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.
XXXXXXXXXX
XXXXXXXXXX 973244
Attention: XXXXXXXXXX
XXXXXXXXXX, 1998
Dear Sirs:
Re: Supplementary advance Income Tax Ruling Request
XXXXXXXXXX - 90426
We are writing in reply to your letter dated XXXXXXXXXX, in which you requested a change for purposes of clarification to paragraph 10 of the above noted ruling letter dated XXXXXXXXXX, 1997 and requested confirmation that this change will not affect the previous rulings given.
The change is to add to the beginning of the third sentence: "Subject to the increases in the Distribution Percentage in XXXXXXXXXX as set out in the Deed of Arrangement". As a result of this request, paragraph 10 will be amended as follows:
10. In no event will the annual distribution be less than the previous year's distribution. Where it is determined that the amount to be distributed based on the formula is less than the previous year's distribution, the current year's distribution will be adjusted to the amount of the prior year's distribution. Subject to the increases in the Distribution Percentage in XXXXXXXXXX as set out in the Deed of Arrangement, the new system will also provide that the current year's distribution cannot exceed XXXXXXXXXX% of the previous year's distribution. The Deed of Arrangement will also limit income distributions in any one year to the amount of cash dividends the Trust receives from Holding Company in that year, ensuring there will be no encroachment on capital of the Trust on behalf of the Income Beneficiaries. These provisions will have the effect of providing the Income Beneficiaries with a stable annual income, and ensuring some growth to the Capital Beneficiaries. In determining the appropriate Distribution Percentage (XXXXXXXXXX%) for the years XXXXXXXXXX and onward, various asset mixes were tested and compared with the results using a rigid asset mix. Rates of return for the last 10 years were used in these projections. Provided these rates of return are a reasonable indication of future rates of return, the new formula will provide an after-tax increase for the Capital Beneficiaries and should also provide a slightly greater after-tax return for the Income Beneficiaries over the longer term.
We confirm that this change to paragraph 10 will not affect the rulings previously given and that they will continue to be binding on the Department, subject to the conditions stated in the ruling letter.
Yours truly,
A/Section Chief
Trusts Section
Resources, Partnerships and
Trusts Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1997
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1997
Email this Content