2006 Ruling 2006-0172201R3 - XXXXXXXXXX Single wing Butterfly Distrib.

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: Single wing butterfly distribution of property on a net asset basis.

XXXXXXXXXX 								2006-017220

XXXXXXXXXX, 2006

Dear XXXXXXXXXX:

Subject: XXXXXXXXXX. - Advance Income Tax Ruling Request

This is in reply to your letter of XXXXXXXXXX, as modified by your letter dated XXXXXXXXXX and your other correspondence, wherein you requested an advance income tax ruling on behalf of the above-noted taxpayers. You have advised us that to the best of your knowledge and that of the taxpayers involved none of the issues involved in this ruling request are:

(i) in an earlier return of the taxpayers or any related person;

(ii) being considered by a tax services office ("TSO") or taxation centre ("TC") in connection with a previously filed tax return by the taxpayers or any related person;

(iii) under objection by the taxpayers or any related person;

(iv) before the courts or, if a judgment has been issued, the time limit for appeal to a higher court has expired; or

(v) the subject of a ruling previously issued by the Income Tax Rulings Directorate.

The taxpayers have also represented that the proposed transactions described herein will not result in the taxpayers or any related person described herein being unable to pay its existing outstanding tax liabilities.

DEFINITIONS

In this letter, all monetary amounts are expressed in Canadian dollars unless otherwise indicated, and the following terms or expressions have the meaning specified:

(a) "Act" means the Income Tax Act, R.S.C. 1985 (5th Supp.) c.1, as amended from time to time and consolidated to the date of this letter, and unless otherwise expressly stated, every reference herein to a part, section or subsection, paragraph or subparagraph, clause or subclause is a reference to the relevant provision, and the Income Tax Act Regulations thereunder are referred to as the "Regulations";

(b) "adjusted cost base" ("ACB") has the meaning assigned by section 54;

(c) "agreed amount" means the amount agreed on by the transferor and transferee in respect of an eligible property in an election filed pursuant to subsection 85(1);

(d) "BCA" means the Business Corporations Act (XXXXXXXXXX);

(e) "BN" means the tax identification number assigned by the CRA to the particular entity;

(f) "Canadian-controlled private corporation" ("CCPC") has the meaning assigned by subsection 125(7);

(g) "capital property" has the meaning assigned by section 54;

(h) "capital dividend account" ("CDA") has the meaning assigned by subsection 89(1);

(i) "CRA" means the Canada Revenue Agency;

(j) "DC" means XXXXXXXXXX

(k) "depreciable property" has the meaning assigned in subsection 248(1);

(l) "distribution" has the meaning assigned by subsection 55(1);

(m) "eligible capital property" has the meaning assigned by section 54;

(n) "fair market value" ("FMV") means the highest price available in an open and unrestricted market, between informed prudent parties, acting at arm's length and with no compulsion to act, expressed in terms of cash;

(o) "forgiven amount" has the meaning assigned by subsections 80(1) and 80.01(1);

(p) "Nomineeco" means XXXXXXXXXX. as described in Paragraph 6;

(q) "paid-up capital" ("PUC") has the meaning assigned by subsection 89(1);

(r) "Paragraph" refers to a numbered paragraph in this advance income tax ruling;

(s) "private corporation" has the meaning assigned by subsection 89(1);

(t) "Proposed Transactions" means the proposed transactions described in Paragraphs 9 to 20;

(u) "refundable dividend tax on hand" ("RDTOH") has the meaning assigned by subsection 129(3);

(v) "series of transactions or events" includes the transactions or events referred to in subsection 248(10);

(w) "Sibling1" means XXXXXXXXXX an individual resident in Canada for the purposes of the Act;

(x) "Sibling2" means XXXXXXXXXX an individual resident in Canada for the purposes of the Act;

(y) "SIN" means social insurance number;

(z) "specified financial institution" ("SFI") has the meaning assigned by subsection 248(1);

(aa) "specified investment business" has the meaning assigned by subsection 89(1);

(bb) "stated capital" means stated capital as that expression is used in the BCA;

(cc) "taxable Canadian corporation" has the meaning assigned in subsection 89(1); and

(dd) "TC" means XXXXXXXXXX. as described in Paragraph 6.

FACTS

1. DC was formed on XXXXXXXXXX on the amalgamation (the "Amalgamation") of XXXXXXXXXX. ("Aco") and XXXXXXXXXX ("Bco") under the BCA. Both Aco and Bco dealt with the XXXXXXXXXX TSO and filed their returns at the XXXXXXXXXX TC.

2. Prior to the Amalgamation, each of Aco's and Bco's issued share capital consisted only of common shares owned equally by Sibling1 and Sibling2. Each of Sibling1 and Sibling2 co-operated in the decision making process of each such predecessor corporation such that the decision making process of each such predecessor corporation was not deadlocked. Sibling1 and Sibling2 are brothers.

3. DC is a CCPC and a taxable Canadian corporation. The authorized capital of DC consists of an unlimited number of common shares ("DC Common Shares"); an unlimited number of non-cumulative, voting, redeemable and retractable Class "A" Special Shares; and an unlimited number of non-cumulative non-voting, redeemable and retractable Class "B" Special Shares. The only shares of DC that are issued and outstanding are XXXXXXXXXX DC Common Shares that are held equally by Sibling1 and Sibling2 as capital property. Each DC Common Share has a paid-up capital and adjusted cost base of $XXXXXXXXXX per share. Each of Sibling1 and Sibling2 fully co-operate in the decision making process of DC such that the decision making process of DC is not deadlocked.

4. The assets of DC consist primarily of cash, prepaid expenses, rental deposits, two vehicles, certain miscellaneous equipment and two industrial use properties (i.e. land and buildings). One industrial property is located at XXXXXXXXXX ("Property1") and the other industrial property is located at XXXXXXXXXX ("Property2"). Although Property1 and Property2 have a similar size and use, the fair market value of Property1 is approximately $XXXXXXXXXX and the fair market value of Property2 is approximately $XXXXXXXXXX. The aggregate cost of the land and undepreciated capital cost of the building comprising Property1 is approximately $XXXXXXXXXX and the aggregate cost of the land and undepreciated capital cost of the building comprising Property2 is approximately $XXXXXXXXXX. Property1 and Property2 are each in a separate prescribed class pursuant to Regulation 1101(1ac). Neither Property1 nor Property2 is subject to a mortgage.

5. The liabilities of DC consist of accounts payable, income taxes payable, rental deposits relating to Property1 and Property2 and shareholder advances from Sibling1 and Sibling2 in the amounts of $XXXXXXXXXX and $XXXXXXXXXX, respectively, which are non-interest bearing and payable on demand. All of DC's liabilities are current liabilities.

6. Two new corporations ("TC" and "Nomineeco") were incorporated by Sibling2 under the BCA on XXXXXXXXXX, for the purposes of carrying out the Proposed Transactions. Each of TC and Nomineeco is a private corporation and a taxable Canadian corporation. None of TC or Nomineeco has carried on any business or engaged in any activity, acquired any assets or incurred any liabilities apart from the issuance of the shares as outlined below. In addition, Nomineeco will have no purpose or activity other than to acquire and hold the legal title (but not beneficial title) to Property2, as described in Paragraph 10, as nominee, agent and bare trustee for DC.

7. TC's authorized capital consists of: an unlimited number of common shares, of which 1 common share has been issued to Sibling2 from treasury pursuant to a cash subscription from Sibling2; an unlimited number of non-cumulative, voting, redeemable and retractable Class "A" special shares ("TC Class A Shares"), none of which have been issued; and an unlimited number of non-cumulative, non-voting, redeemable and retractable Class "B" special shares ("TC Class B Shares"), none of which have been issued.

8. Nomineeco's authorized capital consists of: an unlimited number of common shares, of which one common share has been issued to TC from treasury pursuant to a cash subscription from TC; and an unlimited number of non-cumulative, voting, redeemable and retractable Class "A" special shares ("Nomineeco Class A Shares"), none of which have been issued.

PROPOSED TRANSACTIONS

9. Sibling2 will transfer his XXXXXXXXXX DC Common Shares to TC. As consideration therefor, TC will issue a number of TC Class A Shares to Sibling2 having an aggregate redemption amount and fair market value equal to the fair market value of the XXXXXXXXXX DC Common Shares transferred to TC.

TC and Sibling2 will jointly elect, in prescribed form and within the time determined under subsection 85(6), for the provisions of subsection 85(1) to apply to the transfer of Sibling2's DC Common Shares to TC. The agreed amount specified in the election will be an amount that is equal to the aggregate ACB of the XXXXXXXXXX DC Common Shares to Sibling2 immediately before such transfer. For greater certainty, the agreed amount will not be less than the least of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii) and in each case, the agreed amount will not exceed the aggregate FMV of the DC Common Shares so transferred to TC.

For the purposes of the Act, the increase to the PUC of the TC Class A Shares that are issued as consideration for the XXXXXXXXXX DC Common Shares transferred to TC, will be $XXXXXXXXXX, which, for greater certainty is an amount that is equal to the amount of PUC attributable to the XXXXXXXXXX DC Common Shares for which such TC Class A Shares were issued.

10. DC will transfer its legal title (but not beneficial ownership) to Property2 to Nomineeco. DC will enter into a bare trust agreement with Nomineeco the terms of which will include the following:

(a) Nomineeco will hold legal title to Property2 as nominee, agent and bare trustee for the sole benefit and account of DC as principal and beneficial owner, and

(b) Nomineeco will not deal with the Property2 in any way, or execute any instrument, document or encumbrance in respect of Property2 without prior written consent or direction of DC.

For greater certainty, DC will be the only beneficiary of such bare trust arrangement and will remain the beneficial owner of such property and Nomineeco will deal with such property exclusively as directed by DC at all times. On the subsequent transfer of the beneficial ownership of Property2 by DC to TC as contemplated in Paragraph 14, a similar bare trust agreement between TC and Nomineeco will be executed as described in Paragraph 16.

11. DC will apply a portion of its existing cash to repay a portion of the shareholder advances owing to each of Sibling1 and Sibling2. However, such repayments will not be proportionate, in order to ensure the net fair market value of Property1 (after deducting the remaining shareholder advance owing by DC to Sibling1) and net fair market value of Property2 (after deducting the remaining shareholder advance owing by DC to Sibling2) will be approximately equal.

12. Immediately before the transfer of property described in Paragraph 14, the property owned by DC will be classified into the following three types of property for the purposes of the definition of "distribution" in subsection 55(1), as follows:

(a) cash or near-cash property, comprising all of the current assets of DC, including cash, prepaid expenses and rental deposits;

(b) investment property, comprising all of the assets of DC, other than cash or near-cash property, any income from which would, for purposes of the Act, be income from property or from a specified investment business; and

(c) business property, comprising all of the assets of DC, other than cash or near-cash property, any income from which would, for purposes of the Act, be income from an active business carried on by DC (other than a specified investment business) including any goodwill.

For greater certainty, for purposes of this distribution:

(d) tax accounts of DC, such as the balance of non-capital losses, net capital losses, RDTOH and/or CDA, if any, will not be considered property;

(e) no amount will be considered to be a liability unless it represents a true legal liability which is capable of quantification; and

(f) the amount of any deferred income tax will not be considered a liability for the purposes of the Proposed Transactions.

13. In determining the net FMV of each of the three types of property of DC immediately before the transfers of property described in Paragraph 14, the liabilities of DC will be allocated to, and will be deducted in the calculation of the net FMV of each type of property of DC in the following manner:

(a) current liabilities of DC (including the amounts owing under the shareholder advances) will be allocated to each cash or near-cash property in the proportion that the FMV of each such property is of the FMV of all cash or near-cash property owned by DC. The amount of current liabilities so allocated will not exceed the aggregate FMV of all cash or near-cash property of DC. To the extent that the total amount of current liabilities to be allocated to DC's cash or near cash property does exceed the total FMV of all DC's cash or near cash property, DC will be considered to have a negative amount of cash or near cash property;

(b) liabilities, other than current liabilities, of DC that relate to a particular property will be allocated to that particular property (and effectively to the type of property to which the particular property belongs) to the extent of its FMV. Any excess of such liabilities over the FMV of a particular property and liabilities that pertain to a particular type of property, but not to a particular property, will then be allocated to that particular type of property, but not in excess of the net FMV of such type of property. To the extent that the total amount of liabilities that are to be allocated to a particular type of property as described herein actually exceeds the total FMV of that type of property, DC will be considered to have a negative amount of that type of property; and

(c) if any liabilities remain after the allocations described in (a) and (b) are made ("excess unallocated liabilities"), such excess unallocated liabilities will then be allocated to the cash or near cash property, investment property and business property, if any, of DC, based on the relative net FMV of each type of property prior to the allocation of such excess unallocated liabilities. However, where DC is considered to have a negative amount of a type of property because of (a) or (b), for the purposes of allocating those remaining liabilities, the net FMV of that type of property will be deemed to be nil resulting in none of those excess unallocated liabilities being allocated to that type of property.

Based on the types of property classifications described in Paragraph 12, and after the allocation of DC's liabilities described in this Paragraph, it is anticipated that DC will only have investment property at the time of the transfers of property described in Paragraph 14.

14. DC will transfer a pro rata portion (i.e. 50%) of each of the three types of property of DC to TC, to the extent it owns property of that type, as determined in accordance with Paragraphs 12 and 13, including for greater certainty, Property2 and one of the two vehicles owned by DC. As consideration for the property transferred by DC, TC will assume an appropriate amount of DC's existing liabilities (including for greater certainty the amount of the shareholder advance owed to Sibling2 by DC) and TC will issue to DC a number of its TC Class B Shares having an aggregate redemption amount and aggregate FMV equal to the amount by which the aggregate FMV of the particular properties so transferred to TC exceeds the amount of DC's liabilities assumed by TC.

Immediately following the property transfers and liability assumptions described in this Paragraph, the net FMV of each type of property so transferred to TC, will approximate that proportion of the net FMV of all property of DC of that type determined immediately before such transfer that

(a) the aggregate FMV, immediately before the transfer, of all of the shares of DC owned by TC at that time;

is of

(b) the aggregate FMV, immediately before the transfer, of all of the issued and outstanding shares of DC at that time.

For the purposes of this Paragraph the expression "approximate that proportion" means that the discrepancy of that proportion, if any, will not exceed one percent (1%), determined as a percentage of the net fair market value of each type of property which TC will receive as compared to what TC would have received had such corporation received its appropriate pro rata share of the net fair market value of that type of property.

15. DC and TC, will jointly elect, in prescribed form and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfer of each eligible property transferred by DC to TC as described in Paragraph 14. The agreed amount in respect of each eligible property so transferred will be as follows:

(a) in the case of capital property (other than depreciable property of a prescribed class) and inventory, an amount not less than the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii);

(b) in the case of depreciable property of a prescribed class, an amount not less than the least of the amounts described in subparagraphs 85(1)(e)(i), (ii) and (iii); and

(c) in the case of eligible capital property, an amount not less than the least of the amounts described in subparagraphs 85(1)(d)(i), (ii) and (iii).

In each case, the agreed amount will not exceed the FMV of the respective property, nor will it be less than the amount permitted under paragraph 85(1)(b). The amount of liabilities to be allocated to the property that is the subject of an election under subsection 85(1) will not exceed the total of the agreed amounts elected for that property. The amount of liabilities to be allocated to the property that is not the subject of an election under subsection 85(1) will not exceed the FMV of any such property.

For the purposes of the Act, the increase to the PUC of the TC Class B Shares issued to DC as consideration for the property transferred by DC to TC will not exceed the aggregate cost of such property to TC, as determined pursuant to subsection 85(1) where applicable, less the aggregate amount of DC's liabilities assumed by TC for such property.

16. As mentioned, on the distribution of property described in Paragraph 14, TC will receive beneficial ownership of Property2, legal title of which has been transferred to Nomineeco, as described in Paragraph 10.

Accordingly, immediately prior to the transfer of the beneficial ownership of the Property2 by DC to TC, TC will enter into a bare trust agreement with Nomineeco similar to the bare trust agreement described in Paragraph 10, the terms of which will include that Nomineeco will hold legal title (and not beneficial ownership) to Property2 as nominee, agent and bare trustee for the sole benefit and account of TC as principal and beneficial owner.

17. TC will redeem its TC Class B Shares, that were issued to DC as described in Paragraph 14, for their FMV. TC will pay the aggregate redemption price for these TC Class B Shares by issuing to DC a non-interest bearing demand promissory note (the "TC Note") having a principal amount and FMV equal to the aggregate FMV of the TC Class B Shares so redeemed and DC will accept the TC Note as full payment of the purchase price of such shares.

18. DC will purchase for cancellation its XXXXXXXXXX DC Common Shares held by TC for their FMV. DC will pay the aggregate purchase price for these DC Common Shares by issuing to TC a non-interest bearing demand promissory note (the "DC Note") having a principal amount and FMV equal to the aggregate FMV of the DC Common Shares so purchased for cancellation and TC will accept the DC Note as full payment of the purchase price of such shares.

