2001 Ruling 2000-0039873 - Sublease of XXXXXXXXXX .

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 Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: (a) Whether the sublease is a sale/purchase or lease transaction? (b) Whether section 16.1 of the Act would apply, given the assets under the sublease are owned by the tax-exempt entities? (c) Whether the activities in respect of production of XXXXXXXXXX would qualify for the M&P profits deductions under section 125.1 of the Act? (d) Whether paragraph 12(1)(x) of the Act would apply to XXXXXXXXXX cash receipts by the Partnership for assuming certain contingent liabilities (re unfunded supplemental pension and other retirement benefit liabilities)? (e) Whether the initial lump-sum payment at the beginning of the term of the sublease would be considered as a pre-paid rental or an acquisition cost of a leasehold interest? (f) Whether the annual rental amounts which are subject to prospective change after the first five years but before the initial term (XXXXXXXXXX ) is expired, pending on any additional contingent liability (XXXXXXXXXX ) established under an independent review of such contingent liability, would be considered as contingent amounts for the purposes of paragraphs 18(1)(a) and (e) of the Act? (g) Whether the costs in respect of lay-up and shut-down of XXXXXXXXXX would be deductible in computing income and are not precluded from deduction by virtue of paragraph 18(1)(a) of (b) of the Act? (h) What would be the first renewal term of the sublease with an automatic renewal feature (i.e., whether it is one year or XXXXXXXXXX years term) for the purposes of Schedule III of the Regulations? (i) Whether the additional rent, which is defined as any amounts payable under the sublease agreement in additional to those rents referred to in (e) and (f) above and the supplemental rent which refers to the amount and price of XXXXXXXXXX produced, would be deductible in computing income? (j) Would the normalcy test under subparagraph (b)(iii) and paragraph (c) of the definition of "cost of labour" in section 5204 of the Regulations in respect of the fees to be paid by the Partnership to a company that would provide the services of operating the XXXXXXXXXX to the Partnership?

Position: (a) Lease Transaction (b) No (c) Yes (d) Yes (e) Leasehold Interest Costs (f) No (g) Yes (h) XXXXXXXXXX Years (i) Yes or No (j) No

Reasons:

(a) The terms and conditions of the sublease indicate that they are a lease transaction in legal form and legal substance, which is consistent with the case of Construction Berou Inc. XXXXXXXXXX There is no option to purchase. Furthermore, the risk and obligations of XXXXXXXXXX will substantially remain with the sublessor.

(b) There would be no election to be made under section 16.1 of the Act and therefore this section does not apply in the case at hand.

(c) The activities of "XXXXXXXXXX " are specifically excluded from the "qualified activities" under the definition of the later term in section 5202 of the Regulations. However, pursuant to XXXXXXXXXX of the Act, XXXXXXXXXX is deemed to be manufacturing and processing for the purpose of description (A) in XXXXXXXXXX of the Act and for the purpose of applying the Regulations (other than section 5201 of the Regulations) to that subsection other than the description of (B). It is arguable that the specific exclusion provision in section 5202 of the Regulations could not be overridden by the general inclusion provision in XXXXXXXXXX of the Act. However, based on the intent of the provisions XXXXXXXXXX , the better view is that XXXXXXXXXX of the Act overrides the exclusion provision in section 5202 of the Regulations.

(d) The cash receipts by the Partnership for assuming the contingent liabilities are unconditionally and absolutely received by the Partnership as an inducement, assistance or contribution in respect of future outlays or expenses regarding these contingent liabilities. Therefore, such cash receipts should be included in the Partnership's income by virtue of paragraph 12(1)(x) of the Act. This position is consistent with the file #7-953035 dated February 14, 1996.

(e) The taxpayer could not demonstrate that the annual rentals to be paid under the sublease agreement are substantially lower than the fair market rentals. Furthermore, this initial lease payment is non-refundable in case of early termination of the sublease. The amount is subject to various adjustments at the closing date, but, many of these adjustment factors have nothing to do with annual use of the facilities under the sublease. Therefore, the better view is that this initial lease payment is considered as the acquisition cost of a leasehold interest. XXXXXXXXXX .

(f) The amounts would be paid once and for all even though the future amounts could be adjusted. None of the amounts would be refundable in any case. The Partnership would not have any obligations to XXXXXXXXXX - such obligations remain the responsibility of the sublessor. Therefore, it is our view that they are deductible in computing income.

(g) The lay-up costs are more or less maintenance costs. Therefore, they are deductible in computing income. It is arguable that the shut-down costs are only to be incurred after the production of XXXXXXXXXX ceases, therefore, such costs would be precluded from deduction by virtue of paragraph 18(1)(a) or (b). These costs are incurred mainly to take apart and to XXXXXXXXXX and not to bring into existence a valuable property. Furthermore, these costs are incurred as required by the XXXXXXXXXX By analogy to the cases of Poulin, Selig and Powell Rouyn Gold Mines Limited, the better view is that the shutdown costs are deductible in computing income.

(h) With the feature of automatic renewals (i.e., for a series of renewals with the first one for a one-year term and the rest two-year terms), the first renewal term would be considered as XXXXXXXXXX years. XXXXXXXXXX . The representative of the taxpayers has agreed to delete this automatic renewal feature. As a result, the first renewal term will be considered as one year.

(i) The definition of additional rent is so broad that whether it would be deductible or not depends on the question of the facts. We refuse to rule on it and such ruling request has been withdrawn.

(j) By analogy to the cases of Levi Strauss of Canada, Canadian Clyde Tube Forgings and W.E. Roth Construction, and based on the facts in the case at hand, it is our view that the normalcy test would not be met. The proposed transactions have been restructured so that the general partner of the Partnership will hire the employees on behalf of the Partnership instead of having another company providing the services to the Partnership.

XXXXXXXXXX 2000-003987

XXXXXXXXXX, 2001

Dear XXXXXXXXXX:

Re: Advance Income Tax Ruling
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

This is in reply to your letter of XXXXXXXXXX, wherein you have requested an advance income tax ruling on behalf of the above-noted trust, partnership and corporations. We acknowledge our subsequent telephone conversations (XXXXXXXXXX) and your additional information and documents provided to us.

We understand that to the best of your knowledge and that of the taxpayers involved, none of the issues involved in the ruling request is:

(i) dealt with in an earlier return of the taxpayers or a related person;

(ii) being considered by a Tax Services Office or Taxation Centre in connection with a previously filed tax return of the taxpayers or a related person;

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

(iv) before the courts or, if a judgment has been issued, the time limit for appeal to a higher court has not expired; or

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

We also understand that the above-noted trust and corporations file their income tax returns at the following Tax Centres and are served by the following Tax Services Offices, and their account numbers are as follows:

Account No. Tax Services Tax Centre

Office

XXXXXXXXXX

Our understanding of the facts, proposed transactions and the purpose of the proposed transactions is as follows:

Definitions

Unless otherwise stated, the terms and expressions used herein are defined as follows:

"A Co." means XXXXXXXXXX.

"Act" means the Income Tax Act R.S.C. 1985 (5th Supp.), c.1, as amended to the date hereof.

"Additional Rent" means any amounts, in addition to the Initial Lease Payment, Base Rent and Supplemental Rent, which become due and payable by the Partnership pursuant to the Sublease and Lease under the Agreement T, whether payable to K Co. or otherwise, as described in 24 below.

"Aggregate Contributions" means, with respect to a particular Limited Partner at any time, the aggregate of such Limited Partner's initial capital account at such time and equity contributions made by such Limited Partner prior to such time less any return of capital prior to such time.

"Agreement S" means the Master Agreement of XXXXXXXXXX entered into among K Co., A Co. and the Partnership, as described in 16 below.

"Agreement T" means the Lease Agreement to be entered into among A Co., K Co., the Partnership and the Subsidiaries other than Q Co., whereby part of the Leased Premises (the Surrendered Land) will be leased by N Co. to the Partnership and the remaining part of the Leased Premises (excluding the Surrendered Land) will be subleased by K Co. to the Partnership as described in 21 to 33 below.

"Agreement U" means the XXXXXXXXXX Limited Partnership Agreement of XXXXXXXXXX, which will be amended and restated as described in 17 to 20 below.

"Allocation Percentage" with respect to a Partner means the allocation ratio used in allocating to the Partner its portion of the Tax Income and Tax Loss of the Partnership as described in 19 below.

"Amended Agreement U" means the amended and restated Agreement U.

"Base Rent" means the basic fixed annual rental payable by the Partnership pursuant to the Agreement T as described in 24 and 27 below.

"B Co." means XXXXXXXXXX.

"Benefit Adjustment Amount" means the present value amount of the assumed Supplemental Pension Liability and the Benefit Liability as described in 48 below.

"Benefit Liability" means the accrued liability of K Co. as at the Closing in respect of past service prior to the Closing of those K Co. employees who will be employed by the Partnership, for accrued unpaid vacation days, accrued sick leave, retirement bonuses and all post-retirement and post-employment medical, hospitalization, welfare, dental, drug, disability, life insurance, and other benefits pertaining to those employees.

"Canadian partnership" has the meaning assigned to the expression by subsection 102(1) of the Act.

"Canadian-controlled private corporation" has the meaning assigned by the expression by subsection 125(7) of the Act.

"CBCA" means the Canada Business Corporations Act.

"C Co." means XXXXXXXXXX.

"Closing" means the date that is 20 business days following the date on which the last of the conditions precedent under the Agreement S as described in 16 below has either satisfied or waived unless K Co. and the Partnership mutually agree on another date.

"Commission" means XXXXXXXXXX.

"D Co." means XXXXXXXXXX.

XXXXXXXXXX

"Deferred Amount" means the portion of the Initial Lease Payment that could be deferred for payment by the Partnership as described in 25 below.

"Distribution Percentage" means, with respect to a particular Limited Partner at any time, such Limited Partner's Aggregate Contribution at such time divided by the Aggregate Contribution of all the Limited Partners at such time multiplied by 100.

"E Co." means XXXXXXXXXX.

"XXXXXXXXXX Centre" means the XXXXXXXXXX.

"Excluded Assets" means the XXXXXXXXXX W XXXXXXXXXX miscellaneous assets, as referred to in 12 below, and a few acres of land in the XXXXXXXXXX Development that K Co. wishes to retain for potential research and development, and related development.

"F Co." XXXXXXXXXX.

"First Renewal Term" means the first renewal term of the Sublease under the Agreement T as described in 23 below.

"fiscal period" has the meaning assigned to the expression by subsection 249.1(1) of the Act.

"G Co." means XXXXXXXXXX.

"General Partner" means the general partner of the Partnership.

"H" means XXXXXXXXXX.

"Head Lease" means the Lease Agreement of XXXXXXXXXX as amended on XXXXXXXXXX, whereby a Subsidiary leases certain part of the XXXXXXXXXX Development to K Co., subject to the P Lease, (such leases of the Subsidiaries, collectively, are called "Head Leases"), as described in 9 to 11 below.

"XXXXXXXXXX Inventory" means all XXXXXXXXXX located on the Leased Premises as of the Closing, which is used to operate the XXXXXXXXXX A and XXXXXXXXXX B XXXXXXXXXX.

"I Co." means XXXXXXXXXX.

"Improvements" on any lands means that part of such lands which consists of buildings and other fixed improvements (XXXXXXXXXX) on the date of the Agreement T or thereafter constructed within such lands and includes any additions thereto or replacements thereof, but excluding Purchased Assets, Excluded Assets, Tenant's Property and XXXXXXXXXX Inventory.

"industry standard" means the practices, methods or acts generally accepted in the North American XXXXXXXXXX industry.

"Information Centre" means the XXXXXXXXXX Information Centre.

"Initial Lease Payment" means the lump sum amount payable upon the Closing in respect of the leasing of the Leased Premises under the Sublease and Lease pursuant to the Agreement T, subject to possible deferred payment of the Deferred Amount, as described in 24 and 25 below.

"Initial Term" means the initial term of the Sublease and Lease under the Agreement T as described in 22 below.

"J" means XXXXXXXXXX.

"K Co." means XXXXXXXXXCICK.

"Lay-Up Costs" means the costs incurred for the purposes of maintaining a XXXXXXXXXX in a lay-up state in accordance with the industry standard as described in 14, 15 and 31 below.

"L Co." means XXXXXXXXXX.

"Lease" means the lease entered into among A Co., K Co., the Partnership and the Subsidiaries other than Q Co. pursuant to the Agreement T in respect of the Surrendered Land as described in 21 below.

"Leased Premises" means the lands and premises of the XXXXXXXXXX Development together with all Improvements on such lands, but excluding the Purchased Assets, Excluded Assets, Tenant's Property and XXXXXXXXXX Inventory.

"Limited Partners" means the limited partners of the Partnership.

"M Co." means XXXXXXXXXX.

"N Co." means XXXXXXXXXX.

XXXXXXXXXX

XXXXXXXXXX

"O Co." means XXXXXXXXXX.

XXXXXXXXXX

"Other Renewal Term" means the renewal term other than the Initial Term and First Renewal Term of the Sublease and Lease under the Agreement T as described in 23 below.

"Partners" means the partners of the Partnership.

"Partnership" means XXXXXXXXXX.

"P Co." means XXXXXXXXXX.

"Pension Plan" means the XXXXXXXXXX Registered Pension Plan.

"Planning Act" means the Planning Act (XXXXXXXXXX).

"P Lease" means the lease agreements granted by the Subsidiaries to P Co. or a subsidiary of P Co. of a part of the XXXXXXXXXX Development used in P Co.'s business of XXXXXXXXXX for a term of 999 years and the access rights agreement in respect of access rights to the XXXXXXXXXX Development by P Co. or a subsidiary of P Co.

"XXXXXXXXXX Development" means the XXXXXXXXXX Development, XXXXXXXXXX.

"XXXXXXXXXX Facilities" means, collectively, the Leased Premises and the Purchased Assets.

"private corporation" has the meaning assigned to the expression by subsection 89(1) of the Act.

"public corporation" has the meaning assigned to the expression by subsection 89(1) of the Act.

"Purchased Assets" means the assets of the XXXXXXXXXX Development to be acquired by the Partnership from K Co. upon the Closing pursuant to the Agreement S, for use in connection with or carrying on the business of XXXXXXXXXX for commercial purposes, including inventories, machinery, equipment, vehicle, tools, spare parts, fixtures, furniture and furnishings and other personal property (other than items of property affixed to the Leased Premises), assumed contracts, transferable permits, books, records, intellectual property, XXXXXXXXXX, but excluding the Leased Premises, Excluded Assets and XXXXXXXXXX Inventory.

"Q Co." means XXXXXXXXXX WXXXXXXXXXX.

"R Co." means XXXXXXXXXX.

"Real Property Agreements" means all real property leases, easements, licences and other rights in real property to which K Co. or a Subsidiary is a party and which:

(a) are to be transferred and assigned to the Partnership on Closing;

(b) affect all or any part of the Leased Premises; or

(c) relate to the XXXXXXXXXX Facilities or are material to the business of XXXXXXXXXX.

"registered pension plan" has the meaning assigned to the expression by subsection 248(1) of the Act.

"Regulations" means the Income Tax Regulations to the Act as amended to the date hereof.

"Retirement" means the complete retirement and removal of the Facilities and the restoration of site thereof, as well as any planning and administrative activities incidental thereto.

"Retirement Costs" means the costs incurred for the purposes of XXXXXXXXXX shut down as described in 15 below.

"S Co." means XXXXXXXXXX.

XXXXXXXXXX

XXXXXXXXXX

XXXXXXXXXX

"Sublease" means the sublease entered into among A Co., K Co., the Partnership and the Subsidiaries other than Q Co. pursuant to the Agreement T in respect of the Leased Premises excluding the Surrendered Land as described in 21 below.

"Subsidiary" means L Co., M Co., N Co. or Q Co.

"Subsidiaries" means, collectively, L Co., M Co., N Co. and Q Co.

"Supplemental Pension Liability" means the accrued liability of K Co. as at the Closing in respect of the past service prior to the Closing of those K Co. employees who will be employed by the Partnership, for all benefits provided under the Supplemental Pension Plan.

"Supplemental Pension Plan" means the XXXXXXXXXX . unregistered supplemental pension plan established effective XXXXXXXXXX and amended effective XXXXXXXXXX and pursuant to which employees of K Co. accrue pension benefits which are supplemental to the benefits accrued by them under the Pension Plan.

"Supplemental Rent" means the variable annual rental payable by the Partnership pursuant to the Agreement T and is calculated in accordance with a formula that refers to the XXXXXXXXXX from the XXXXXXXXXX Facilities and the market price of XXXXXXXXXX in excess of certain floor price as described in 24 and 26 below.

"Surrendered Land" means the lands that K Co. will surrender to N Co., which will in turn be leased by N Co. to the Partnership as described in 21 below.

"Tax Income" or "Tax Loss" of the Partnership in respect of a particular fiscal period means the income or loss including any capital gain or allowable capital loss of the Partnership, determined for that period in accordance with the provisions of the Act.

"taxable Canadian corporation" has the meaning assigned to the expression by subsection 89(1) of the Act.

"taxation year" has the meaning assigned to the expression by subsection 249(1) of the Act.

"T Co." means XXXXXXXXXX.

"Tenant's Property" means the interest of the Partnership in and to the properties acquired after the Closing as described in 35 below.

"Township" means the XXXXXXXXXX.

"Trust A" means the inter vivos trust called XXXXXXXXXX established and settled by H on XXXXXXXXXX for the direct or indirect benefit of H and the members thereof, with the Trust C and Trust D as its beneficiaries.

"Trust B" means the inter vivos trust called XXXXXXXXXX established for the direct or indirect benefit of J and the members thereof.

"Trust C" means the inter vivos trust called XXXXXXXXXX, Trust A, established and settled by H on XXXXXXXXXX for the direct benefit of its sole beneficiary, H.

"Trust D" means the inter vivos trust called XXXXXXXXXX, Trust B, established and settled on XXXXXXXXXX for the direct benefit of its beneficiaries, the members of H.

"Trustees" means, collectively, S Co., T Co. and U Co.

"U Co." means XXXXXXXXXX.

"XXXXXXXXXX W-Agreement" means the XXXXXXXXXX W-Agreement and the term sheet thereof as an attachment to Agreement XXXXXXXXXX WXXXXXXXXXX W XXXXXXXXXX.

Facts

1. The Partnership is a limited partnership and a Canadian partnership created under the laws of the Province of XXXXXXXXXX. Pursuant to the Agreement U, the Partnership was formed on XXXXXXXXXX by E Co. as the General Partner (with a 0.001% partnership interest) and G Co. as the Limited Partner (with a 99.999% partnership interest). The purpose of the Partnership is to carry on the business of XXXXXXXXXX distributing, purchasing and marketing XXXXXXXXXX.

2. B Co., formerly E Co., is a corporation incorporated under the XXXXXXXXXX and is a taxable Canadian corporation. By the Closing, C Co. will own XXXXXXXXXX% of the shares of B Co., and I Co. will own XXXXXXXXXX% of the shares of B Co. B Co. maintains its registered office in XXXXXXXXXX. Besides the business of the Partnership, B Co. does not carry on any other businesses.

3. D Co., formerly F Co. (prior to that G Co.), is a corporation incorporated under the XXXXXXXXXX and is a taxable Canadian corporation. D Co. is wholly-owned by I Co. D Co. maintains its registered office in XXXXXXXXXX. Besides the business of the Partnership, D Co. does not now carry on any other businesses but may enter into other XXXXXXXXXX related business activities in the future.

4. A Co. is a XXXXXXXXXX corporation incorporated under the laws of XXXXXXXXXX and is not resident in Canada for purposes of the Act. A Co. maintains its head office in XXXXXXXXXX and is listed on the XXXXXXXXXX Stock Exchanges. XXXXXXXXXX.

5. C Co. is a corporation incorporated under the XXXXXXXXXX and is a taxable Canadian corporation and a public corporation. C Co. maintains its head office in XXXXXXXXXX, and is listed on the XXXXXXXXXX Stock Exchanges. XXXXXXXXXX.

6. J is XXXXXXXXXX exempt from income tax under XXXXXXXXXX 149XXXXXXXXXX of the Act. H is XXXXXXXXXX exempt from income tax under XXXXXXXXXX 149XXXXXXXXXX of the Act. H established and settled on XXXXXXXXXX three trusts, the Trust A, Trust C and Trust D. Both the Trust C and Trust D are the beneficiaries of the Trust A. H is the sole beneficiary of the Trust C. The members of H are the beneficiaries of the Trust D. The trustees of the Trust A, Trust C and Trust D, are S Co., T Co. and U Co., respectively. The Trustees are corporations incorporated under the XXXXXXXXXX and are taxable Canadian corporations and Canadian-controlled private corporations. The shareholders and directors of each of the Trustees are the executives of H. The Trustees carry on no other business than their respective roles as trustees of the respective trusts. The registered office of the Trustees is in XXXXXXXXXX. Besides the business of the Partnership, the Trust A will not carry on any other businesses.

7. K Co. is a corporation incorporated under the XXXXXXXXXX. K Co. maintains its head office in XXXXXXXXXX. K Co. is XXXXXXXXXX exempt from income tax under XXXXXXXXXX 149XXXXXXXXXX of the Act. K Co. carries on the business of XXXXXXXXXX.

8. L Co., M Co., N Co. and Q Co. are corporations incorporated under the XXXXXXXXXX and are exempt from income tax under XXXXXXXXXX 149XXXXXXXXXX of the Act. They are wholly-owned subsidiaries (the "Subsidiaries") of K Co. The Subsidiaries' only role is to hold and own the major fixed assets of the XXXXXXXXXX Development.

9. The Subsidiaries have a freehold interest, leasehold interest or licence interest in the XXXXXXXXXX Development, which include lands, buildings, structures, fixtures, roads and improvements on the lands, equipment and personal property. XXXXXXXXXX Then, under the Head Leases XXXXXXXXXX the Subsidiaries have leased the XXXXXXXXXX Development, excluding those assets related to the P Lease, to K Co. for an initial term of five years commencing on XXXXXXXXXX, with the option of renewing the Head Leases for eight further terms of five years each, followed by one renewal term of four years. There will be no further right of renewal thereafter, and in no circumstances, the terms, including the initial term and renewal terms, will exceed 49 years. K Co. will be deemed to have duly and automatically exercised the renewals unless K Co., at least 60 days prior to the expiry, delivers a written notice to the Subsidiaries declaring that K Co. does not renew the Head Leases.

