1998 Ruling 982645A - SUPPLEMENTARY RULING XXXXXXXXXX

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: Supplementary ruling - clarifications of previous ruling (although client OK’d previous draft version...after receiving the final, realized they had changes to be made-----no substantive change in proposed transactions

Position: confirmation of previous rulings

Reasons: no substantive changes

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XXXXXXXXXX 1-982645
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Attention: XXXXXXXXXX

XXXXXXXXXX, 1998

Dear Sirs:

Re: Supplementary Ruling
XXXXXXXXXX (Ruling # 982075)

We are writing in reply to your letter dated XXXXXXXXXX in which you requested certain minor amendments to the facts and proposed transactions of advance income tax ruling 982075, dated XXXXXXXXXX, 1998 (the “Ruling”). As a result of your letter, the following amendments have been made to the Ruling (underlined for ease of reference):

1. In Paragraph 3, the words “declaration of trust” are deleted from the first sentence and are replaced by the words “a trust document” so that this paragraph will read as follows:

3. Each Fund was established by a trust document under the laws of the province of XXXXXXXXXX . Each Existing Fund is a “mutual fund trust” within the meaning of subsection 132(6) of the Act. It is expected that each of the XXXXXXXXXX New Funds XXXXXXXXXX will qualify as a “mutual fund trust” within the meaning of subsection 132(6) of the Act XXXXXXXXXX. Apart from the New Fund’s investment objectives, the terms of the trust document governing each New Fund are substantially identical to the terms of the trust document governing each Group 1 Fund.

2. In Paragraph 5, the word “existing” is deleted from the third line, hence that paragraph is restated as follows:

5. Currently, the capital of each Group 1 Fund and each New Fund is represented by one XXXXXXXXXX class and each unitholder’s XXXXXXXXXX in such Fund is based on the number of units of the Fund held by the unitholder. Each unit of such a Fund represents an equal undivided interest in the Fund and is entitled to participate in all distributions made by the Fund, and in its net assets on any liquidation of the Fund, XXXXXXXXXX Effectively, therefore, each unit of a Group 1 Fund and a New Fund bears its XXXXXXXXXX share of all expenses of such Fund.

3. The words “has issued” in line four of paragraph 6 are deleted and are replaced with the words “is authorized to issue” so that this paragraph will read as follows:

6. Each Group 2 Fund since its creation has been permitted to issue more than one XXXXXXXXXX class, the attributes of which are determined by InvestCo XXXXXXXXXX and set out in the trust document governing each Group 2 Fund.

XXXXXXXXXX.

4. The word “InvestCo” is deleted from line 6 of paragraph 8, and is replaced by the word “TrusteeCo.” Paragraph 8 is restated as follows:

8. Under each trust document governing a Fund, the Fund is obligated to distribute to its unitholders on or before the end of each taxation year of the Fund the amount (the “Distribution Amount”), if any, by which its net income and realized capital gains (net of any realized capital losses of the Fund in such year or prior years) exceeds any non-capital loss of the Fund and certain adjustment amounts to be determined by TrusteeCo (including, for example, any amount retained by the Fund in respect of capital gains realized by it for purposes of claiming a capital gains refund in accordance with the Act), each as determined under the Act.

XXXXXXXXXX.

5. The words “XXXXXXXXXX ” and “XXXXXXXXXX ” are deleted from subparagraph 9 a) and the words “XXXXXXXXXX ” will be inserted between the words “InvestCo” and “from” in the last line of that subparagraph. The words “XXXXXXXXXX ” are deleted from subparagraph 9 b) and are replaced by the words “the attributes of which will be determined by InvestCo XXXXXXXXXX .” The word “will” is deleted from the last line of subparagraph 9 c). Hence subparagraphs 9 a), b) and c) will read as follows:

a) It is proposed that the trust document governing each Group 1 Fund and each New Fund will be amended to permit each Fund to issue more than one XXXXXXXXXX units, XXXXXXXXXX

b) It is proposed that the trust document governing each Group 2 Fund will be amended to permit XXXXXXXXXX units in addition to XXXXXXXXXX, the attributes of which will be determined by InvestCo XXXXXXXXXX

c) XXXXXXXXXX.

6. The last sentence of subparagraph 10 a) is deleted and the word “XXXXXXXXXX ” is deleted from the last line of subparagraph 10 b). Paragraph 10 will read as follows:

a) It is proposed that after the proposed amendments are made each Fund may issue additional XXXXXXXXXX units XXXXXXXXXX; however, initially, each Fund will offer XXXXXXXXXX units, being XXXXXXXXXX The main distinction between each XXXXXXXXXX units of a Fund will be XXXXXXXXXX.

b) The level of XXXXXXXXXX payable by the Fund will differ for eachXXXXXXXXXX units and will form part of the Fund’s expenses attributable to that XXXXXXXXXX units of the Fund.

XXXXXXXXXX.

7. In paragraph 11, the words “XXXXXXXXXX” will be inserted between the words “XXXXXXXXXX”. The words “to meet” will be deleted from the third sentence of this same paragraph and will be replaced by the words “XXXXXXXXXX”. Restated paragraph 11 will read as follows:

11. Pursuant to the trust document governing each Fund, units of one or more XXXXXXXXXX may be reclassified into units of another XXXXXXXXXX of the Fund (XXXXXXXXXX) upon meeting and ceasing to meet the Criteria of each XXXXXXXXXX as determined by InvestCo

XXXXXXXXXX

An investor will not be entitled to proceeds of disposition upon any reclassification and the reclassified units will not be redeemed, converted or canceled upon any reclassification.

Moreover, the only change to the attributes of the units will be XXXXXXXXXX. The rights, privileges and conditions attached to reclassified units, the method of calculating the net asset value and the distributions payable inrespect of each XXXXXXXXXX units, the nature of the investments underlying such units and the investment objectives and portfolios of each Fund will not be affected by the re- classification.

8. The federal account numbers for the following two funds as stated on Schedule A have been corrected as follows:

XXXXXXXXXX
XXXXXXXXXX

9. XXXXXXXXXX

We confirm that the changes to the facts and proposed transactions as described above will not affect the Ruling previously given and it will continue to be binding on the Department, subject to the conditions stated therein.

Yours truly,

Manager
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch