30 November 1996 Ruling 9715863 - SUPPLEMENT TO ESTATE FREEZE

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							971586
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1997

Dear Sirs:

Re: XXXXXXXXXX
Advance Income Tax Ruling 3-970399

This is in reply to your facsimile of XXXXXXXXXX in which you requested certain amendments to the facts, proposed transactions and rulings described in advance income tax ruling 970399 (the "Letter") which was issued on XXXXXXXXXX, 1997.

As requested the Letter is hereby amended as follows:

The second sentence of paragraph 3 is deleted and replaced by:

"The issued and outstanding share capital of Middleco consists of XXXXXXXXXX non-voting Class XXXXXXXXXX shares and XXXXXXXXXX voting Class XXXXXXXXXX shares."

Subparagraph 12(a) is deleted and replaced by:

"a demand, non-interest bearing promissory note of HoldcoA ("Note A") having a principal amount of $XXXXXXXXXX, an amount not exceeding the paid-up capital of the Subject Shares of Middleco; and"

Subparagraph 17(c) is deleted and replaced by:

"subject to paragraphs (f) and (g) below, the Family Trust will terminate on the later of (1) the date of death of the last to die of Father, Child 1 and Child 2 (the "Division Date") or (2) the date when all issue of Father alive on the Division Date have attained the age of XXXXXXXXXX years;"

Subparagraph 17(g) is deleted and replaced by:

"(g)if on or after the Division Date, any beneficiary or other person whose interest is not subject to the provisions described in (f) above shall acquire a vested interest in any share of the Trust Fund before attaining the age of majority, the trustee shall keep invested such share until he attains the age of majority; however discretion is provided to the trustee to pay amounts out of such capital for the benefit of such beneficiary or other person or to pay or transfer all of the capital of the Trust Fund to which the beneficiary is entitled to or for the benefit of such beneficiary or other person;"

Ruling A is deleted and replaced by:

"A.The provisions of subsection 85(1) will apply to the transfer by Father of the Subject Shares of Middleco to HoldcoA as described in paragraph 12 above such that the agreed amount in respect of such transfer shall be deemed to be Father's proceeds of disposition and HoldcoA's cost thereof pursuant to paragraph 85(1)(a) of the Act. For greater certainty, paragraph 85(1)(e.2) of the Act will not apply to the transfer referred to herein."

Ruling E is deleted and replaced by :

"E.The application of section 84.1 to the transfer of the Subject Shares of Middleco to HoldcoA, as described in paragraph 12 above, will result in a deduction to the paid-up capital of the Former Common Shares of HoldcoA issued as consideration for such transfer to the extent that (i) the amount added to the stated capital of such Former Common Shares, as described in paragraph 13 above, exceeds (ii) the amount by which the greater of the paid-up capital of the Subject Shares of Middleco so transferred and the adjusted cost base, as adjusted pursuant to paragraph 84.1(2)(a) or (a.1) of the Act, of the Subject Shares of Middleco to Father exceeds the principal amount of Note A."

The reference in Ruling J to "subsection 25(5) of the ITAR" is replaced by a reference to "subsection 26(5) of the ITAR".

Notwithstanding the above changes, we confirm that, subject to the conditions set out therein, the rulings given in the Letter, as hereby amended, will continue to be binding on Revenue Canada in accordance with the practice outlined in Information Circular 70-6R3, dated December 30, 1996, provided that the proposed transactions described in the Letter, as amended herein, are completed in the manner described therein by XXXXXXXXXX.

Yours truly,

for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch