2024 Ruling 2024-1009511R3 - Post-mortem Pipeline

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: 1) Whether subsection 84.1(1) applies to the Proposed Transactions. 2) Whether subsection 84(2) applies to the Proposed Transactions. 3) Whether subsection 245(2) applies to the Proposed Transactions.

Position: 1) to 3) No. Favorable rulings given.

Reasons: The Proposed Transactions meet the statutory requirements and are consistent with CRA administrative positions.

XXXXXXXXXX									2024-100951

XXXXXXXXXX 2024

Dear XXXXXXXXXX:

Re: Advance Income Tax Ruling – Post-mortem pipeline
XXXXXXXXXX

We are writing in response to your request, dated XXXXXXXXXX, for an advance income tax ruling (Ruling) on behalf of the above-noted taxpayers. We acknowledge the additional information provided in your correspondence in respect of this matter. The additional information provided forms part of this letter only to the extent that it is described herein.

CONFIRMATION

To the best of your knowledge and that of the taxpayers involved, none of the proposed transactions or issues involved in this Ruling request are the same as, or substantially similar to, transactions or issues that are:

(a) in a previously filed tax return of the taxpayers or a related person and:

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

(ii) under objection by the taxpayers or a related person; or

(iii) the subject of a current or completed court process involving the taxpayers or a related person; or

(b) the subject of a Ruling request previously considered by the Income Tax Rulings Directorate.

The tax account numbers, Tax Services Offices and the Tax Centres and head office address of the taxpayers involved are as follows:

XXXXXXXXXX

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

DEFINITIONS

Unless otherwise stated:

(a) a 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.), as amended (the Act);

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

(c) all references to monetary amounts are in Canadian dollars; and

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

The relevant parties to the Proposed Transactions (as defined below) will be referred to as follows:

“Amalco” means a corporation to be formed on the amalgamation of Opco and Newco, as described in Paragraph 25;

“Beneficiaries” means XXXXXXXXXX, the grandchildren of the Deceased, both of whom are over 18 years of age and resident in Canada;

“Child-in-Law” means XXXXXXXXXX, who is the spouse of XXXXXXXXXX, the Estate Trustee, the daughter-in-law of the Deceased and a parent of the Beneficiaries, and who is resident in Canada;

“Deceased” means XXXXXXXXXX, an individual taxpayer who was resident in Canada as at the date of his death on XXXXXXXXXX;

“Estate” means the estate that arose on the death of the Deceased, which will be governed by the terms of the Primary Will and the Secondary Will;

“Estate Trustee” refers to XXXXXXXXXX, the trustee of the Estate, as appointed by the Deceased in his Primary Will and the Secondary Will, and who is a child of the Deceased and a Canadian resident;

“Newco” means a corporation to be incorporated under BCA1;

“Non-resident Shareholder” refers to the estate of XXXXXXXXXX, a resident of XXXXXXXXXX at the time of death on XXXXXXXXXX, and which estate continues to hold XXXXXXXXXX% of the issued and outstanding shares of the capital stock of Subco 1, as described in Paragraph 10;

“Opco” means XXXXXXXXXX, a corporation incorporated under BCA1;

“Subco 1” means XXXXXXXXXX, a corporation incorporated under the BCA1, as described in Paragraph 9;

“Subco 1 Sub” means XXXXXXXXXX, a corporation incorporated under the BCA2, which operates a XXXXXXXXXX owned in strata title, as described in Paragraph 11; and

“Subco 2” means XXXXXXXXXX, an inactive corporation incorporated under the BCA1, as described in Paragraph 12.

