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.
Principal Issues: Supplementary ruling to 2011-040303
XXXXXXXXXX 2011-041774
XXXXXXXXXX
XXXXXXXXXX, 2011
Dear XXXXXXXXXX
Re: Supplementary Advance Income Tax Ruling
XXXXXXXXXX
Business Number XXXXXXXXXX , XXXXXXXXXX Tax centre
We are writing in response to the email correspondence we had with XXXXXXXXXX on XXXXXXXXXX in which he requested that changes be made to the advance income tax ruling 2011-040303 dated XXXXXXXXXX (the "Ruling").
Further to the review of the aforementioned email correspondence, the Ruling is amended as follows:
1. The definition of "Amalco Class A preferred shares" in paragraph 2.1 of the Ruling is replaced by the following definition:
2.1 "Amalco Class A preferred shares" means the Class A preferred shares that the Estate will hold in Amalco further to the Amalgamation.
2. The definition of "Class A Redemption Amount" in paragraph 14 of the Ruling is replaced by the following definition:
14. "Class A Redemption Amount" at any time means the amount determined by dividing the excess of the FMV of Transferred Shares on the Effective Date over the principal amount of the Promissory Note by the aggregate number of Issued Shares issued by Newco to the Estate upon completion of the Pipeline Transaction;
3. The definition of "Issued Share" in paragraph 31 of the Ruling is replaced by the following definition:
31. "Issued Share" means one of the Class A preferred shares to be issued by Newco to the Estate in partial consideration for the Transferred Shares, the aggregate of which is referred to as the "Issued Shares";
4. The definition of the term "Promissory Note" in paragraph 43 of the Ruling is replaced by the following definition:
43. "Promissory Note" means the promissory note having a principal amount of $XXXXXXXXXX to be issued by Newco to the Estate in partial consideration for the Transferred Shares;
5. Paragraph 90 of the Ruling is replaced by the following paragraph:
90. "On XXXXXXXXXX , the directors of Opco declared a dividend in the amount of $XXXXXXXXXX on the XXXXXXXXXX common shares that the Estate held in Opco. The dividend was paid by the issuance of a promissory note equal to $XXXXXXXXXX payable to the Estate, which was extinguished by way of legal set-off against the Estate Debt, and the payment of a dividend in kind equal to $XXXXXXXXXX payable to the Estate."
6. Paragraph 92 of the Ruling is replaced by the following paragraph:
92. "On XXXXXXXXXX , Opco proceeded with the Share Redemption and redeemed the Redeemed Shares for an amount equal to their aggregate redemption value of $XXXXXXXXXX . The amount of the redemption proceeds is to be repaid in cash or in kind in the next XXXXXXXXXX days.
7. Paragraph 102 of the Ruling is replaced by the following paragraph:
102. "The principal amount of the Promissory Note will be equal to the Hard ACB of the Transferred Shares less an amount of $XXXXXXXXXX , which is the amount to be added to the PUC in respect of the Issued Shares.
8. Paragraph 105 of the Ruling is replaced by the following paragraph:
105. "Further to the Estate's assignment of the Transferred Shares to Newco, the Estate will hold: (i) XXXXXXXXXX common shares in Newco, (ii) the Issued Shares issued and outstanding at that time and (ii) the Promissory Note.
9. The following paragraph is added after paragraph 106 of the Ruling:
106.1 "A portion of the Issued Shares issued and outstanding at that time may be redeemed by Newco."
10. The second sentence of paragraph 108 of the Ruling is replaced by the following sentence:
108. "All the property and all the liabilities of the Predecessor Corporations immediately before the Amalgamation will become the property and liabilities of Amalco. In addition, the Estate will receive one common share of Amalco for each common share that it holds in Newco immediately before the Amalgamation, and one Amalco Class A preferred share for each Issued Share that it holds immediately before the Amalgamation.
We confirm that the changes described above will not affect the Ruling, which will continue to be binding on the CRA within the limitations set out therein.
Yours truly,
XXXXXXXXXX
For Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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