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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Minor changes to ruling
Position: Supplemental ruling provided
Reasons: Ruling position remains unchanged
XXXXXXXXXX 2003-003570
XXXXXXXXXX, 2003
Dear XXXXXXXXXX:
Re: XXXXXXXXXX
Advance Income Tax Ruling
This is in reply to your letter of XXXXXXXXXX wherein you advised us of certain changes to the proposed transactions described in advance income tax ruling 2002-016132 dated XXXXXXXXXX, 2002 (the "Ruling"). We understand that, to the best of your knowledge, none of the proposed transactions has been implemented and the facts described in the Ruling remain unchanged.
Changes to Proposed Transactions
The proposed transactions are changed as follows:
Paragraph 9
In addition to common and Class "A" shares, Subco1's authorized share capital will include Class "B" voting non-participating preferred shares bearing a discretionary non-cumulative dividend of up to XXXXXXXXXX% per month and redeemable for an amount equal to the fair market value of the amount received by the corporation as consideration for the share.
Upon incorporation, DC will subscribe for XXXXXXXXXX Class "B" shares for $XXXXXXXXXX per share and XXXXXXXXXX common shares for $XXXXXXXXXX per share.
Paragraph 15
DC will sell all of its properties to TC1 and Subco2 with the exception of the XXXXXXXXXX Class B shares issued in paragraph 9. The sales will be made on the same basis described in paragraph 15 of the Ruling.
Paragraph 19
On XXXXXXXXXX, DC will not be liquidated. Rather, the paid-up capital of the Class "F" shares will be increased by an amount equal to DC's capital dividend account at that time. DC will elect, pursuant to subsection 83(2), in prescribed manner and form, that the full amount of any resulting dividend pursuant to subsection 84(1) be deemed to be a capital dividend. Immediately thereafter, all of the issued and outstanding Class "F" shares will be redeemed by DC and XXXXXXXXXX common shares will be purchased by DC for cancellation. In connection with these corporate transactions, DC will distribute to TC1 the excess of the TC1 Consideration Notes and the TC1 Redemption Notes over the fair market value of 1 common share of DC and to TC2 the excess of the TC2 Consideration Notes and the TC2 Redemption Notes over the fair market value of 1 common share of DC.
On XXXXXXXXXX, TC1 and TC2 will, by special resolution, resolve to liquidate and dissolve DC under the applicable provisions of the BCA. In connection with the winding-up of DC, DC will distribute to TC1 the remainder of the TC1 Consideration Notes and the TC1 Redemption Notes and XXXXXXXXXX Class "B" shares of Subco1 and DC will distribute to TC2 the remainder of the TC2 Consideration Notes and the TC2 Redemption Notes and XXXXXXXXXX Class "B" shares of Subco1. As a result of the assignment and distribution of the remainder of the TC1 Consideration Notes and the TC1 Redemption Notes and the assignment and distribution of the remainder of the TC1 Consideration Notes and the TC1 Redemption Notes, the obligations under each such promissory note will be cancelled. In due course, DC will file tax returns and articles of dissolution.
Paragraph 20
Paragraph 20 is deleted.
Purpose of Changes to Proposed Transactions
The purpose of the changes to the proposed transactions described above is to provide TC1 and Subco2 relief from the payment of tax under the XXXXXXXXXX.
Confirmation
We hereby confirm that the rulings given in the Ruling will continue to be binding on the Canada Customs and Revenue Agency, subject to the conditions set out therein and in accordance with the practice outlined in Information Circular 70-6R5, dated May 17, 2002, provided that:
(a) the proposed transactions other than the liquidation and dissolution of DC are completed on or before XXXXXXXXXX; and
(b) the liquidation and dissolution of DC are completed before XXXXXXXXXX.
Yours truly,
XXXXXXXXXX
Section Manager
for Division Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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© Her Majesty the Queen in Right of Canada, 2003
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