The following abbreviations, terms and expressions have the meanings specified for the purposes of this letter:

“adjusted cost base” or “ACB” has the meaning assigned by section 54;

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

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

“BCA1” means the XXXXXXXXXX;

“BCA2” means the XXXXXXXXXX;

“Canadian-controlled private corporation”, or “CCPC”, has the meaning assigned by subsection 125(7);

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

“capital dividend account”, or “CDA”, has the meaning assigned by subsection 89(1);

“capital gain” has the meaning assigned in paragraph 38(l)(a);

“capital property” has the meaning assigned by section 54 and subsection 248(1);

“CRA” means the Canada Revenue Agency;

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

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

“ERDTOH” means “eligible refundable dividend tax on hand” as that term is defined in subsection 129(4);

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

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

“GRE” means “graduated rate estate” and has the meaning assigned in subsection 248(1);

“marketable securities” means a diversified portfolio of investment products that includes treasury bills, government and corporate bonds, shares of public corporations, and units in mutual funds;

“NERDTOH” means “non-eligible refundable dividend tax on hand” as that term is defined in subsection 129(4);

“Newco Class A Common Shares” means the Class “A” common shares of the capital stock of Newco as described in Paragraph 19;

“Newco Note” means the non-interest-bearing, demand promissory note to be issued by Newco to the Estate, as described in Paragraph 21;

“Opco Common Shares” means the issued and outstanding common shares of the capital stock of Opco, as described in Paragraph 2;

“paid-up capital” or “PUC” has the meaning assigned by subsection 89(1);

“Paragraph” means a numbered or lettered paragraph in this letter;

“Price Adjustment Clause” means an agreement between two parties to provide for the adjustment to the transaction price in the event that a third party such as the CRA or a court of law determines that the FMV of the transferred property is greater or less than the amount otherwise determined by the parties, with the agreement having the features set out in paragraph 1.5 of Income Tax Folio S4-F3-C1;

“Primary Estate” means all property of every kind, both real and personal, over which the Deceased had a general power of appointment on his death, except for the property under the Secondary Estate;

“Primary Will” means the last will and testament of the Deceased, executed on April 28, 2014, that relates to the assets that form the Primary Estate of the Deceased;

“proceeds of disposition” has the meaning assigned by section 54;

“Proposed Transactions” means the transactions described in Paragraphs 19 to 27 of this letter;

“resident in Canada” means resident in Canada for the purposes of the Act;

“series of transactions or events” includes the transactions or events referred to in subsection 248(10);

“SIN” means social insurance number;

“Secondary Estate” means shares, debts, or other interests owned by the Deceased on his death in XXXXXXXXXX;

“Secondary Will” means the last will and testament of the Deceased that relates to the assets that form the Secondary Estate;

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

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

“V-Day Basis” means the amount, if any, described in subparagraph 84.1(2)(a.1)(i) for purposes of element “B” of paragraph 84.1(1)(a) and element “E” of paragraph 84.1(1)(b); and

“Will” means the last will and testament of the Deceased, executed on XXXXXXXXXX, and includes the Primary Will and the Secondary Will.

FACTS

The relevant facts are as follows:

Opco

1. Opco is and will be, at all relevant times and for all purposes of the Act, a CCPC and a taxable Canadian corporation. Opco was incorporated under the BCA1 in XXXXXXXXXX. Its registered office is located in XXXXXXXXXX.

2. The history of the share ownership of Opco is as follows:

(a) On the amalgamation to form Opco on XXXXXXXXXX, the authorized share capital of Opco consisted of an unlimited number of shares of each of the following classes:

(i) common shares (Opco Common Shares), which are voting, participating shares, entitle the holder to receive discretionary dividends and, in the event of the winding-up, dissolution or liquidation of the corporation, entitle the holder to share equally in the corporation’s profits and assets, subject to the entitlement of any other class of shares;

(ii) Class A preference shares, which are non-voting, non-participating, convertible, non-redeemable, entitle the holder to receive discretionary, non-cumulative dividends, and in the event of a winding-up, dissolution or liquidation of the corporation, entitle the holder to an amount up to the redemption amount of the shares plus any declared but unpaid dividends and rank pari passu with the Opco Common Shares, subject to the entitlement of any other class of shares; and

(iii) Class B preference shares, which are non-voting, non-participating, redeemable and retractable at an amount equal to the aggregate FMV of the consideration received upon issuance plus the amount of any declared but unpaid dividends, entitle the holder to receive discretionary, non-cumulative dividends, and in the event of a winding-up, dissolution or liquidation of the corporation, entitle the holder to an amount up to the redemption amount of the shares plus any declared but unpaid dividends.

3. Immediately prior to the date of death, the Deceased owned all the issued and outstanding shares of Opco, consisting of XXXXXXXXXX Opco Common Shares, which had an aggregate FMV of $XXXXXXXXXX and an aggregate ACB and a PUC of $XXXXXXXXXX. The Opco Common Shares were held as capital property. The remaining classes of shares of the capital stock of Opco have not been issued to the date of this letter.

4. Opco previously operated XXXXXXXXXX. However, significant changes occurring in the Canadian real estate market, along with material economic risks appearing in the capital markets caused Opco to change its business model. Since XXXXXXXXXX, Opco has carried on an XXXXXXXXXX. Opco reports the income from its business as income from a specified investment business on the basis that it employs less than five (5) full-time employees in its operations.

5. At the time of the death of the Deceased, the FMV of the significant assets of Opco were estimated to be approximately $XXXXXXXXXX, consisting of the following:

(a) Cash : $XXXXXXXXXX;

(b) XXXXXXXXXX;

(c) Advances to related parties: $XXXXXXXXXX which includes two $XXXXXXXXXX short term loan advances with interest at a rate of XXXXXXXXXX% per annum made to two related corporations on XXXXXXXXXX; and

(d) Securities in Subco 1, consisting of XXXXXXXXXX common share (the Subco Common Share), and Subco 2, consisting of XXXXXXXXXX common shares.

The additional $XXXXXXXXXX of advances to related parties made in XXXXXXXXXX, and a substantial portion of the loan amount of $XXXXXXXXXX carried over from XXXXXXXXXX, were repaid on XXXXXXXXXX. The outstanding amount of advances to related parties as at XXXXXXXXXX was approximately $XXXXXXXXXX. The proceeds from the foregoing repayments were deposited into Opco’s bank savings account, and subsequently reinvested into a portfolio of fixed income instruments in XXXXXXXXXX.

6. As at the date of death of the Deceased, Opco’s liabilities include accounts payable, accrued liabilities, and income taxes payable, estimated to be approximately $XXXXXXXXXX.

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

(a) ERDTOH 		$XXXXXXXXXX
(b) NERDTOH   	$XXXXXXXXXX
(c) CDA		$XXXXXXXXXX
(d) GRIP		$XXXXXXXXXX

8. Since XXXXXXXXXX, except as described in the preceding Paragraphs, there has not been a material change in the composition of Opco’s assets and liabilities. Moreover, there is not expected to be any material change in the composition of Opco’s assets or liabilities or in the FMV of the assets or the amount of the liabilities, except as contemplated in the Proposed Transactions, from the date of this letter until the date that the Proposed Transactions are completed.

9. Subco 1 was incorporated under the BCA1 on XXXXXXXXXX, and is resident in Canada for purposes of the Act. Its taxation year-end is XXXXXXXXXX.

10. Subco 1 operates a corporate and property consulting and management business. The Subco 1 Common Share held by Opco represents XXXXXXXXXX% of the issued and outstanding shares of Subco 1. The remaining XXXXXXXXXX% of the shares of the capital stock of Subco 1 are owned by Non-resident Shareholder. The revenue for Subco 1 the year ending XXXXXXXXXX was $XXXXXXXXXX.

11. Subco 1 holds XXXXXXXXXX% of the issued and outstanding shares of Subco 1 Sub. Subco1 Sub’s revenue for the year ending XXXXXXXXXX was $XXXXXXXXXX.

12. Subco 2 is a CCPC and taxable Canadian corporation, that was incorporated under the BCA1 on XXXXXXXXXX. Its taxation year-end is XXXXXXXXXX. All of the issued and outstanding shares of the capital stock of Subco 2 are held by Opco. Subco 2 is inactive and does not have any material assets and, for greater certainty, it had no income for the taxation years ending XXXXXXXXXX.

The Estate

13. The Deceased was resident in Canada immediately before death on XXXXXXXXXX.

14. Pursuant to paragraph 70(5)(a), the Deceased was deemed to have disposed of the Opco Common Shares immediately before the Deceased’s death, and to have received proceeds of disposition equal to their FMV at that time. Pursuant to paragraph 70(5)(b), the Estate was deemed to have acquired the Opco Common Shares at a cost equal to the proceeds of disposition of the Deceased.

15. In the Deceased’s XXXXXXXXXX final T1 income tax return filed on XXXXXXXXXX, capital gains were reported in respect of the deemed disposition of the Deceased’s Opco Common Shares in the amount of $XXXXXXXXXX.

16. The Estate is resident in Canada and all the beneficiaries of the Estate are resident in Canada.

17. The Estate holds the Opco Common Shares as capital property and such shares constitute eligible property.

18. The Will provides that the Beneficiaries share equally in the residue of the Estate. The Estate will be designated as a GRE when the Estate Trustee files the T3 Trust Income Tax and Information Return for the Estate’s first taxation year which will end on XXXXXXXXXX.

PROPOSED TRANSACTIONS

19. The Estate will incorporate Newco under the BCA1. Newco will be a TCC and a CCPC. Newco’s authorized share capital will consist of an unlimited number of the following classes of shares:

(a) Class A common shares (Newco Class A Common Share) and class B common shares that will be voting, participating, entitle the holder to receive discretionary dividends and, in the event of the winding-up, dissolution or liquidation of the corporation, entitle the holder to share equally in the corporation’s profits and assets pari passu with the other classes of common shares, and in preference to the holders of the preferred shares.

(b) Class C common shares and class D common shares that will be non-voting, participating, entitle the holder to receive discretionary dividends and, in the event of the winding-up, dissolution or liquidation of the corporation, entitle the holder to share equally in the corporation’s profits and assets pari passu with the other classes of common shares, and in preference to the holders of the preferred shares;

(c) Class A preference shares that will be voting, non-participating, and redeemable and retractable for a redemption amount equal to $XXXXXXXXXX/share, entitle the holder to receive discretionary, non-cumulative dividends of XXXXXXXXXX% of the redemption amount, as declared at the discretion of the directors and in the event of a winding-up, dissolution or liquidation of the corporation, entitle the holder to an amount up to the redemption amount of the shares plus any declared but unpaid dividends pari passu with the holders of the other preferred share classes and subordinate to the holders of the common shares;

(d) Class B preference shares that will be non-voting, non-participating, and redeemable and retractable for a redemption amount equal to $XXXXXXXXXX/share, entitle the holder to receive discretionary, non-cumulative dividends of XXXXXXXXXX% of the redemption amount, as declared at the discretion of the directors and in the event of a winding-up, dissolution or liquidation of the corporation, entitle the holder to an amount up to the redemption amount of the shares plus any declared but unpaid dividends pari passu with the holders of the other preferred share classes and subordinate to the holders of the common shares; and

(e) Class C and class D preference shares that will be non-voting, non-participating, and redeemable and retractable for a redemption amount equal to $XXXXXXXXXX/share, and in the event of a winding-up, dissolution or liquidation of the corporation, entitle the holder to an amount up to the redemption amount of the shares plus any declared but unpaid dividends pari passu with the holders of the other preferred share classes and subordinate to the holders of the common shares.

20. The Estate will subscribe for one (1) Newco Class A Common Share for a nominal amount.

21. The Estate will transfer the XXXXXXXXXX Opco Common Shares to Newco in exchange for consideration consisting of:

(a) the Newco Note, having a principal amount equal to the lesser of:

(i) the aggregate “adjusted” ACB of the Opco Common Shares determined immediately before such transfer in accordance with paragraph 84.1(2)(a.1), less $XXXXXXXXXX; and

(ii) the aggregate FMV of the Opco Common Shares immediately before such transfer, less $XXXXXXXXXX; and

(b) XXXXXXXXXX Newco Class A Common Shares, having an aggregate FMV equal to the amount, if any, by which the aggregate FMV of the Opco Common Shares at the date of the transfer exceeds the FMV of the Newco Note.

22. The Estate and Newco 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 the Opco Common Shares held by the Estate to Newco.

The agreed amount will be equal to the ACB of the Opco Common Shares to the Estate immediately before this transfer, subject to paragraph 85(1)(c). For greater certainty, the agreed amount will not be less than the lesser of the two amounts specified in paragraph 85(1)(c.1), and will not be less than the amount described in paragraph 85(1)(b).

23. Newco will add $XXXXXXXXXX to the legal stated capital account of the Newco Class A Common Shares. For greater certainty, the amount added to the PUC in respect of the XXXXXXXXXX Newco Class A Common Shares will not exceed the maximum amount permitted to be added to the PUC of such shares without resulting in an adjustment in computing the PUC of those shares, having regard to paragraph 84.1(1)(a).

For greater certainty, the sum of the principal amount of the Newco Note and the PUC of the XXXXXXXXXX Newco Class A Common Shares will not exceed the FMV of the Opco Common Shares immediately before the date of the Deceased’s death.

24. Opco will continue to carry on its business described in Paragraph 4 for at least one year following the share transfers described in Paragraph 21. During the one-year period, neither Newco nor Opco will discontinue or reorganize its business, or purchase for cancellation any of the Newco Class A Common Shares or of the Opco Common Shares, as the case may be. Moreover, Newco will not repay any portion of the Newco Note.

25. After a period of at least one year has elapsed from the time of the share transfers described in Paragraph 21, Newco will amalgamate with Opco to form Amalco.

26. In accordance with subsection 87(1), all of the property and all of the liabilities of Newco and Opco immediately before the amalgamation, will become property and liabilities of Amalco. The shares of the capital stock of Opco held by Newco and any intercompany debt will be cancelled without any payment.

The authorized share capital of Amalco will be the same as Newco’s authorized share capital. Moreover, the PUC and ACB of each class of shares that the Estate will hold in the capital stock of Amalco after the amalgamation will be equal to the PUC and ACB of the corresponding classes of issued and outstanding shares that the Estate held in the capital stock of Newco immediately prior to the amalgamation. Amalco will continue to carry on the business formerly carried on by Opco.

27. The Newco Note will be gradually repaid over a period of at least one year following the amalgamation of Opco and Newco as described in Paragraph 25. For greater certainty, Amalco will pay down no more than XXXXXXXXXX% of the principal amount of the Newco Note by 3 months following the amalgamation, no more than XXXXXXXXXX% of the remaining principal amount of the Newco Note by 6 months following the amalgamation, and no more than XXXXXXXXXX% of the remaining principal amount of the Newco Note by 9 months following the amalgamation.

ADDITIONAL INFORMATION

28. Opco may also pay dividends to Newco from time to time following the share transfers described in Paragraph 21. However, such dividends will be funded by the earnings of Opco and not from the sale of any of its assets or investments.

29. The Deceased did not claim a deduction under section 110.6 in respect of the Opco Common Shares, or any shares for which they were substituted, within the meaning of subsection 248(5). Moreover, there was no person not dealing at arm’s length with the Deceased, or with the Estate, that previously claimed a deduction under section 110.6 in respect of the Opco Common Shares, or any shares for which they were substituted, within the meaning of subsection 248(5).

30. There is no V-day basis included in the ACB of the Opco Common Shares, or any shares for which they were substituted, within the meaning of subsection 248(5).

31. When he passed away on XXXXXXXXXX, the Deceased was survived by two children, one of which is the Estate Trustee, and two grandchildren, who are the Beneficiaries of the Estate. All of the children and grandchildren are resident in Canada.

32. For several decades, Opco operated a property development business, and its development projects often took the form of joint ventures with other developers and investors. Depending on various business factors, Opco’s investment would generally range from between XXXXXXXXXX% of the equity participation in such projects. The projects often took years to complete, from land acquisition and land use redesignation, to development and construction and eventual sale. Opco often had cash reserves between development projects, available for immediate reinvestment at the next best opportunity.

33. Opco’s business has historically been operated with advice from professional financial advisors, investment advisers, and its accountant. A number of these professional advisors have been long-term, assisting Opco for decades and continuing to date. Based on professional advice received, Opco has invested reserves in marketable securities. Opco’s marketable securities were historically concentrated in lower-risk investments, so that market fluctuations would minimally impact day-to-day business operations and activities and business decisions. The Deceased met regularly with Opco’s lenders and investment advisers to review and revise Opco’s investment strategy.

34. Opco sold its XXXXXXXXXX has been identified since then despite Opco’s ongoing efforts to find such opportunities by conducting market research and review, meeting with brokers and business partners, and consulting with professional advisors.

35. Prior to the passing of the Deceased, the Child-in-Law and the Estate Trustee were active in the management of Opco. Child-in-Law was appointed a director of Opco on XXXXXXXXXX, and remains the only director, following the passing of the Deceased. In XXXXXXXXXX, following the retirement of Opco’s long-serving internal bookkeeper/accountant, Child-in-Law also began handling Opco’s financial and accounting matters and meeting regularly with Opco’s external financial advisors and accountant. The Estate Trustee was also involved in the operations of Opco, as a manager. In XXXXXXXXXX the Deceased suffered XXXXXXXXXX. During that time, Child-in-Law and the Estate Trustee became engaged in regular communications with Opco’s investment advisers and accountant regarding Opco’s Business and they continue to manage the day-to-day operations of Opco, following the death of the Deceased.

36. Since the passing of the Deceased, Opco has continued its property management business, and upon consultation with the same investment advisors and accountant, its marketable securities have been redeployed to discounted bonds and other debt instruments with less liquidity but the potential for greater returns. This redeployment has continued with the result that approximately XXXXXXXXXX% of Opco’s assets are currently attributable to marketable securities. The investment strategy for Opco for the foreseeable future will consist of the preservation of capital and reasonable growth within a moderate risk context. The Estate Trustee continues to meet regularly with Opco’s professional advisors and accountant to seek ongoing advice on Opco’s investment strategy.

PURPOSE OF THE PROPOSED TRANSACTIONS

37. The purpose of the Proposed Transactions is to create a “pipeline” to distribute from Opco to the Estate an amount up to the FMV of the Opco Common Shares held by Deceased immediately before death, without triggering additional taxes on the value of the Estate’s interest in Opco for which the taxes were already paid or payable as a result of the death of the Deceased and the application of subsection 70(5), in a manner that satisfies the administrative requirements established by the CRA.

RULINGS

Provided the foregoing statements constitute a complete and accurate disclosure of all of the relevant facts, completed and Proposed Transactions, additional information and purposes of the Proposed Transactions and provided that the Proposed Transactions are completed in the manner described above, we confirm the following:

A. Section 84.1 will not apply to deem the Estate to have received a dividend from Newco, on the disposition of the Opco Common Shares to Newco, as described in Paragraph 21.

B. Subsection 84(2) will not apply as a result of the Proposed Transactions, in and by themselves, to deem Opco to have paid, and the Estate or its beneficiaries to have received, a dividend on the issuance or subsequent repayment of the Newco Note, as described in Paragraph 27.

C. The provisions of subsection 245(2) will not apply as a result of the Proposed Transactions, in and by themselves, to redetermine the tax consequences confirmed in the Rulings given above.

The Rulings are given subject to the general limitations and qualifications set out in Information Circular, IC 70-6R12, dated April 1, 2022, and are binding on the CRA provided that the Proposed Transactions described in Paragraphs 19 to 23 are completed no later than six months from the date of this letter, and that all other transactions are completed in accordance with the time frames set out therein.

The Rulings are based on the Act as it presently reads and do not take into account any proposed amendments to the Act which, if enacted, could have an effect on the Rulings provided herein.

COMMENTS

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

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

(b) the balance of the NERDTOH, ERDTOH, GRIP, non-capital losses, CDA or any other tax account for any corporation described herein;

(c) whether the Proposed Transactions may be implemented by the Executors under the terms of the Will;

(d) whether the Estate is, at any particular time, a GRE under the Act;

(e) whether any person described herein deals, or does not deal, with any other person at arm’s length; or

(f) any other tax consequence (including provincial tax consequences) relating to the facts, additional information, Proposed Transactions or any transaction or event taking place either prior or subsequent to the Proposed Transactions, whether described in this letter or not, other than those specifically described in the Rulings given above, including, but not limited to the tax consequences associated with the distribution of any assets of the Estate, other than those specifically described in the Rulings given above; and, 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 application of a price adjustment clause may invalidate one or more of the Rulings given in this letter. 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