30 November 1996 Ruling 9723033 - REORGANIZATION

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: changes in wording - no issues

Position:

Reasons:

XXXXXXXXXX							1-972303
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1997

Dear Sirs:

Re: Advance Income Tax Ruling 3-970444
dated XXXXXXXXXX, 1997 (the "Ruling Letter")
XXXXXXXXXX

This is in reply to your letter of XXXXXXXXXX in which you requested that certain changes be made to the Ruling Letter.

We confirm that the Ruling Letter will apply to XXXXXXXXXX.

Paragraph 30 of the Ruling Letter is replaced with the following:

"30.On the Closing Date and subsequent to the transfers described in paragraphs 24, 26 and 28 above, XXXXXXXXXX will transfer, at fair market value, to each of XXXXXXXXXX Holdco, XXXXXXXXXX Holdco and XXXXXXXXXX Holdco a proportionate amount of each type of property owned by XXXXXXXXXX at that time such that the aggregate of the net fair market value of each type of property received by recipient will be equal to or approximate the proportion (the "Transfer Proportion") of the net fair market value of all property of the particular type owned by XXXXXXXXXX immediately before the transfer that:

the aggregate of the fair market value, immediately before the transfer, of all shares of the capital stock of XXXXXXXXXX owned by the recipient at that time

is of:

the fair market value, immediately before the transfer, of all the issued shares of the capital stock of XXXXXXXXXX at that time.

The phrase "approximate the proportion" means within one percent of the Transfer Proportion, expressed as a percentage of the Transfer Proportion. To the extent that the transfers result in a Holdco owing fractional interests in the marketable securities, the Holdcos may sell the fractional interests among themselves for fair market value consideration, however any such sales will be made within the parameters of paragraph 55(3.1)(c).

As consideration for the transferred properties referred to above, each Holdco will:

(a) assume one-third of the current accounts payable of XXXXXXXXXX, and one-third of the shareholder loans of XXXXXXXXXX; and

(b) issue to XXXXXXXXXX Class XXXXXXXXXX Preference Shares of its capital stock having an aggregate redemption amount and fair market value equal to the amount by which the fair market value of the transferred properties received by it as a result of the transfers described herein exceeds the fair market value of the liabilities of XXXXXXXXXX assumed by it.

The liabilities assumed by Newco will be specifically allocated to particular properties."

Ruling C of the Ruling Letter is replaced by the following:

"C.The provisions of subsection 55(2) will not apply to the dividends described in ruling B above by virtue of the application of paragraph 55(3)(b) provided that, as part of the series of transactions or events that includes the proposed transactions described herein, there is no:

disposition of property in the circumstances described in subparagraph 55(3.1)(b)(i);

acquisition of control in the circumstances described in subparagraph 55(3.1)(b)(ii); or

acquisition of property in the circumstances described in subparagraphs 55(3.1)(c) or (d);

which has not been described herein."

You have also advised us that, apart from the above, there have not been any changes to the relevant facts and proposed transactions as described in the Ruling Letter.

Subject to the conditions stated therein, we confirm that the Ruling Letter will continue to be binding on Revenue Canada.

Yours truly,

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