2003 Income Tax Severed Letter 2003-0050031 - AMENDED DSU PLAN

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:

Will certain amendments to a DSU Plan affect its status as a plan that complies with paragraph 6801(d)?

Position: No

Reasons:

The Plan continues to comply with the requirements of paragraph 6801(d) of the Regulations..

XXXXXXXXXX 2003-005003

XXXXXXXXXX, 2003

Dear XXXXXXXXXX:

Re: Supplemental Income Tax Ruling: XXXXXXXXXX

This is in reply to your letter of XXXXXXXXXX and is supplemental to our advance income tax ruling number 2003-003372 dated XXXXXXXXXX, 2003 (the "Ruling").

As a result of your letter wherein you have indicated that changes will be made to the proposed Plan, the following changes are made to the Ruling:

1. In paragraph 17 of the Ruling, the figure $XXXXXXXXXX as a qualifying earnings level for Plan participation is replaced by $XXXXXXXXXX.

2. In paragraph 18 of the Ruling the final sentence is deleted and replaced with the following: "A Participant may choose to defer XXXXXXXXXX% or less of the immediately preceding year's total compensation ("Deferred Compensation")."

3. In paragraph 23 of the Ruling, the first sentence is deleted and replaced by the following: "To entice eligible employees to participate in the Plan and to encourage Participants to remain in the employ of the Group, whether or not an employee has elected to become a Participant, the Group may augment that employee's Compensation ("Additional Compensation")."

A new paragraph 23.1 is added to the Ruling which will state as follows: "For XXXXXXXXXX only, employees of the Group who are participants in Holdco's deferred share unit plan (the "Holdco Plan") may submit an election prior to XXXXXXXXXX to have their XXXXXXXXXX Holdco Plan DSUs relating to a special bonus ("Holdco Plan Special Bonus DSUs") credited to the individual's Notional Account under the Plan as described in 28 below rather than under the Holdco Plan. Holdco Plan Special Bonus DSUs will be awarded based on the employee's net income for the XXXXXXXXXX month period ended XXXXXXXXXX. These Holdco Plan Special Bonus DSUs will be issued based on the value of shares of Controlco on XXXXXXXXXX."

4. In paragraph 35 of the Ruling, the second sentence is deleted and replaced by the following: "The amount payable to a Participant will depend on the value of the vested DSUs in the Participant's Notional Account(s), determined on the last day of the month preceding the Payment Date(s) as determined in paragraphs 33 and 34, above."

Notwithstanding the above changes, we confirm that the Ruling will continue to be binding on the Canada Customs and Revenue Agency in the manner described therein, provided the proposed Plan is implemented by XXXXXXXXXX.

Yours truly,

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