1999 Ruling 9931593 - INTEREST DEDUCTIBILITY

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: Amendment to facts and proposed transactions.

Position: Okay.

Reasons: Does not affect the ruling given (file # 992492).

XXXXXXXXXX 993159

Attention: XXXXXXXXXX

XXXXXXXXXX, 1999

Dear Madam:

Re: Advance Income Tax Ruling
XXXXXXXXXX

This is in response to your letter of XXXXXXXXXX, requesting amendments to the facts and proposed transactions to the advance income tax ruling (File # 992492) issued to your firm on behalf of the above-noted taxpayers on XXXXXXXXXX, 1999.

In accordance with your request, the Ruling is amended to reflect the following:

1. Paragraph 5 is amended as follows:

ACO reported a gain of $XXXXXXXXXX in XXXXXXXXXX from the disposition of its XXXXXXXXXX % interest in XXXXXXXXXX ("FCO") by way of a share redemption. The remaining shareholder of FCO, XXXXXXXXXX ("GCO"), a non-resident corporation, did not deal at arm's length with ACO. The disposition of FCO was part of ECO's disposition of its XXXXXXXXXX business to an arm's length purchaser, XXXXXXXXXX ("HCO") pursuant to an agreement entered into on XXXXXXXXXX. The remaining shares of FCO were then disposed of by GCO to HCO on XXXXXXXXXX. The shares of XXXXXXXXXX, the parent of GCO, were sold to HCO on XXXXXXXXXX, along with all of the remaining assets and shares associated with the XXXXXXXXXX business.

2. Paragraph 7 is amended as follows:

ACO will borrow sufficient funds in order to pay a dividend of up to $XXXXXXXXXX to CCO.

3. Paragraph 8 is amended as follows:

ACO will use the borrowed funds referred to in paragraph 7 above to pay a dividend of the same amount to CCO.

4. Paragraph 9 is amended as follows:

ACO's ultimate parent, ECO, wishes to repatriate ACO's retained earnings.

We confirm that the above amendments will not affect the rulings given and that they will continue to be binding on the Agency in the manner set forth in the Ruling.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings
and Interpretations Directorate
Policy and Legislation Branch