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 1-981933
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 advised of additional facts and transactions to be completed prior to and following the proposed transactions described in our letter of XXXXXXXXXX, 1998 on our file No. 3-980098 as amended in our letter of XXXXXXXXXX on our file No. 1-981555 (collectively, the "Amended 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 letters the following changes will be made to the Amended Ruling:
Add the following paragraphs:
"27A. Prior to the transactions described in paragraph 32, XXXXXXXXXX will borrow approximately $XXXXXXXXXX from XXXXXXXXXX pursuant to a non-revolving term loan facility. The borrowed money will be used for business purposes unrelated to the XXXXXXXXXX. XXXXXXXXXX will provide a pledge of its shares of XXXXXXXXXX Amalco to XXXXXXXXXX. XXXXXXXXXX will not acquire the right to vote the pledged shares except in the event of a default. The security interest held in the shares of XXXXXXXXXX Amalco by the XXXXXXXXXX will be replaced by a mortgage on XXXXXXXXXX% undivided beneficial interest in the real property acquired from XXXXXXXXXX Amalco following the purchase for cancellation of the XXXXXXXXXX Amalco shares described in paragraph 38.
XXXXXXXXXX may also borrow funds from XXXXXXXXXX and secure such a loan with a pledge of its shares of XXXXXXXXXX Amalco and following the completion of the proposed transactions described in the Amended Ruling with a mortgage of its undivided XXXXXXXXXX% beneficial interest in the real property acquired from XXXXXXXXXX Amalco. The borrowed money will be used for business purposes unrelated to the XXXXXXXXXX."
27B. XXXXXXXXXX became aware that a property near the XXXXXXXXXX may be available for purchase and subsequent development. XXXXXXXXXX had initial discussions with the owner to obtain an exclusive right to inspect the property and carry out appropriate due diligence with a view to making an offer to purchase the property. XXXXXXXXXX advised XXXXXXXXXX of this possible acquisition and invited it to participate in this acquisition should it occur.
20A. In XXXXXXXXXX granted a security interest in its shares of XXXXXXXXXX and Newco to XXXXXXXXXX in connection with an indemnity relating to the reorganization of the XXXXXXXXXX. This security was replaced by a security interest in the shares of XXXXXXXXXX Amalco on XXXXXXXXXX. Under the security agreements, XXXXXXXXXX was the registered holder of these shares but XXXXXXXXXX remained the beneficial owner, including having voting rights, unless and until such time as the security could be enforced. The parties agreed in XXXXXXXXXX of this year to a release of this security and a formal release will be executed shortly."
We confirm that notwithstanding the additions described in this letter, the rulings given in the Amended Ruling 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
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