19. The principal amount owing by TC to DC under the TC Note will be set-off against the principal amount owing by DC to TC under the DC Note such that each such note will be cancelled in full satisfaction of the obligations under each such note.

20. Sibling2 may gift the one common share of TC to his adult child, who is an individual resident in Canada for the purposes of the Act. Sibling2 will continue to control TC through his ownership of the TC Class A Shares.

ADDITIONAL INFORMATION

21. The Proposed Transactions described above will occur in the order presented unless otherwise indicated, with the exception of filing the applicable election forms, as described in Paragraphs 9 and 15, which will be filed within the applicable due date following the completion of the Proposed Transactions.

22. After the Proposed Transactions are completed, each of DC and TC will select a day in which its first taxation year will end. It is expected that DC and TC will not have any taxable income or RDTOH in its first taxation year.

23. No property has been acquired by DC or will become property of DC and no liabilities have been or will be incurred by DC in contemplation of and before the Proposed Transactions, except in the ordinary course of business, or as otherwise described above. Neither DC nor TC has any specific intentions of disposing of any property, the fair market value of which, at any time after the distribution, represented more than 10% of the property owned by such corporation, as part of a series of transactions or events that includes the Proposed Transactions. For greater certainty, DC will not dispose of Property1 and TC will not dispose of Property2 as part of a series of transactions or events that includes the Proposed Transactions.

24. Except as otherwise described herein, neither Sibling1, Sibling2 or TC will dispose of any shares of any corporation described herein as part of a series of transactions or events that includes the Proposed Transactions.

25. Neither DC, TC nor Nomineeco is, or will be, a specified financial institution or a corporation described in any of paragraphs (a) to (f) of the definition of "financial intermediary corporation' in subsection 191(1) at any time during a series of transactions or events that includes the Proposed Transactions described herein.

26. None of the shares of DC, TC or Nomineeco (including the shares to be issued as described in the Proposed Transactions) is or will be at any time during a series of transactions or events that includes the Proposed Transactions described herein:

(a) the subject of any undertaking that is a guarantee agreement;

(b) a share that is issued or acquired as part of a transaction, event or series of transactions or events of the type described in subsection 112(2.5); or

(c) the subject of a dividend rental arrangement referred to in subsection 112(2.3).

27. Each of TC and DC will have the financial capacity to honour, upon presentation for payment, the amount payable under its promissory note as described in Paragraph 17 and 18, as the case may be.

PURPOSE OF THE PROPOSED TRANSACTIONS

28. Sibling1 and Sibling2 previously carried on a business together through Aco, which business was wound down, leaving Aco with a substantial cash balance. The purpose of the Amalgamation was to permit Aco's cash to be applied to reduce and equalize the shareholder advances, which represented money, previously lent to Bco by its shareholders. Following the Amalgamation, for estate planning purposes, Sibling1 and Sibling2 wish to separate their respective interests in Property1 and Property2 that were previously owned by Bco, such that Sibling1 will acquire sole ownership of DC (and indirectly of Property1), and Sibling2 will acquire sole ownership of TC (and indirectly Property2).

RULINGS

Provided that the preceding statements constitute a complete and accurate disclosure of all of the relevant facts, proposed transactions and the purpose of the Proposed Transactions, and provided that the Proposed Transactions are completed in the manner described above, our rulings are as set forth below.

A. The transfer by DC of its legal title to Property2 to Nomineeco described in Paragraph 10 will not constitute a disposition for the purposes of the Act provided Nomineeco can reasonably be considered to act as agent for DC and ultimately TC as described in Paragraph 16, with respect to all dealings with Property2.

B. Subject to the application of subsection 69(11), provided the appropriate joint elections are filed in the prescribed form and manner within the time limits specified in subsection 85(6) and provided that each particular property so transferred is an eligible property in respect of which shares have been issued as full or partial consideration therefore, the provisions of subsection 85(1) will apply to:

(a) the transfer of the XXXXXXXXXX DC Common Shares by Sibling2 to TC as described in Paragraph 9; and

(b) the transfer of each eligible property by DC to TC as described in Paragraph 14;

such that the agreed amount in respect of each such transfer shall be deemed to be the transferor's proceeds of disposition and the transferee's cost amount thereof pursuant to paragraph 85(1)(a) and that paragraph 85(1)(e.2) will not apply to the transfers referred to herein.

C. As a result of the redemption by TC of the TC Class B Shares described in Paragraph 17 and the purchase for cancellation by DC of the XXXXXXXXXX DC Common Shares described in Paragraph 18, by virtue of subsection 84(3);

(a) TC will be deemed to have paid, and DC will be deemed to have received, a taxable dividend equal to the amount by which the amount paid by TC in respect of its redemption of the TC Class B Shares owned by DC exceeds the paid-up capital of such class of shares immediately before the redemption; and

(b) DC will be deemed to have paid, and TC will be deemed to have received, a taxable dividend equal to the amount by which the amount paid by DC in respect of the repurchase of the XXXXXXXXXX DC Common Shares owned by TC exceeds the paid-up capital attributable to such DC Common Shares immediately before the purchase for cancellation; and

(c) The taxable dividends described in described in (a) and (b) above:

(i) will be included in computing the income, pursuant to subsection 82(1) and paragraph 12(1)(j), of the person deemed to have received such dividend;

(ii) will be deductible by the recipient pursuant to subsection 112(1) in computing its taxable income in the year in which such a dividend is deemed to have been received, and, for greater certainty, such deduction will not be prohibited by subsections 112(2.1), (2.2), (2.3) or (2.4);

(iii) will be excluded in determining the POD to the recipient of the shares so redeemed, purchased or cancelled pursuant to paragraph (j) of the definition of "proceeds of disposition" in section 54;

(iv) will, by virtue of subsection 112(3), reduce the loss, if any, in respect of the disposition of the shares on which the dividend is deemed to be received;

(v) will not be subject to tax under Part IV except to the extent that such payer corporation is entitled to a dividend refund for its taxation year in which it paid such dividend; and

(vi) will not be subject to tax under Part IV.1 or VI.1.

D. Provided that, as part of a series of transactions or events that includes the Proposed Transactions described above, there is not:

(a) an acquisition of property in circumstances described in paragraph 55(3.1)(a);

(b) a disposition of property in the circumstances described in subparagraph 55(3.1)(b)(i);

(c) an acquisition of control in the circumstances described in subparagraph 55(3.1)(b)(ii);

(d) an acquisition of a share in the circumstances described in subparagraph 55(3.1)(b)(iii); or

(e) an acquisition of property in the circumstances described in subparagraph 55(3.1)(c) or 55(3.1)(d);

which has not been described herein, then by virtue of paragraph 55(3)(b), subsection 55(2) will not apply to the taxable dividends referred to in Ruling C and, for greater certainty, subsection 55(3.1) will not apply to deny the exemption under paragraph 55(3)(b).

E. The set-off and cancellation of the principal amounts owing by TC on the TC Note with the principal amount owing by DC to TC on the DC Note as described in Paragraph 19 will not result in a "forgiven amount" within the meaning of either subsection 80(1) or section 80.01. In addition, neither DC nor TC will otherwise realize any gain or loss as a result of such set-off and cancellation.

F. The provisions of subsections 15(1), 56(2), 69(1), 69(4) and 246(1) will not apply to any of the Proposed Transactions, in and by themselves.

G. The provisions of subsection 245(2) will not be applied as a result of the Proposed Transactions, in and by themselves, to re-determine the tax consequences confirmed in the rulings given above.

The above rulings are subject to the limitations and qualifications set out in Information Circular 70-6R5 dated May 17, 2002 and are binding on CRA provided that the Proposed Transactions are completed by XXXXXXXXXX. The above rulings are based on the law as it presently reads and do not take into account any proposed amendments to the Act and the Regulations which, if enacted into law, could have an effect on the rulings provided herein.

Unless otherwise confirmed in the above rulings, nothing in this letter should be construed as implying that the CRA has confirmed, reviewed or has made any determination in respect of:

(a) the paid-up capital of any share or the adjusted cost base or fair market value of any property referred to herein; or

(b) the balance of CDA or RDTOH of any corporation;

(c) any other tax consequence relating to the facts, Proposed Transactions or any transaction or event taking place either prior to the Proposed Transactions or subsequent to the Proposed Transactions, whether described in this letter or not, other than those specifically described in the rulings given above, including whether any of the Proposed Transactions would also be included in a series of transactions or events that include other transactions or events that are not described in this letter.

Yours truly,

XXXXXXXXXX
Section Manager
for Division Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch