the right to receive the remaining property of a TC on the liquidation, dissolution or winding-up of a TC.

(d) Class E Preferred Shares that carry XXXXXXXXXX vote per share, are non-participating shares and are redeemable and retractable for the amount of consideration received by the corporation upon issuance of the shares (“Redemption Amount”), plus any declared and unpaid dividends thereon. Dividends may be paid on the Class E Preferred Shares to the exclusion of any other class. These shares will have a non-cumulative dividend right of up to XXXXXXXXXX% per annum on the Redemption Amount. These shares rank ahead of the Class A Common Shares and Class B Common Shares in regards to any return of capital and on the liquidation, dissolution or winding-up of a TC. On liquidation, dissolution or wind-up of a TC, these shares rank behind the Class D Preferred Shares and rank ahead of the Class F, G, and H Preferred shares, in regards to any return of capital and in regards to the right to receive the remaining property of a TC on the liquidation, dissolution or winding-up of a TC.

(e) Class F Preferred Shares that carry XXXXXXXXXX vote per share, are non-participating shares and are redeemable and retractable for the amount of consideration received by the corporation upon issuance of the shares (“Redemption Amount”), plus any declared and unpaid dividends thereon. Dividends may be paid on the Class F Preferred Shares to the exclusion of any other class. These shares will have a non-cumulative dividend right of up to XXXXXXXXXX% per annum on the Redemption Amount. These shares rank ahead of the Class A Common Shares and Class B Common Shares in regards to any return of capital and on the liquidation, dissolution or winding-up of a TC. On liquidation, dissolution or wind-up of a TC, these shares rank behind the Class D and E Preferred Shares and rank ahead of the Class G, and H Preferred Shares, in regards to any return of capital and in regards to the right to receive the remaining property of a TC on the liquidation, dissolution or winding-up of a TC.

(f) Class G Preferred Shares that carry XXXXXXXXXX vote per share, are non-participating shares and are redeemable and retractable for the amount of consideration received by the corporation upon issuance of the shares (“Redemption Amount’). These shares do not have a dividend entitlement. These shares rank ahead of the Class A Common Shares and Class B Common Shares in regards to any return of capital and on the liquidation, dissolution or winding-up of a TC. On liquidation, dissolution or wind-up of a TC, these shares rank behind the Class D, E and F Preferred Shares and rank ahead of the Class H Preferred Shares, in regards to any return of capital and in regards to the right to receive the remaining property of a TC on the liquidation, dissolution or winding-up of a TC.

(g) Class H Preferred Shares that carry XXXXXXXXXX votes per share, are non-participating shares and are redeemable and retractable for the amount of consideration received by the corporation upon issuance of the shares (“Redemption Amount”), plus any declared and unpaid dividends thereon. Dividends may be paid on the Class H Preferred Shares to the exclusion of any other class. These shares will have a non-cumulative dividend right of up to XXXXXXXXXX% per annum on the Redemption Amount. These shares rank ahead of the Class A Common Shares and Class B Common Shares in regards to any return of capital and on the liquidation, dissolution or winding-up of a TC. Further, on liquidation, dissolution or wind-up of a TC, these shares rank behind the Class D, E, F and G Preferred Shares, in regards to any return of capital and in regards to the right to receive the remaining property of a TC on the liquidation, dissolution or winding-up of a TC.

Amalgamation of Predecessor Corporations

37. The Predecessor Corporations will amalgamate in accordance with the provisions of Act 1 and section 87, to form DC, which will be a taxable Canadian corporation and a CCPC.

Upon the Amalgamation:

(a) all of the property (except amounts receivable from any Predecessor Corporation or shares of the capital stock of any Predecessor Corporation) of the Predecessor Corporations immediately before the Amalgamation will become property of DC by virtue of the Amalgamation;

(b) all of the liabilities (except amounts payable to any Predecessor Corporation) of the Predecessor Corporations immediately before the Amalgamation will become liabilities of DC by virtue of the Amalgamation; and

(c) all the shareholders (except any Predecessor Corporation) who owned shares of the capital stock of any Predecessor Corporation immediately before the Amalgamation will receive shares of DC because of the Amalgamation.

38. DC’s authorized share capital will consist of an unlimited number of the following classes of shares:

(a) Class A Common Shares that carry XXXXXXXXXX vote per share, are participating shares, and include the right to receive dividends as and when declared by the board of directors. Dividends may be paid on the Class A Common shares to the exclusion of all other classes of shares. These shares will receive the remaining property of DC on a liquidation, dissolution or on the winding-up of DC, pari passu with the Class B Common Shares.

(b) Class B Common Shares that are non-voting, participating shares, and include the right to receive dividends as and when declared by the board of directors. Dividends may be paid on the Class B Common shares to the exclusion of all other classes of shares. These shares will receive the remaining property of DC on a liquidation, dissolution or on the winding-up of DC, pari passu with the Class A Common Shares.

(c) Class D Preferred Shares that carry XXXXXXXXXX vote per share, are non-participating shares and are redeemable and retractable for an amount equal to the FMV of the consideration received upon issuance (“Redemption Amount”), plus any declared and unpaid dividends thereon. Dividends may be paid on the Class D Preferred Shares to the exclusion of any other class. These shares have a non-cumulative cash dividend entitlement of up to XXXXXXXXXX% per annum of the Redemption Amount. These shares rank ahead of the Class A Common Shares and Class B Common Shares in regards to any return of capital and on the liquidation, dissolution or winding-up of DC. On liquidation, dissolution or wind-up of DC, these shares rank ahead of the Class E, F, G, H and J Preferred Shares, in regards to any return of capital and in regards to the right to receive the remaining property of DC on the liquidation, dissolution or winding-up of DC.

(d) Class E Preferred Shares that carry XXXXXXXXXX vote per share, are non-participating shares and are redeemable and retractable for an amount equal to the FMV of the consideration received upon issuance (“Redemption Amount”), plus any declared and unpaid dividends thereon. Dividends may be paid on the Class E Preferred Shares to the exclusion of any other class. These shares have a non-cumulative cash dividend entitlement of up to XXXXXXXXXX% per annum of the Redemption Amount. These shares rank ahead of the Class A Common Shares and Class B Common Shares in regards to any return of capital and on the liquidation, dissolution or winding-up of DC. On liquidation, dissolution or wind-up of DC, these shares rank behind the Class D Preferred Shares and ahead of the Class F, G, H and J Preferred Shares, in regards to any return of capital and in regards to the right to receive the remaining property of DC on the liquidation, dissolution or winding-up of DC.

(e) Class F Preferred Shares that carry XXXXXXXXXX vote per share, are non-participating shares and are redeemable and retractable for an amount equal to the FMV of the consideration received upon issuance (“Redemption Amount”), plus any declared and unpaid dividends thereon. Dividends may be paid on the Class F Preferred Shares to the exclusion of any other class. These shares have a non-cumulative cash dividend entitlement of up to XXXXXXXXXX% per annum of the Redemption Amount. These shares rank ahead of the Class A Common Shares and Class B Common Shares in regards to any return of capital and on the liquidation, dissolution or winding-up of DC. On liquidation, dissolution or wind-up of DC, these shares rank behind the Class D and E Preferred Shares and ahead of the Class G, H and J Preferred Shares, in regards to any return of capital and in regards to the right to receive the remaining property of DC on the liquidation, dissolution or winding-up of DC.

(f) Class G Special Shares that carry XXXXXXXXXX vote per share, are non-participating shares and are redeemable and retractable for an amount equal to the FMV of the consideration received upon issuance (“Redemption Amount. These shares are not entitled to dividends. These shares rank ahead of the Class A Common Shares and Class B Common Shares in regards to any return of capital and on the liquidation, dissolution or winding-up of DC. On liquidation, dissolution or wind-up of DC, these shares rank behind the Class D, E and F Preferred Shares and ahead of the Class H and J Preferred shares, in regards to any return of capital and in regards to the right to receive the remaining property of DC on the liquidation, dissolution or winding-up of DC.

(g) Class H Preferred Shares that carry XXXXXXXXXX votes per share, are non-participating shares and are redeemable and retractable for an amount equal to the FMV of the consideration received upon issuance (“Redemption Amount”), plus any declared and unpaid dividends thereon. Dividends may be paid on the Class H Preferred Shares to the exclusion of any other class. These shares have a non-cumulative cash dividend entitlement of up to XXXXXXXXXX% per annum of the Redemption Amount. These shares rank ahead of the Class A Common Shares and Class B Common Shares in regards to any return of capital and on the liquidation, dissolution or winding-up of DC. On liquidation, dissolution or wind-up of DC, these shares rank behind the Class D, E, F and G Preferred Shares and ahead of the Class J Preferred shares, in regards to any return of capital and in regards to the right to receive the remaining property of DC on the liquidation, dissolution or winding-up of DC.

(h) Class J Preferred Shares that carry XXXXXXXXXX vote per share, are non-participating shares and are redeemable and retractable for an amount equal to the FMV of the consideration received upon issuance (“Redemption Amount”), plus any declared and unpaid dividends thereon. Dividends may be paid on the Class J Preferred Shares to the exclusion of any other class. These shares have a non-cumulative cash dividend entitlement of up to XXXXXXXXXX% per annum of the Redemption Amount. These shares rank ahead of the Class A Common Shares and Class B Common Shares in regards to any return of capital and on the liquidation, dissolution or winding-up of DC. On liquidation, dissolution or wind-up of DC, these shares rank behind the Class D, E, F, G and H Preferred Shares in regards to any return of capital and in regards to the right to receive the remaining property of DC on the liquidation, dissolution or winding-up of DC.

39. Immediately after the Amalgamation, the issued and outstanding shares of DC will be as follows:

			Shareholder		Class
			Children Trust	XXXX Class A Common
						XXXX Class D Preferred
			Parent 1		XXXX Class E Preferred
			Parent 2		XXXX Class F Preferred
			Child 1		XXXX Class A Common
			Child 2		XXXX Class A Common
			Child 3		XXXX Class A Common
			Child 4		XXXX Class A Common
			Trust 1		XXXX Class H Preferred
			Trust 2		XXXX Class H Preferred
			Trust 3		XXXX Class H Preferred
			Trust 4		XXXX Class H Preferred

40. Immediately after the Amalgamation, DC is expected to have approximately the following tax account balances:

(a) ERDTOH – $XXXXXXXXXX;
(b) NERDTOH – $XXXXXXXXXX;
(c) GRIP – $XXXXXXXXXX; and
(d) CDA – $XXXXXXXXXX.

Distribution of property from the Children Trust

41. In accordance with the terms of the Trust Agreement, the Trustees will exercise their discretion to encroach on the capital of the Children Trust and will distribute property in the following manner to the capital beneficiaries in satisfaction of their capital interests in the Children Trust:

Child 1 – XXXXXXXXXX DC Class A Common Shares
Child 2 – XXXXXXXXXX DC Class A Common Shares
Child 3 – XXXXXXXXXX DC Class A Common Shares
Child 4 – XXXXXXXXXX DC Class A Common Shares

The Children Trust will not elect under subsection 107(2.001) to cause subsection 107(2) to not apply in respect of the distribution. Both Parent 1 and Parent 2 are the Trustees of the Children Trust at the time of the distribution.

42. In accordance with the terms of the Trust Agreement, the Trustees will exercise their discretion to encroach on the capital of the Children Trust and will distribute property in the following manner to the capital beneficiaries in satisfaction of their capital interests in the Children Trust:

Child 1 – XXXXXXXXXX DC Class D Preferred Shares
Child 2 – XXXXXXXXXXDC Class D Preferred Shares
Child 3 – XXXXXXXXXX DC Class D Preferred Shares
Child 4 – XXXXXXXXXX DC Class D Preferred Shares

43. Parent 1 will transfer all of their DC Class E Preferred Shares to TC3 for consideration consisting solely of XXXXXXXXXX TC3 Class E Preferred Shares, with an aggregate FMV equal to the aggregate FMV of the DC Class E Preferred Shares transferred to TC3 by Parent 1 at that time.

44. Parent 1 and TC3 will jointly elect, in prescribed form and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of the DC Class E Preferred Shares to TC3 as described in Paragraph 43. The agreed amount will be the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii). The amount added to the stated capital account of the respective shares issued to Parent 1, in Paragraph 43, will be restricted to the greater of (i) the aggregate PUC, immediately before the disposition, of the respective shares transferred to TC3, as the case may be; and (ii) the aggregate ACB to Parent 1 immediately before the disposition, of such shares, taking into account any adjustments provided in paragraphs 84.1(2)(a) and (a.1).

45. Parent 2 will transfer all of their DC Class F Preferred Shares to TC3 for consideration consisting solely of XXXXXXXXXX TC3 Class F Preferred Shares, with an aggregate FMV equal to the aggregate FMV of the DC Class F Preferred Shares transferred to TC3 by Parent 2 at that time.

46. Parent 2 and TC3 will jointly elect, in prescribed form and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of the DC Class F Preferred Shares to TC3 as described in Paragraph 45. The agreed amount will be the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii). The amount added to the stated capital account of the respective shares issued to Parent 2, in Paragraph 45, will be restricted to the greater of (i) the aggregate PUC, immediately before the disposition, of the respective shares transferred to TC3, as the case may be; and (ii) the aggregate ACB to Parent 2 immediately before the disposition, of such shares, taking into account any adjustments provided in paragraphs 84.1(2)(a) and (a.1).

47. Child 1 will transfer all of their DC Class A Common Shares and all of their DC Class D Preferred Shares to TC1 for consideration consisting solely of XXXXXXXXXX TC1 Class A Common Shares, with an aggregate FMV equal to the aggregate FMV of the DC Class A Common Shares and the DC Class D Preferred Shares transferred to TC1 by Child 1 at that time.

48. Child 1 and TC1 will jointly elect, in prescribed form and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of the shares of DC to TC1 as described in Paragraph 47. The agreed amount will be the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii). The amount added to the stated capital account of the respective shares issued to Child 1, in Paragraph 47, will be restricted to the greater of (i) the aggregate PUC, immediately before the disposition, of the respective shares transferred to TC1, as the case may be; and (ii) the aggregate ACB to Child 1 immediately before the disposition, of such shares, taking into account any adjustments provided in paragraphs 84.1(2)(a) and (a.1).

49. Child 2 will transfer all of their DC Class A Common Shares and all of their DC Class D Preferred Shares to TC2 for consideration consisting solely of XXXXXXXXXX TC2 Class A Common Shares, with an aggregate FMV equal to the aggregate FMV of the DC Class A Common Shares and the DC Class D Preferred Shares transferred to TC2 by Child 2 at that time.

50. Child 2 and TC2 will jointly elect, in prescribed form and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of the shares of DC to TC2 as described in Paragraph 49. The agreed amount will be the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii). The amount added to the stated capital account of the respective shares issued to Child 2, in Paragraph 49, will be restricted to the greater of (i) the aggregate PUC, immediately before the disposition, of respective shares transferred to TC2, as the case may be; and (ii) the aggregate ACB to Child 2 immediately before the disposition, of such shares, taking into account any adjustments provided in paragraphs 84.1(2)(a) and (a.1).

51. Child 3 will transfer all of their DC Class A Common Shares and all of their DC Class D Preferred Shares to TC3 for consideration consisting solely of XXXXXXXXXX TC3 Class A Common Shares, with an aggregate FMV equal to the aggregate FMV of the DC Class A Common Shares and the DC Class D Preferred Shares transferred to TC3 by Child 3 at that time.

52. Child 3 and TC3 will jointly elect, in prescribed form and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of the shares of DC to TC3 as described in Paragraph 51. The agreed amount will be the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii). The amount added to the stated capital account of the respective shares issued to Child 3, in Paragraph 51, will be restricted to the greater of (i) the aggregate PUC, immediately before the disposition, of the respective shares transferred to TC3, as the case may be; and (ii) the aggregate ACB to Child 3 immediately before the disposition, of such shares, taking into account any adjustments provided in paragraphs 84.1(2)(a) and (a.1).

53. Child 4 will transfer all of their DC Class A Common Shares and all of their DC Class D Preferred Shares to TC4 for consideration consisting solely of XXXXXXXXXX TC4 Class A Common Shares, with an aggregate FMV equal to the aggregate FMV of the DC Class A Common Shares and the DC Class D Preferred Shares transferred to TC4 by Child 4 at that time.

54. Child 4 and TC4 will jointly elect, in prescribed form and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of the shares of DC to TC4 as described in Paragraph 53. The agreed amount will be the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii). The amount added to the stated capital account of the respective shares issued to Child 4, in Paragraph 53, will be restricted to the greater of (i) the aggregate PUC, immediately before the disposition, of the respective shares transferred to TC4, as the case may be; and (ii) the aggregate ACB to Child 4 immediately before the disposition, of such shares, taking into account any adjustments provided in paragraphs 84.1(2)(a) and (a.1).

55. Trust 1 will transfer all of its DC Class H Preferred Shares to TC1 for consideration consisting solely of XXXXXXXXXX TC1 Class H Preferred Shares, with an aggregate FMV equal to the aggregate FMV of the DC shares transferred to TC1 by Trust 1 at that time.

56. Trust 1 and TC1 will jointly elect, in prescribed form and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of the shares of DC to TC1 as described in Paragraph 55. The agreed amount will be the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii). The amount added to the stated capital account of the respective shares issued to Trust 1, in Paragraph 55, will be restricted to the greater of (i) the aggregate PUC, immediately before the disposition, of the respective shares transferred to TC1, as the case may be; and (ii) the aggregate ACB to Trust 1 immediately before the disposition, of such shares, taking into account any adjustments provided in paragraphs 84.1(2)(a) and (a.1).

57. Trust 2 will transfer all of its DC Class H Preferred Shares to TC2 for consideration consisting solely of XXXXXXXXXX TC2 Class H Preferred Shares, with an aggregate FMV equal to the aggregate FMV of the DC shares transferred to TC2 by Trust 2 at that time.

58. Trust 2 and TC2 will jointly elect, in prescribed form and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of the shares of DC to TC2 as described in Paragraph 57. The agreed amount will be the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii). The amount added to the stated capital account of the respective shares issued to Trust 2, in Paragraph 57, will be restricted to the greater of (i) the aggregate PUC, immediately before the disposition, of the respective shares transferred to TC2, as the case may be; and (ii) the aggregate ACB to Trust 2 immediately before the disposition, of such shares, taking into account any adjustments provided in paragraphs 84.1(2)(a) and (a.1).

59. Trust 3 will transfer all of its DC Class H Preferred Shares to TC3 for consideration consisting solely of XXXXXXXXXX TC3 Class H Preferred Shares, with an aggregate FMV equal to the aggregate FMV of the DC shares transferred to TC3 by Trust 3 at that time.

60. Trust 3 and TC3 will jointly elect, in prescribed form and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of the shares of DC to TC3 as described in Paragraph 59. The agreed amount will be the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii). The amount added to the stated capital account of the respective shares issued to Trust 3, in Paragraph 59, will be restricted to the greater of (i) the aggregate PUC, immediately before the disposition, of the respective shares transferred to TC3, as the case may be; and (ii) the aggregate ACB to Trust 3 immediately before the disposition, of such shares, taking into account any adjustments provided in paragraphs 84.1(2)(a) and (a.1).

61. Trust 4 will transfer all of its DC Class H Preferred Shares to TC4 for consideration consisting solely of XXXXXXXXXX TC4 Class H Preferred Shares, with an aggregate FMV equal to the aggregate FMV of the DC shares transferred to TC4 by Trust 4 at that time.

62. Trust 4 and TC4 will jointly elect, in prescribed form and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of the shares of DC to TC4 as described in Paragraph 61. The agreed amount will be the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii). The amount added to the stated capital account of the respective shares issued to Trust 4, in Paragraph 61, will be restricted to the greater of (i) the aggregate PUC, immediately before the disposition, of the respective shares transferred to TC4, as the case may be; and (ii) the aggregate ACB to Trust 4 immediately before the disposition, of such shares, taking into account any adjustments provided in paragraphs 84.1(2)(a) and (a.1).

Separation of Legal and Beneficial Interest XXXXXXXXXX

63. DC will transfer legal title of certain XXXXXXXXXX situated in XXXXXXXXXX, to each of TC1, TC2, TC3 and TC4 such that each of the TCs will ultimately hold legal title to the particular XXXXXXXXXX to be transferred by DC to TC1, TC2, TC3 and TC4, as the case may be, as part of the DC Transfers described in Paragraph 67 to Paragraph 78.

DC will enter into a bare trust agreement with each of the TCs in respect of the particular XXXXXXXXXX situated in XXXXXXXXXX, the terms of which will include the following:

(a) Each of the TCs will hold legal title to the respective XXXXXXXXXX as nominee, agent and bare trustee for the sole benefit and account of DC, and for greater certainty, DC will be the only beneficiary of such trust and will remain the beneficial owner of such property; and

(b) The TCs, as agent for DC, will deal with the XXXXXXXXXX exclusively as directed by DC.

Following the subsequent transfer of the beneficial ownership of the particular XXXXXXXXXX by DC to TC1 as described in Paragraph 67, to TC2 as described in Paragraph 70, to TC3 as described in Paragraph 73 and to TC4 as described in Paragraph 76, a the TCs will be both the legal and beneficial owner of the particular XXXXXXXXXX, thus terminating the bare trust agreement.

Classification of DC’s property

64. DC has significant influence over Corporation A and Subco. Consequently, the consolidated look-through method will apply for determining the appropriate proportion of each of the three types of property that the shares of, or amounts receivable from, Corporation A and Subco represent.

65. Immediately before the DC Transfers described in Paragraph 67 to Paragraph 78, the property of DC, Corporation A and Subco will be classified into the following types of property for purposes of the definition of distribution, provided in subsection 55(1), as follows:

(a) cash or near-cash property, comprising of all the current assets of DC, Corporation A and Subco, including, cash and cash equivalents, marketable securities , accounts receivable and prepaid expenses, but not including business property described in Paragraph 65(b);

(b) business property, comprising all of the assets of DC, Corporation A and Subco, other than cash or near-cash property and includes, XXXXXXXXXX, equipment, XXXXXXXXXX; and

It is anticipated that DC, Corporation A and Subco will not own any investment property immediately prior to the DC Transfers.

For the purposes of determining the types of property owned by DC immediately prior to the DC Transfers:

(d) DC will not have significant influence over any corporations, partnerships or trusts other than Corporation A and Subco;

(e) tax accounts or other tax related amounts of DC, Corporation A and New Subco, such as CDA, GRIP, NERDTOH or ERDTOH, if any, will not be considered property;

(f) the amount of any deferred tax will not be considered to be a property, as the case may be, for the purposes of the Proposed Transactions; and

(g) any amount in respect of a refund of taxes, and interest thereon, actually receivable will be treated as cash or near-cash property.

Allocation of liabilities

66. In determining, on a consolidated look-through basis, the net FMV of each type of property of DC, Corporation A and Subco, immediately before the DC Transfers described in Paragraph 67 to Paragraph 78, the liabilities of DC, Corporation A and Subco will be allocated to, and deducted in the calculation of, the net FMV of each such type of property to DC, Corporation A or Subco, as the case may be, in the following manner:

(a) in determining, immediately before the transfers described in each of Paragraph 67, Paragraph 70, Paragraph 73 and Paragraph 76, the net FMV of each type of property of a corporation over which DC has the ability to exercise significant influence (Corporation A and Subco), the liabilities of that entity (other than any amount owing by such entity to DC) will be allocated to, and deducted in the calculation of, the net FMV of a type of property of that particular entity in the following manner:

(i) current liabilities of such entity will be allocated to the cash or near-cash property of such entity in the proportion that the FMV of each such property was of the FMV of all cash or near-cash property owned by that entity. To the extent that the total current liabilities so allocated exceeds the total FMV of all cash or near-cash property of that particular entity, such entity is considered to have a negative amount of cash or near-cash property;

(ii) provided that the amount of such entity’s cash or near-cash property exceeds its current liabilities, the net FMV of all the assets of such entity that were initially classified in accordance with subparagraph (a)(i) above, as cash or near-cash property, and that are accounts receivable and prepaid expenses and relate to a business carried on by such entity and that will be collected or consumed in the ordinary course of such business, will be reclassified as business property and the net FMV thereof, determined after the allocation described in subparagraph (a)(i) herein, will be included in the net FMV of such entity’s business property and not be included in the net FMV of such entity’s cash or near-cash property;

(iii) liabilities, other than current liabilities, of such entity that relate to a particular property, will be allocated to the particular property (and effectively to the type of property to which the particular property belongs) to the extent of its FMV. The liabilities pertaining to a type of property but not to a particular property were then allocated to that type of property. To the extent that the allocation of liabilities to business property as described herein exceeds the aggregate FMV of all the business property of such entity, such entity will be considered to have a negative amount of business property; and

(iv) any liabilities, other than current liabilities, of such entity which do not relate to a particular type of property will be allocated to the cash or near-cash property, investment property or business property, if any, of such entity, but after the allocation of the liabilities described in subparagraphs (a)(i) and (a)(iii) above and the reallocation of amounts described in subparagraph (a)(ii) above. However, where an entity was considered to have a negative amount of a type of property because of subparagraphs (a)(i) or (a)(iii) above, for the purposes of allocating those remaining liabilities, the net FMV of that type of property will be deemed to be nil, resulting in none of those remaining liabilities being allocated to that type of property;

(b) in determining, on a consolidated basis, the net FMV of each type of property of DC immediately before the DC Transfers described in Paragraph 67 to Paragraph 78, DC will include the appropriate proportion of the net FMV of each type of property of any entity over which DC has the ability to exercise significant influence (Corporation A and Subco) and, for greater certainty, the appropriate negative amount of such types of property of any such entity, as determined in accordance with subparagraph (a) herein, and any liabilities of DC, will be allocated to, and deducted in the calculation of, the net FMV of each type of property of DC in the following manner:

(i) 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 of DC. To the extent that current liabilities exceed the FMV of cash or near cash property, the cash or near cash property will be deemed to be nil;

(ii) to the extent that the amount of DC's cash or near-cash property exceeds its current liabilities, the net FMV of the assets of DC that were initially classified in accordance with Paragraph 65 above as cash or near-cash property that are accounts receivable and that relate to a business that will be carried on by DC and that will be collected or consumed in the ordinary course of such business, will be reclassified as business property and the net FMV thereof, that will be determined after the allocation described in subparagraph (b)(i) herein, will be included in the net FMV of DC's business property and, if so included, will not be included in the net FMV of DC's cash or near-cash property;

(iii) liabilities, other than current liabilities, of DC that relate to a particular property will be allocated to the particular property (and effectively to the type of property to which the property belongs) to the extent of its FMV. The liabilities pertaining to a type of property but not to a particular property will be allocated to that type of property, but not in excess of the net FMV of such type of property after the allocation of liabilities to a particular property as described herein; and

(iv) if any liabilities remain after the allocations described in subparagraphs (b)(i) and (b)(iii) above are made, such DC unallocated liabilities will 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 remaining liabilities, but after the allocation of the liabilities described in subparagraphs (b)(i) and (b)(iii) above and the reallocation of amounts described in subparagraph b(ii) above.

For purposes of determining the net FMV of each type of property of DC, Corporation A and Subco:

(c) the amount of deferred income tax liability, if any, will not be considered a liability because such amount does not represent a legal obligation;

(d) amounts owing by DC or by Corporation A and Subco (other than an amount owing to DC) that have a term of less than 12 months or are due on demand with no fixed terms of repayment are considered current liabilities;

(e) current liabilities include accounts payable, accrued liabilities and taxes payable; and

(f) no amount will be considered to be a liability unless it represents a true legal liability that is capable of quantification.

DC Transfer 1

67. Immediately following the classification of DC’s types of property, DC will transfer a proportionate share of each type of property owned by DC at that time to TC1, such that immediately following the DC Transfer 1 and the assumption by TC1 of a portion of DC’s liabilities, the net FMV of each type of property transferred by DC to TC1 (after allocating and deducting the liabilities of DC, in the manner described in Paragraph 66) is equal to or approximates that proportion of each type of property determined by the formula:

A x B/C

where:

A is the net FMV, immediately before the DC Transfer 1, of all property of that type of property owned by DC at that time;

B is the aggregate FMV, immediately before the distribution, of all the shares of the capital stock of DC owned by TC1 at that time; and

C is the aggregate FMV, immediately before the distribution, of all the issued and outstanding shares of the capital stock of DC at that time.

The cash to be transferred to TC1 will be determined within XXXXXXXXXX days of the transfer of the property and an adjustment will be made as required to the cash transferred.

For the purpose of this Paragraph, the expression “approximate that proportion” means that the discrepancy from that proportion, if any, will not exceed 1%, determined as a percentage of the net FMV of each type of property that TC1 will receive as compared to what TC1 would have received (or DC would have retained) had it received (or retained) its appropriate proportion of the net FMV of that type of property of DC.

68. As consideration for the transfer of property by DC to TC1 on the DC Transfer 1, TC1 will:

(a) assume an appropriate amount of liabilities of DC so that TC1 receives a proportionate share of the net FMV of each type of property owned by DC; and

(b) issue XXXXXXXXXX TC1 Class D Preferred Shares to DC having an aggregate FMV and redemption value equal to the aggregate FMV of the distribution property that TC1 received on the DC Transfer 1, less the amount of liabilities that TC1 respectively assumed.

For greater certainty, the TC1 Class D Preferred Shares will be taxable preferred shares and short-term preferred shares, which will be held by DC as capital property.

69. In respect of the distribution of property under the DC Transfer 1, DC will jointly elect with TC1, in prescribed form and within the time allowed by subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of each eligible property of DC that is transferred to TC1. The agreed amount in respect of each such capital property will be an amount equal to the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii).

For greater certainty, the amount of liabilities that are allocated by DC to a particular eligible property that is subject to an election under subsection 85(1), and that are assumed by TC1, which, will not exceed the agreed amount for that particular property in accordance with paragraph 85(1)(b). The amount of liabilities assumed by TC1, which are allocated by DC to a particular property that is not subject to an election under subsection 85(1), will not exceed the FMV of any such property.

TC1 will add to the stated capital account maintained for the TC1 Class D 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 aggregate FMV, in the case of other properties respectively transferred to TC1, exceeds the DC liabilities assumed by TC1.

The amount added to the stated capital account for the TC1 Class D Preferred Shares issued by TC1 as partial consideration for the distribution property under the DC Transfer 1, will not exceed the maximum amount that could be added to the aggregate PUC of such shares without a reduction taking place pursuant to subsection 85(2.1).

DC Transfer 2

70. Immediately following the classification of DC’s types of property, DC will transfer a proportionate share of each type of property owned by DC at that time, such that immediately following the DC Transfer 2 and the assumption by TC2 of a portion of DC’s liabilities, the net FMV of each type of property transferred by DC to TC2 (after allocating and deducting the liabilities of DC, in the manner described in Paragraph 66) is equal to or approximates that proportion of each type of property determined by the formula:

A x B/C

where:

A is the net FMV, immediately before the DC Transfer 2, of all property of that type of property owned by DC at that time;

B is the aggregate FMV, immediately before the distribution, of all the shares of the capital stock of DC owned by TC2 at that time; and

C is the aggregate FMV, immediately before the distribution, of all the issued and outstanding shares of the capital stock of DC at that time.

The cash to be transferred to TC2 will be determined within XXXXXXXXXX days of the transfer of the property and an adjustment will be made as required to the cash transferred.

For the purpose of this Paragraph, the expression “approximate that proportion” means that the discrepancy from that proportion, if any, will not exceed XXXXXXXXXX%, determined as a percentage of the net FMV of each type of property that TC2 will receive as compared to what TC2 would have received (or DC would have retained) had it received (or retained) its appropriate proportion of the net FMV of that type of property of DC.

71. As consideration for the transfer of property by DC to TC2 on the DC Transfer 2, TC2 will:

(a) assume an appropriate amount of liabilities of DC so that TC2 receives a proportionate share of the net FMV of each type of property owned by DC; and

(b) issue XXXXXXXXXX TC2 Class D Preferred Shares to DC having an aggregate FMV and redemption value equal to the aggregate FMV of the distribution property that TC2 received on the DC Transfer 2, less the amount of liabilities that TC2 respectively assumed.

For greater certainty, the TC2 Class D Preferred Shares will be taxable preferred shares and short-term preferred shares, which will be held by DC as capital property.

72. In respect of the distribution of property under the DC Transfer 2, DC will jointly elect with TC2, in prescribed form and within the time allowed by subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of each eligible property of DC that is transferred to TC2. The agreed amount in respect of each such capital property will be an amount equal to the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii).

For greater certainty, the amount of liabilities that are allocated by DC to a particular eligible property that is subject to an election under subsection 85(1), and that are assumed by TC2, which, will not exceed the agreed amount for that particular property in accordance with paragraph 85(1)(b). The amount of liabilities assumed by TC2, which are allocated by DC to a particular property that is not subject to an election under subsection 85(1), will not exceed the FMV of any such property.

TC2 will add to the stated capital account maintained for the TC2 Class D 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 aggregate FMV, in the case of other properties respectively transferred to TC2, exceeds the DC liabilities assumed by TC2.

The amount added to the stated capital account for the TC2 Class D Preferred Shares issued by TC2 as partial consideration for the distribution property under the DC Transfer 2, will not exceed the maximum amount that could be added to the aggregate PUC of such shares without a reduction taking place pursuant to subsection 85(2.1).

DC Transfer 3

73. Immediately following the classification of DC’s types of property, DC will transfer a proportionate share of each type of property owned by DC at that time (including all of the shares of Subco owned by DC, the Subco Loan Receivable, all of the shares of Corporation A owned by DC and the Corporation A Loan Receivable), such that immediately following the DC Transfer 3 and the assumption by TC3 of a portion of DC’s liabilities, the net FMV of each type of property transferred by DC to TC3 (after allocating and deducting the liabilities of DC, in the manner described in Paragraph 66) is equal to or approximates that proportion of each type of property determined by the formula:

A x B/C

where:

A is the net FMV, immediately before the DC Transfer 3, of all property of that type of property owned by DC at that time;

B is the aggregate FMV, immediately before the distribution, of all the shares of the capital stock of DC owned by TC3 at that time; and

C is the aggregate FMV, immediately before the distribution, of all the issued and outstanding shares of the capital stock of DC at that time.

The cash to be transferred to TC3 will be determined within XXXXXXXXXX days of the transfer of the property and an adjustment will be made as required to the cash transferred.

For the purpose of this Paragraph, the expression “approximate that proportion” means that the discrepancy from that proportion, if any, will not exceed 1%, determined as a percentage of the net FMV of each type of property that TC3 will receive as compared to what TC3 would have received (or DC would have retained) had it received (or retained) its appropriate proportion of the net FMV of that type of property of DC.

74. As consideration for the transfer of property by DC to TC3 on the DC Transfer 3, TC3 will:

(a) assume an appropriate amount of liabilities of DC so that TC3 receives a proportionate share of the net FMV of each type of property owned by DC; and

(b) issue XXXXXXXXXX TC3 Class D Preferred Shares to DC having an aggregate FMV and redemption value equal to the aggregate FMV of the distribution property that TC3 received on the DC Transfer 3, less the amount of liabilities that TC3 respectively assumed.

For greater certainty, the TC3 Class D Preferred Shares will be taxable preferred shares and short-term preferred shares, which will be held by DC as capital property.

75. In respect of the distribution of property under the DC Transfer 3, DC will jointly elect with TC3, in prescribed form and within the time allowed by subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of each eligible property of DC that is transferred to TC3. The agreed amount in respect of each such capital property will be an amount equal to the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii).

For greater certainty, the amount of liabilities that are allocated by DC to a particular eligible property that is subject to an election under subsection 85(1), and that are assumed by TC3, which, will not exceed the agreed amount for that particular property in accordance with paragraph 85(1)(b). The amount of liabilities assumed by TC3, which are allocated by DC to a particular property that is not subject to an election under subsection 85(1), will not exceed the FMV of any such property.

TC3 will add to the stated capital account maintained for the TC3 Class D 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 aggregate FMV, in the case of other properties respectively transferred to TC3, exceeds the DC liabilities assumed by TC3.

The amount added to the stated capital account for the TC3 Class D Preferred Shares issued by TC3 as partial consideration for the distribution property under the DC Transfer 3, will not exceed the maximum amount that could be added to the aggregate PUC of such shares without a reduction taking place pursuant to subsection 85(2.1).

DC Transfer 4

76. Immediately following the classification of DC’s types of property, DC will transfer a proportionate share of each type of property owned by DC at that time, such that immediately following the DC Transfer 4 and the assumption by TC4 of a portion of DC’s liabilities, the net FMV of each type of property transferred by DC to TC4 (after allocating and deducting the liabilities of DC, in the manner described in Paragraph 66) is equal to or approximates that proportion of each type of property determined by the formula:

A x B/C

where:

A is the net FMV, immediately before the DC Transfer 4, of all property of that type of property owned by DC at that time;

B is the aggregate FMV, immediately before the distribution, of all the shares of the capital stock of DC owned by TC4 at that time; and

C is the aggregate FMV, immediately before the distribution, of all the issued and outstanding shares of the capital stock of DC at that time.

The cash to be transferred to TC4 will be determined within XXXXXXXXXX days of the transfer of the property and an adjustment will be made as required to the cash transferred.

For the purpose of this Paragraph, the expression “approximate that proportion” means that the discrepancy from that proportion, if any, will not exceed 1%, determined as a percentage of the net FMV of each type of property that TC4 will receive as compared to what TC4 would have received (or DC would have retained) had it received (or retained) its appropriate proportion of the net FMV of that type of property of DC.

77. As consideration for the transfer of property by DC to TC4 on the DC Transfer 4, TC4 will:

(a) assume an appropriate amount of liabilities of DC so that TC4 receives a proportionate share of the net FMV of each type of property owned by DC; and

(b) issue XXXXXXXXXX TC4 Class D Preferred Shares to DC having an aggregate FMV and redemption value equal to the aggregate FMV of the distribution property that TC4 received on the DC Transfer 4, less the amount of liabilities that TC4 respectively assumed.

For greater certainty, the TC4 Class D Preferred Shares will be taxable preferred shares and short-term preferred shares, which will be held by DC as capital property.

78. In respect of the distribution of property under the DC Transfer 4, DC will jointly elect with TC4, in prescribed form and within the time allowed by subsection 85(6), to have the provisions of subsection 85(1) apply to the transfers of each eligible property of DC that is transferred to TC4. The agreed amount in respect of each such capital property will be an amount equal to the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii).

For greater certainty, the amount of liabilities that are allocated by DC to a particular eligible property that is subject to an election under subsection 85(1), and that are assumed by TC4, which, will not exceed the agreed amount for that particular property in accordance with paragraph 85(1)(b). The amount of liabilities assumed by TC4, which are allocated by DC to a particular property that is not subject to an election under subsection 85(1), will not exceed the FMV of any such property.

TC4 will add to the stated capital account maintained for the TC4 Class D 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 aggregate FMV, in the case of other properties respectively transferred to TC4, exceeds the DC liabilities assumed by TC4.

The amount added to the stated capital account for the TC4 Class D Preferred Shares issued by TC4 as partial consideration for the distribution property under the DC Transfer 4, will not exceed the maximum amount that could be added to the aggregate PUC of such shares without a reduction taking place pursuant to subsection 85(2.1).

79. Each of the TCs will redeem all of the respective TC Class D Preferred Shares held by DC for an amount equal to the Redemption Amount of such shares. As consideration therefor:

(a) TC1 will issue the TC1 Redemption Note to DC;
(b) TC2 will issue the TC2 Redemption Note to DC;
(c) TC3 will issue the TC3 Redemption Note to DC; and
(d) TC4 will issue the TC4 Redemption Note to DC.

Each such redemption note will have a principal amount and FMV equal to the aggregate Redemption Amount of the respective TC Class D Preferred Shares owned by DC, immediately before each redemption. DC will accept the TC1 Redemption Note, the TC2 Redemption Note, the TC3 Redemption Note and the TC4 Redemption Note, respectively, as payment in full for the respective TC Class D Preferred Shares redeemed, respectively.

80. Immediately after the transaction steps described in Paragraph 67 to Paragraph 78, each of TC1, TC2, TC3 and TC4 will select its first taxation year end.

81. TC3 will exchange all of its DC Class E Preferred Shares and all of its DC Class F Preferred Shares for 18,166,400 DC Class J Preferred Shares. In connection with this share exchange:

(a) TC3 and DC will not make a joint election under the provisions of subsection 85(1); and

(b) The aggregate amount to be added by DC, pursuant to the provisions of the applicable corporation law, to the stated capital of the XXXXXXXXXX DC Class J Preferred Shares will be an amount equal to the aggregate PUC of the DC Class E Preferred Shares and the DC Class F Preferred Shares held by TC3 immediately before this share exchange.

82. DC will redeem from TC3, the XXXXXXXXXX DC Class J Preferred Shares owned by TC3. DC will elect, pursuant to the provisions of subsection 83(2), such that the dividend deemed to be paid to TC3, as a result of such redemption, shall be deemed to be a capital dividend paid out of DC’s CDA. As consideration therefor, DC will issue to TC3 the DC CDA Redemption Note with a principal amount and FMV equal to the aggregate FMV of such DC Class J Preferred Shares redeemed. TC3 will accept the DC CDA Redemption Note as payment in full for the DC Class J Preferred Shares so redeemed.

Winding-up of DC

83. TC1, TC2, TC3 and TC4 will resolve to wind-up and dissolve DC in accordance with the provisions of Act 1.

84. In the course of the winding-up of DC, DC will:

(a) assign and distribute the TC1 Redemption Note 1 to TC1;

(b) assign and distribute the TC2 Redemption Note to TC2;

(d) assign and distribute the TC4 Redemption Note to TC4

which will represent all or substantially all of the property owned by DC and all of the liabilities of DC, immediately before the winding-up of DC. As a result of the assignment and distribution of these redemption notes, the obligation of each of the TCs under such redemption notes and of DC under such redemption notes, as the case may be, will be extinguished and cancelled.

85. To the extent that there is a positive balance in the CDA of DC immediately prior to the distribution of the notes described in Paragraph 84, DC will elect, in the manner and form required under subsection 83(2), to treat the portion of the winding-up dividend referred to in subparagraph 88(2)(b)(i) as a separate capital dividend paid on the issued and outstanding shares of DC immediately before the winding-up.

86. To the extent that there is a positive GRIP balance remaining in DC at the time of the winding-up of DC, DC will designate, pursuant to subsection 89(14), to treat a portion of the dividend referred to in subparagraph 88(2)(b)(iii) arising on the winding up of DC, which is deemed to be a separate taxable dividend, to be an eligible dividend by notifying each of the TCs in writing, in a timely manner, that the dividend is an eligible dividend.

87. Immediately after the distribution of the redemption notes described in Paragraph 84, but before the formal dissolution of DC, DC will not own or acquire any property or carry on any activity or undertaking.

88. Upon receipt of any dividend refund to which DC may become entitled as a result of the Proposed Transactions, DC will immediately transfer the cash received in the form of a dividend refund (under the terms of the agreement governing the winding-up of DC) to each of the TCs.

89. Within a reasonable time following the distribution of such dividend refund, articles of dissolution will be filed by DC with the appropriate corporate registry and, upon receipt of a certificate of dissolution, DC will be dissolved.

90. TC3 will redeem from Parent 1, all of the XXXXXXXXXX TC3 Class E Preferred Shares owned by Parent 1 for an amount equal to the Redemption Amount of such shares. TC3 will elect, pursuant to the provisions of subsection 83(2), such that the dividend deemed to be paid to Parent 1 as a result of such redemption shall be deemed to be a capital dividend paid out of TC3’s CDA. In consideration therefor, TC3 will transfer to Parent 1, Subco Class A Common Shares and Subco Class B Preference Shares with a redemption amount and FMV equal to the aggregate FMV of such TC3 Class E Preferred Shares redeemed.

91. TC3 will redeem from Parent 2 all of the XXXXXXXXXX TC3 Class F Preferred Shares owned by Parent 2 for an amount equal to the Redemption Amount of such shares. TC3 will elect, pursuant to the provisions of subsection 83(2), such that the dividend deemed to be paid to Parent 2 as a result of such redemption shall be deemed to be a capital dividend paid out of TC3’s CDA In consideration therefor, TC3 will transfer to Parent 2, Subco Class A Common Shares and Subco Class B Preference Shares with a redemption amount and FMV equal to the aggregate FMV of such TC3 Class F Preferred Shares redeemed.

Settlement of Parent 1 Loan

92. Each of TC1, TC2 and TC4 will make a cash payment to Parent 1 in full satisfaction of the respective portion of the Parent 1 Loan that was allocated to each of TC1, TC2 and TC4 as part of the DC Transfer 1, DC Transfer 2 and DC Transfer 4, respectively. The obligation of each of TC1, TC2 and TC4 under the Parent 1 Loan will be extinguished and cancelled.

93. At the same time as the transaction described in Paragraph 92, TC3 will transfer its remaining Subco Class A Common Shares, Subco Class B Preference Shares and the Subco Loan Receivable to Parent 1, as well as make a cash payment, which together will fully satisfy the respective portion of the Parent 1 Loan that was allocated to TC3 as part of the DC Transfer 3. The obligation of TC3 under the Parent 1 Loan will be extinguished and cancelled.

94. Each of TC1, TC2, TC3 and TC4 will redeem from Trust 1, Trust 2, Trust 3 and Trust 4, the XXXXXXXXXX Class G Preferred Shares for an amount equal to the Redemption Amount of such shares. In consideration therefor, the TCs will make a cash payment to each of Trust 1, Trust 2, Trust 3 and Trust 4.

95. Each of TC1, TC2, TC3 and TC4 will redeem from Trust 1, Trust 2, Trust 3 and Trust 4, XXXXXXXXXX Class H Preferred Shares for an amount equal to the Redemption Amount of such shares. The TCs will elect, pursuant to the provisions of subsection 83(2), to treat the dividend as a capital dividend. In consideration therefor, the TCs will issue a non-interest bearing promissory note payable to each of Trust 1, Trust 2, Trust 3 and Trust 4. Each of Trust 1, Trust 2, Trust 3 and Trust 4 will accept such promissory note as payment in full for the redemption proceeds.

96. Each of TC1, TC2, TC3 and TC4 will redeem from Trust 1, Trust 2, Trust 3 and Trust 4, the remaining XXXXXXXXXX Class H Preferred Shares for an amount equal to the Redemption Amount of such shares. To the extent of the GRIP balance in each of the TCs at that time, the TCs will designate, pursuant to subsection 89(14), to treat the dividend as an eligible dividend. In consideration therefor, the TCs will issue a non-interest bearing promissory note payable to each of Trust 1, Trust 2, Trust 3 and Trust 4. Each of Trust 1, Trust 2, Trust 3 and Trust 4 will accept such promissory note as payment in full for the redemption proceeds.

Payment of Dividends

97. Each of TC1, TC2, TC3 and TC4 will declare and pay a dividend on the Class A Common Shares of each respective TC in the amount of $XXXXXXXXXX. In consideration therefor, each respective TC will issue a non-interest bearing promissory note to each of Child 1, Child 2, Child 3 and Child 4, as the case may be. Each TC will make an election, within the time and manner prescribed by subsection 83(2), such that each of these separate dividends will be a capital dividend.

ADDITIONAL INFORMATION

98. Except as described in the Facts and the Proposed Transactions, no property has been or will be acquired by DC, in contemplation of and before the Proposed Transactions, other than in a transaction described in subparagraphs 55(3.1)(a)(i) to (iv).

99. There has not, and will not be, as part of the series of transactions or events that includes the Proposed Transactions, any disposition or acquisition of property in circumstances described in subparagraphs 55(3.1)(b)(i) or (iii), or an acquisition of control in the circumstances described in subparagraph 55(3.1)(b)(ii).

100. None of the property received by the TCs as part of the series of transactions or events that includes the distribution of property under the DC Transfers, will be acquired by a person unrelated to the TCs, or by a partnership, in the circumstances described in paragraph 55(3.1)(c).

101. None of the corporations referred to herein 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 the paragraphs (a) to (f) of the definition of financial intermediary corporation.

102. During the implementation of the Proposed Transactions, none of the shares of the corporations referred to herein will be:

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

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

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

(e) issued for consideration that is or includes:

(i) an obligation of the type described in subparagraph 112(2.4)(b)(i), other than an obligation of a corporation that is related (otherwise than by reason of a right referred to in paragraph 251(5)(b)); or

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

103. To the best of DC’s knowledge, DC does not have any Pre-1972 CSOH.

104. Immediately before the redemption of the Class D Preferred Shares in Paragraph 79, each of the TCs will be connected to DC pursuant to subsections 186(4) and 186(2). DC will also have a substantial interest in each of the TCs as that term is defined in subsection 191(2) at that time.

105. Immediately before the redemption of the Class J Preferred Shares in Paragraph 82, TC3 will be connected to DC pursuant to subsections 186(4) and 186(2). DC will also have a substantial interest in TC3 as that term is defined in subsection 191(2) at that time.

106. Immediately before the distributions of property by DC to each of the TCs on the winding-up of DC described in Paragraph 84, DC will be connected to each of the TCs pursuant to subsection 186(4). Each of the TCs will also have a substantial interest in DC as that term is defined in subsection 191(2) at that time.

107. The Proposed Transactions will not result in any of the Taxpayers being unable to pay its existing tax liabilities.

PURPOSE OF THE PROPOSED TRANSACTIONS

108. The purpose of the Proposed Transactions is to facilitate the repayment of the Parent 1 Loan, and to separate on a tax-deferred basis, the assets owned by Aco, Corporation 1 and Corporation 2, equally between the TCs, respectively, to allow the shareholders of the TCs to operate the business of managing XXXXXXXXXX independently of each other.

RULINGS

Provided that the above statements of Facts, Proposed Transactions, Additional Information and Purpose of the Proposed Transactions are accurate and constitute a complete disclosure of all relevant information and provided that the Proposed Transactions are completed in the manner described above, our rulings are as follows:

A. The provisions of subsection 87(1) will apply to the Amalgamation, as described in Paragraph 37.

B. Subsection 107(2) will apply with respect to the distribution of:

(a) the DC Class A Common Shares by the Children Trust to Child 1, Child 2, Child 3 and Child 4, as described in Paragraph 41;

(b) the DC Class D Preferred Shares by the Children Trust to Child 1, Child 2, Child 3 and Child 4, as described in Paragraph 42;

such that: (i) the Children Trust will be deemed under paragraph 107(2)(a) to have disposed of the DC Class A Common Shares and the DC Class D Preferred Shares for proceeds of disposition equal to their cost amount to the Children Trust immediately before the distribution; (ii) each of Child 1, Child 2, Child 3 and Child 4, as the case may be, will be deemed to have acquired the DC Class A Common Shares and the DC Class D Preferred Shares, as the case may be, so distributed to them at a cost equal to the amount determined under paragraph 107(2)(b) and; (iii) each of Child 1, Child 2, Child 3 and Child 4, as the case may be, will be deemed to have disposed of their respective capital interest in the Children Trust for proceeds of disposition determined in accordance with paragraph 107(2)(c).

C. Subject to the application of subsection 69(11), provided that the requisite joint elections are filed in prescribed form and manner within the prescribed time specified in subsection 85(6) and provided that each particular property so transferred is an eligible property in respect of which shares have been issued as full or partial consideration therefor, the provisions of subsection 85(1) will apply to:

(a) The transfer of all of Parent 1’s shares of DC to TC3 as described in Paragraph 43;

(b) The transfer of all of Parent 2’s shares of DC to TC3, as described in Paragraph 45;

(d) The transfer of all of Child 2’s shares of DC to TC2 as described in Paragraph 49;

(e) The transfer of all of Child 3’s shares of DC to TC3 as described in Paragraph 51;

(f) The transfer of all of Child 4’s shares of DC to TC4 as described in Paragraph 53;

(g) The transfer of all of Trust 1’s shares of DC to TC1 as described in Paragraph 55;

(h) The transfer of all of Trust 2’s shares of DC to TC2 as described in Paragraph 57;

(i) The transfer of all of Trust 3’s shares of DC to TC3 as described in Paragraph 59; and

(j) The transfer of all of Trust 4’s shares of DC to TC4 as described in Paragraph 61;

(k) The transfer of each eligible property owned by DC to TC1, TC2, TC3 and TC4, as the case may be, on the DC Transfers

such that the agreed amount in respect of each such transfer of eligible property will be deemed to be the transferor’s proceeds of disposition of the particular property and the transferee’s cost thereof.

For greater certainty, paragraph 85(1)(e.2) will not apply to any of these transfers.

D. The transfers by DC of the legal title to certain XXXXXXXXXX to each of the TCs, as described in Paragraph 63, will not constitute a disposition for the purposes of the Act provided that the TCs can reasonably be considered to act as an agent for DC, as described in Paragraph 63b, with respect to all dealings concerning the properties.

E. Subsection 84(3) will apply on the redemption of the:

(a) TC1 Class D Preferred Shares held by DC, as described in Paragraph 79, to deem TC1 to have paid and DC to have received, a dividend on such shares equal to the amount, if any, by which the amount paid by TC1 on the redemption of the TC1 Class D Preferred Shares exceeds the aggregate PUC in respect of such shares immediately before the redemption;

(b) TC2 Class D Preferred Shares held by DC, as described in Paragraph 79, to deem TC2 to have paid and DC to have received, a dividend on such shares equal to the amount, if any, by which the amount paid by TC2 on the redemption of the TC2 Class D Preferred Shares exceeds the aggregate PUC in respect of such shares immediately before the redemption;

(c) TC3 Class D Preferred Shares held by DC, as described in Paragraph 79, to deem TC3 to have paid and DC to have received, a dividend on such shares equal to the amount, if any, by which the amount paid by TC3 on the redemption of the TC3 Class D Preferred Shares exceeds the aggregate PUC in respect of such shares immediately before the redemption;

(d) TC4 Class D Preferred Shares held by DC, as described in Paragraph 79, to deem TC4 to have paid and DC to have received, a dividend on such shares equal to the amount, if any, by which the amount paid by TC4 on the redemption of the TC4 Class D Preferred Shares exceeds the aggregate PUC in respect of such shares immediately before the redemption;

(e) DC Class J Preferred Shares held by TC3, as described in Paragraph 82, to deem DC to have paid and TC3 to have received, a dividend on such shares equal to the amount, if any, by which the amount paid by DC on the redemption of the DC Class J Preferred Shares exceeds the aggregate PUC in respect of such shares immediately before the redemption;

F. Subsection 84(2) and paragraph 88(2)(b) will apply on the winding-up of DC such that:

(a) subject to (b) and (c) herein, DC will be deemed to have paid a dividend on each particular class of the outstanding shares of DC at the time property is distributed or appropriated by DC equal to the amount by which:

(i) the amount or value of the funds or property distributed or appropriated, as the case may be, on that particular class,

exceeds

(ii) the amount, if any, by which the PUC in respect of that class is reduced on the distribution or appropriation, and

each of the TCs will be deemed to have received a dividend at that time equal to that proportion of the amount of the excess that the number of the shares of that particular class held by each TC immediately before that time is of all the issued and outstanding shares of that particular class;

(b) such portion of the winding-up dividend that does not exceed the CDA of DC immediately before the payment of the winding-up dividend will, pursuant to subparagraph 88(2)(b)(i), be deemed for the purposes of an election in respect thereof under subsection 83(2), to be the full amount of a separate dividend; and

(c) pursuant to subparagraph 88(2)(b)(iii), the portion of the winding-up dividend that exceeds the amount of the separate capital dividend referred to in (b) for which DC makes an election under subsection 83(2) will be deemed to be a separate dividend that is a taxable dividend.

G. The taxable dividends described in Rulings E and F above:

(a) will be included in computing the income of the recipient corporation deemed to have received such a dividend pursuant to subsection 82(1) and paragraph 12(1)(j);

(b) will be deductible by the recipient corporation pursuant to subsection 112(1) in computing its taxable income for the taxation year in which such a dividend is deemed to have been received, and, for greater certainty, such deduction will not be prohibited by subsections 112(2.1), (2.2), (2.3) or (2.4);

(c) will be excluded in determining the recipient corporation’s proceeds of disposition of the shares so redeemed, purchased or cancelled pursuant to paragraph (j) of the definition of proceeds of disposition in section 54;

(d) will, by virtue of subsection 112(3), reduce the loss, if any, in respect of the disposition of the shares on which the dividend is deemed to be received; and

(e) will not be subject to tax under Part IV except, as provided in paragraph 186(1)(b), to the extent that the payer corporation is entitled to a dividend refund for its taxation year in which it paid a taxable dividend described in Rulings E and F above.

H. The taxable dividends described in Ruling E and Ruling F:

(a) will not be subject to Part IV.1 by virtue of paragraphs (b) and (c) of the definition of excepted dividend in section 187.1; and

(b) will not be subject to Part VI.1 by virtue of paragraph (a) of the definition of excluded dividend in subsection 191(1).

I. 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);

(d) an acquisition of property in the circumstances described in subparagraph 55(3.1)(b)(iii); or

(e) an acquisition of property in the circumstances described in paragraphs 55(3.1)(c) or 55(3.1)(d),

which has not been described in this letter, then by virtue of paragraph 55(3)(b), subsection 55(2) will not apply to the taxable dividends referred to in Rulings E and F above, and, for greater certainty, subsection 55(3.1) will not apply to deny the exemption under paragraph 55(3)(b).

J. The dividends with respect to the redemption described in Paragraph (e) of Ruling E above:

(a) will be deemed by subsection 83(2) to be a capital dividend to the extent of DC’s CDA immediately before the redemption and will not be included in computing the income of TC3, in accordance with paragraphs 83(2)(a) and (b), provided that DC elects in respect of the full amount of such deemed dividend in prescribed manner and prescribed form within the time required by subsection 83(2); and

(b) will be added to the CDA of TC3 in accordance with paragraph (b) of the definition of “capital dividend account” in subsection 89(1).

K. The extinguishment of the TC1 Redemption Note, the TC2 Redemption Note, the TC3 Redemption Note, the TC4 Redemption Note and the DC CDA Redemption Note, as described in Paragraph 84, will not, in and of itself, give rise to a forgiven amount. In addition, neither DC or the TCs will otherwise realize a gain or incur any loss as a result of such extinguishment.

L. Provided that the DC Class E Preferred Shares and the DC Class F Preferred Shares represent capital property to TC3, the provisions of subsection 51(1) will apply, and the provisions of subsection 51(2) will not apply, to the share exchange by TC3, as described in Paragraph 81.

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

N. The provisions of subsection 245(2) will not be applied to the Proposed Transactions, in and by themselves, to re-determine the tax consequences confirmed in the rulings given above.

The above rulings are given subject to the limitations and qualifications set forth in Information Circular 70-6R12 issued on April 1, 2022, and are binding on the CRA provided that the Proposed Transactions are completed within six months of the date of this letter, unless otherwise specified.

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.

OTHER COMMENTS

Unless otherwise confirmed in the above rulings, nothing in this letter should be construed as implying that the CRA has confirmed, reviewed or has made any determination in respect of:

(a) the PUC of any share or the ACB or FMV of any property referred to herein;

(b) the balance of the CDA, GRIP, pre-1972 CSOH, ERDTOH or NERDTOH of any corporation;

(c) the attribution of safe income to any share of any corporation referred to herein (see generally CRA documents 2020-0861031C6 and 2021-0889611E5, and the paper titled “CRA Update on Subsection 55(2) and Safe Income – Where Are We Now” delivered to the Canadian Tax Foundation on December 22, 2023, for guidance on the allocation of safe income on a corporate reorganization); and

(d) any other tax consequence relating to the facts, Proposed Transactions or any transaction or event taking place either prior to the Proposed Transactions or subsequent to the Proposed Transactions, whether described in this letter or not, other than those specifically described in the rulings given above, including whether any of the Proposed Transactions would also be included in a series of transactions or events that includes other transactions or events that are not described in this letter.

Nothing in this letter should be construed as confirmation, express or implied, that, for the purposes of any of the rulings given above, any adjustment to the FMV of the properties transferred or the redemption amount of the shares issued as consideration, whether pursuant to a price adjustment clause or otherwise, will be effective retroactively to the time of the transfer and issuance of shares. Furthermore, the operation of a price adjustment clause may invalidate one or more rulings provided. The general position of the CRA with respect to price adjustment clauses is stated in Income Tax Folio S4-F3-C1 Price Adjustment Clauses.

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

Yours Truly,

XXXXXXXXXX
Manager, Reorganizations Section II
For Division Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.

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2025 Ruling 2024-1002891R3 - Multi-wing split-up net asset butterfly

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DEFINITIONS

FACTS

Aco

Corporation 1

Corporation 2

Corporation A

Children Trust

The Trusts

COMPLETED TRANSACTIONS

PROPOSED TRANSACTIONS

Payment of Dividends

Incorporation of TCs

Amalgamation of Predecessor Corporations

DC Share Transfers

Separation of Legal and Beneficial Interest XXXXXXXXXX

Classification of DC’s property

Allocation of liabilities

DC Transfer 1

DC Transfer 2

DC Transfer 3

DC Transfer 4

TC Class D Preferred Share Redemptions

Share Exchange

DC Class J Preferred Share Redemptions

Winding-up of DC

TC3 Class E Preferred Share Redemptions

Settlement of Parent 1 Loan

TC Class G Preferred Share Redemption

Payment of Dividends

ADDITIONAL INFORMATION

PURPOSE OF THE PROPOSED TRANSACTIONS

RULINGS

OTHER COMMENTS