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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
XXXXXXXXXX 961625
XXXXXXXXXX
Attention: XXXXXXXXXX
XXXXXXXXXX, 1996
Dear Sirs:
Re: XXXXXXXXXX
Advance Income Tax Rulings Request
This is in reply to your letters of XXXXXXXXXX, in which you requested an advance income tax ruling on behalf of the above-mentioned corporation in respect of the tax consequences under the Income Tax Act (Canada) arising out of the proposed transactions described below.
You provided us with the following documents:
•
XXXXXXXXXX
•
XXXXXXXXXX
•
XXXXXXXXXX
We also acknowledge XXXXXXXXXX letter of XXXXXXXXXX, 1996.
We understand that to the best of your knowledge and that of the taxpayers involved:
a)none of the issues involved in the requested rulings are being considered by a Tax Services office or a Taxation Centre in connection with tax returns already filed, and
b)none of the issues involved in the requested rulings are the subject of any notice of objection or are under appeal.
All statutory references contained in this letter are to the Income Tax Act, R.S.C. 1985 (5th Supp.) c.1, as amended to the date hereof (the "Act").
DEFINITIONS
Except as otherwise indicated, the following defined terms have the following meaning:
(a)"ACB" has the meaning assigned to the expression "adjusted cost base" by section 54 of the Act;
(b) "CBCA" means Canada Business Corporation Act;
(c)"capital property" has the meaning assigned by section 54 of the Act;
(d)"cost amount" has the meaning assigned by section 248 of the Act;
(e) XXXXXXXXXX;
(f)"ineligible property" has the meaning assigned by paragraph 88(1)(c) of the Act; and
(g)"TCC" has the meaning assigned to the expression "taxable Canadian corporation" by subsection 89(1) of the Act.
FACTS, PROPOSED TRANSACTIONS AND PURPOSE OF THE PROPOSED TRANSACTIONS
Our understanding of the facts, the proposed transactions and the purpose of the proposed transactions is as follow:
A - FACTS
XXXXXXXXXX
a) XXXXXXXXXX
b) XXXXXXXXXX
c) XXXXXXXXXX
d) XXXXXXXXXX
e) XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
a) XXXXXXXXXX
b) XXXXXXXXXX
c) XXXXXXXXXX
d) XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
B - PROPOSED TRANSACTIONS
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX enter into a voluntary liquidation XXXXXXXXXX will then distribute all of its property to XXXXXXXXXX will assume all of the liabilities XXXXXXXXXX The shares of XXXXXXXXXX will be cancelled as a consequence of the distribution by XXXXXXXXXX will file a designation under paragraph 88(1)(d) of the Act in respect of any capital property, other than ineligible property, XXXXXXXXXX.
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
amalgamate and to continue as one corporation ("Amalco").
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX enter into a voluntary liquidation XXXXXXXXXX XXXXXXXXXX will then distribute all of its property to NewcoII and NewcoII will assume all of the liabilities of
XXXXXXXXXX
NewcoII will file a designation under paragraph 88(1)(d) of the Act in respect of any capital property, other than ineligible property, XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
C - PURPOSE OF THE PROPOSED TRANSACTIONS
XXXXXXXXXX
XXXXXXXXXX
RULINGS REQUESTED AND GIVEN
Provided that the preceding statements constitute a complete and accurate disclosure of all the relevant facts, proposed transactions and purpose of the proposed transactions, that the proposed transactions are completed in the manner described above and that XXXXXXXXXX, we confirm that:
A. Subsection 249(4) of the Act will not apply XXXXXXXXXX, as the XXXXXXXXXX:
(i)XXXXXXXXXX
(ii)XXXXXXXXXX
B.Provided XXXXXXXXXX is wound up into XXXXXXXXXX, as described in paragraph 19 above, the provisions of subsection 88(1) of the Act will apply to the wind-up of XXXXXXXXXX into XXXXXXXXXX and in particular, pursuant to paragraph 88(1)(c) of the Act, the cost to XXXXXXXXXX of property of XXXXXXXXXX that is capital property other than ineligible property will be deemed to be the amount deemed by paragraph 88(1)(a) of the Act to be the proceeds of disposition to XXXXXXXXXX of such property plus, subject to the provisions of subparagraphs 88(1)(d)(ii) and (iii) of the Act, such portion of the amount by which:
(i)the aggregate of the amounts referred to in subparagraph 88(1)(b)(ii) of the Act, determined immediately before the wind-up, in respect of the shares of XXXXXXXXXX disposed of by XXXXXXXXXX on the wind-up, exceeds
(ii)the aggregate of the amounts determined under subparagraphs 88(1)(d)(i) and (i.1) of the Act,
as designated by XXXXXXXXXX in respect of each capital property of XXXXXXXXXX referred to herein in its return of income under Part I of the Act for its taxation year in which XXXXXXXXXX is wound up. In particular, the amount so designated in respect of XXXXXXXXXX cannot exceed, pursuant to subparagraph 88(1)(d)(ii) of the Act, the amount, if any, by which the fair market value of XXXXXXXXXX, and, the total amounts so designated in respect of XXXXXXXXXX cannot exceed the amount, if any, by which the total determined under subparagraph 88(1)(b)(ii) of the Act exceeds the total of the amounts determined under subparagraphs 88(1)(d)(i) and (i.1) of the Act.
C. Provided XXXXXXXXXX is wound up into NewcoII, as described in paragraph 20 above, NewcoII will be considered pursuant to subsection 88(4) of the Act to have acquired control of XXXXXXXXXX for the purposes of paragraphs 88(1)(c) and (d) of the Act at the time XXXXXXXXXX.
D. Provided XXXXXXXXXX is wound up into NewcoII, as described in paragraph 20 above, the provisions of subsection 88(1) of the Act will apply to the wind-up of XXXXXXXXXX into NewcoII and in particular, pursuant to paragraph 88(1)(c) of the Act, the cost to NewcoII of property of XXXXXXXXXX that is capital property other than ineligible property will be deemed to be the amount deemed by paragraph 88(1)(a) of the Act to be the proceeds of disposition to XXXXXXXXXX of such property plus, subject to the provisions of subparagraphs 88(1)(d)(ii) and (iii) of the Act, such portion of the amount by which
(i)the aggregate of the amounts referred to in subparagraph 88(1)(b)(ii) of the Act, determined immediately before the wind-up, in respect of the shares of XXXXXXXXXX disposed of by NewcoII on the wind-up, exceeds
(ii)the aggregate of the amounts determined under subparagraphs 88(1)(d)(i) and (i.1) of the Act,
as designated by NewcoII in respect of each capital property of XXXXXXXXXX referred to herein in its return of income under Part I of the Act for its taxation year in which XXXXXXXXXX is wound up. In particular, the amount so designated in respect of XXXXXXXXXX cannot exceed, pursuant to subparagraph 88(1)(d)(ii) of the Act, the amount, if any, by which the fair market value of XXXXXXXXXX, and, the total amounts so designated in respect of XXXXXXXXXX cannot exceed the amount, if any, by which the total determined under subparagraph 88(1)(b)(ii) of the Act exceeds the total of the amounts determined under subparagraphs 88(1)(d)(i) and (i.1) of the Act.
Nothing in this letter should be interpreted as confirmation by us that any property referred to herein is or is not an "ineligible property" for the purpose of paragraph 88(1)(c) of the Act. Such a determination may be affected by future events or transactions that may not be known at the time of this letter. For example, an asset owned by XXXXXXXXXX may be an "ineligible property" for the purpose of the application of paragraph 88(1)(c) of the Act to the wind-up of XXXXXXXXXX into XXXXXXXXXX if the asset is subsequently acquired by a person (other than a specified person as defined in paragraph 88(1)(c.2) of the Act) that, XXXXXXXXXX, was a specified shareholder (as defined in subsection 248(1) of the Act) XXXXXXXXXX
These rulings are given subject to the limitations and qualifications set out in Information Circular 70-6R2 dated September 28, 1990, as amended by Special Release dated September 30, 1992, issued by Revenue Canada and are binding provided that the proposed transactions are completed on or before XXXXXXXXXX
These rulings are based on the Act and the Income Tax Regulations as of the date hereof without taking into account any future amendments thereto, whether currently proposed or not. Furthermore, these rulings are also based on the wording of the submitted draft XXXXXXXXXX A material difference between the final wording of this document and the wording of the draft document provided to us may affect some or all of the rulings given.
Yours truly,
for Director
Reorganization and International Division
Income Tax Rulings & Interpretations Directorate
Policy and Legislation Branch
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© Her Majesty the Queen in Right of Canada, 1995
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