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.
Principal Issues:
whether the substitution of notes results in a new indebtedness for purposes of 212(1)(b)(vii)
Position:
no
Reasons:
the terms of the old and new notes are identical except that the new notes are freely tradeable
XXXXXXXXXX 962319
XXXXXXXXXX
Attention: XXXXXXXXXX
XXXXXXXXXX, 1996
Dear Sirs:
Re: XXXXXXXXXX
This is in reply to your letters of XXXXXXXXXX wherein you requested an advance income tax ruling on behalf of the above-noted taxpayer.
To the best of your knowledge and that of the taxpayer involved, none of the issues raised in this request are being considered by a Tax Services Office or Taxation Centre in connection with an income tax return already filed or is the subject of a notice of objection or is under appeal.
Our understanding of the pertinent facts, the proposed transactions and purpose of the proposed transactions is as follows:
FACTS AND PROPOSED TRANSACTIONS
1. XXXXXXXXXX
2. XXXXXXXXXX
3.To finance the ongoing operations of XXXXXXXXXX will issue XXXXXXXXXX principal amount at maturity notes (the "XXXXXXXXXX Notes")
XXXXXXXXXX
XXXXXXXXXX
4.The XXXXXXXXXX Notes will be issued under a private placement to investors meeting the criteria for qualified institutional buyers or institutional accredited investors under the XXXXXXXXXX The XXXXXXXXXX Notes, at the time of their issue, will not have been registered under the XXXXXXXXXX As a result, the transfer of the XXXXXXXXXX Notes will be restricted. The restrictions will be set out on the certificates evidencing the XXXXXXXXXX Notes.
5.XXXXXXXXXX will agree to file with the XXXXXXXXXX and use its best efforts to cause to become effective a registration statement (the "Registration Statement") with respect to an issue of XXXXXXXXXX notes of XXXXXXXXXX (the "New XXXXXXXXXX Notes"). Upon its effectiveness, pursuant to the terms of the XXXXXXXXXX Notes, XXXXXXXXXX will be required to offer the holders of the XXXXXXXXXX Notes the opportunity to exchange their XXXXXXXXXX Notes for a like principal amount of the New XXXXXXXXXX Notes. The terms and conditions of the New XXXXXXXXXX Notes will be identical to those of the XXXXXXXXXX Notes except that the New XXXXXXXXXX Notes will be freely tradeable in the XXXXXXXXXX Under the terms of the exchange, the New XXXXXXXXXX Notes will be issued as evidence of the same continuing indebtedness of XXXXXXXXXX under the XXXXXXXXXX Notes. In no circumstances will XXXXXXXXXX be obligated under the Registration Statement to repay the principal amount of the XXXXXXXXXX Notes.
PURPOSES OF THE PROPOSED TRANSACTIONS
6.The purpose of issuing the notes is to raise funds to finance XXXXXXXXXX business.
7.The purpose of issuing the notes initially on an unregistered basis to qualified investors is to effect the placement in a timely fashion. The purpose of the subsequent registration is to provide investors with additional liquidity for their investment.
XXXXXXXXXX
RULING
Provided that the foregoing statements constitute complete and accurate disclosure of all of the relevant facts and proposed transactions, we confirm that the substitution of the New XXXXXXXXXX Notes for the XXXXXXXXXX Notes pursuant to the requirement contained in the terms of the XXXXXXXXXX Notes will not result in new indebtedness for the purposes of subparagraph 212(1)(b)(vii) of the Act.
The above ruling is subject to the general limitations and qualifications set forth in Information Circular 70-6R2 and is binding on Revenue Canada, Taxation provided that the XXXXXXXXXX Notes are issued before XXXXXXXXXX This ruling is based on the Act in its present form and does not take into account any proposed amendments.
Except as expressly stated herein, our ruling does not imply acceptance, approval or confirmation of any income tax implications of the facts or proposed transactions. Specifically, except as expressly stated herein, our ruling does not confirm in any way the eligibility for the exemption from withholding tax, contained in subparagraph 212(1)(b)(vii) of the Act, of any interest or amounts paid in lieu of interest to the holders of the XXXXXXXXXX Notes and New XXXXXXXXXX Notes who deal at arm's length with XXXXXXXXXX.
XXXXXXXXXX
XXXXXXXXXX
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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© Her Majesty the Queen in Right of Canada, 1995
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© Sa Majesté la Reine du Chef du Canada, 1995
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