30 November 1997 Ruling 9815553 - SUPPLEMENTARY TO 3-980098

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
XXXXXXXXXX 			 		1-981555
XXXXXXXXXX 

Attention: XXXXXXXXXX

XXXXXXXXXX, 1998

Dear Sirs:

Re: XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Advance Income Tax Ruling

This is in reply to your letters of XXXXXXXXXX in which you requested additional rulings and certain changes to the facts and proposed transactions described in our letter of XXXXXXXXXX, 1998 on our file No. 3-980098 (the "Ruling"). Terms defined in the Ruling to have a certain meaning have the same meaning when used in this letter.

As a result of your request the following changes will be made to the Ruling:

1. In paragraph 27, line 12, following the last sentence of the first subparagraph, add the following sentence:

"XXXXXXXXXX has incurred financing expenses of approximately $XXXXXXXXXX in connection with this refinancing which are deductible under paragraph 20(1)(e)."

2. In paragraph 34, line 10 of the first subparagraph, following the words "the principal amount of which will be equal to the" add the following words:

"aggregate of the amounts paid by XXXXXXXXXX, as the case may be, to XXXXXXXXXX Amalco referred to in paragraph 34A and the".

3. In paragraph 34, line 10 of the second subparagraph, delete the words "less the principal amount of the liabilities assumed by it" and replace with the following:

"less the aggregate of the principal amount of the liabilities assumed by it and the principal amount of the XXXXXXXXXX Reimbursement Note or the XXXXXXXXXX Reimbursement Note, as the case may be, referred to in paragraph 34A."

4. Add new paragraph 34A as follows:

"34A. As consideration for assuming the debt of XXXXXXXXXX referred to in paragraph 27 above, XXXXXXXXXX will reimburse XXXXXXXXXX Amalco for the financing expenses incurred by XXXXXXXXXX in connection with this debt by issuing and delivering to XXXXXXXXXX Amalco a non-interest-bearing demand promissory note (the "XXXXXXXXXX Reimbursement Note" and the "XXXXXXXXXX Reimbursement Note", respectively), the principal amount of which will be equal to one-half of such financing expenses. With respect to the receipt of this reimbursement, XXXXXXXXXX Amalco will make the election pursuant to subsection 12(2.2) and will elect for purposes of that subsection the amount of the reimbursement."

5. In paragraph 39, line 1, after the words "The XXXXXXXXXX Redemption Note" add the words "and the XXXXXXXXXX Reimbursement Note".

6. In paragraph 40, line 1, after the words "The XXXXXXXXXX Redemption Note" add the words "and the XXXXXXXXXX Reimbursement Note".

7. The following new rulings will be added:

"Z. XXXXXXXXXX will each be entitled to deduct in accordance with paragraph 20(1)(e) in computing its income for the taxation year in which payment is made to XXXXXXXXXX Amalco and following taxation years the amount paid by each of them to XXXXXXXXXX Amalco referred to paragraph 34A as reimbursement of financing expenses incurred by XXXXXXXXXX in connection with the refinancing referred in paragraph 27.

AA. Provided that XXXXXXXXXX Amalco elects in the time and manner provided by subsection 12(2.2) and elects an amount equal to the aggregate amount received from XXXXXXXXXX described in paragraph 34A, no amount will be included in computing the income of XXXXXXXXXX Amalco as a result of the receipt of these amounts and XXXXXXXXXX Amalco will not be entitled to any deduction in computing its income in respect of its financing expenses which are reimbursed by XXXXXXXXXX."

We confirm that the above changes and additional rulings will not affect the rulings given in the Ruling and they will continue to be binding on the Department as indicated therein.

Yours truly,

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