10. The Subsidiaries may at any time and without consent of K Co., sell, transfer, mortgage, encumber or otherwise deal with all or any part of its interest in the XXXXXXXXXX Development and all of its interest in the Head Leases, subject however, to the Head Leases and the rights of K Co. under the Head Leases. The Subsidiaries may terminate the Head Leases on two years' prior written notice to K Co. if the Subsidiaries sell all or a substantial part of the XXXXXXXXXX Development. On the other hand, K Co. may at any time upon giving at least 60 days' prior written notice to the Subsidiaries, terminate the Head Leases.

11. Pursuant to the Head Leases, K Co. and the Subsidiaries have agreed that at all times, any buildings, structures, fixtures, roads and Improvements on the lands of the XXXXXXXXXX Development, by whomever constructed, are and will be deemed for all purposes to be fixtures of and appurtenant to the lands and are the absolute property of the Subsidiaries. Furthermore, K Co. will be responsible, subject to any indemnification by third parties, for the retirement of the XXXXXXXXXX Development XXXXXXXXXX, as required by all laws of Canada and Provinces.

(a) 12. The XXXXXXXXXX Development site covers a total area of approximately XXXXXXXXXX acres and includes the supporting infrastructure for XXXXXXXXXX A and XXXXXXXXXX B and the common facilities thereof.

XXXXXXXXXX

13. XXXXXXXXXX.

14. XXXXXXXXXX K Co. has estimated that between $XXXXXXXXXX and $XXXXXXXXXX each year might need to be spent to maintain the XXXXXXXXXX A equipment in a lay-up state in accordance with the industry standard. This cost will drop to approximately $XXXXXXXXXX to $XXXXXXXXXX per year if the XXXXXXXXXX A is permanently shut down before its Retirement.

15. The XXXXXXXXXX lay-up costs to be incurred by the Partnership (the "Lay-Up Costs") are primarily composed of the salary for staff dealing with the provision of security at the XXXXXXXXXX site, XXXXXXXXXX, and similar types of activities. XXXXXXXXXX The costs for safe shut down and storage XXXXXXXXXX to be incurred by the Partnership (the "XXXXXXXXXX Costs") include XXXXXXXXXX.

Proposed Transactions

Agreement S

16. A Co., K Co. and the Partnership entered into the Agreement S on XXXXXXXXXX, whereby the Partnership would acquire the Purchased Assets and lease the Leased Premises from K Co., and acquire K Co.'s business of XXXXXXXXXX for commercial purposes using the Purchased Assets and Leased Premises, subject to obtaining XXXXXXXXXX the following:

XXXXXXXXXX

(g) obtaining satisfactory rulings from the Canadian Customs and Revenue Agency XXXXXXXXXX.

The Agreement S will terminate on XXXXXXXXXX, if the Closing has not occurred by that date.

Amended Agreement U

17. The Agreement U will be amended and restated (the "Amended Agreement U"). Pursuant to the Amended Agreement U, B Co. will remain the General Partner and there will be new Limited Partners. The Limited Partners will be required to make capital contributions when B Co. requires such contributions. The Partnership's budget for the first two years of its operations after the Closing contemplates capital contributions by the Limited Partners in an aggregate of $XXXXXXXXXX. Any capital contributions by or returns of capital to a Limited Partner will increase or decrease, respectively, such a Limited Partner's Aggregate Contributions. This may also change the Distribution Percentage. On the Closing, D Co. and R Co. will make capital contributions to result in a proportion of XXXXXXXXXX% and XXXXXXXXXX% of the total contributions, respectively, for an aggregate amount equivalent to the funds required for the Closing in respect of the XXXXXXXXXX Facilities and the operation thereof. Amended Agreement U contemplates that H and J have the right to acquire a XXXXXXXXXX% and XXXXXXXXXX% interest in the Partnership, respectively, as well as an option to acquire a further XXXXXXXXXX% and XXXXXXXXXX% interest in the Partnership, respectively. This option must be exercised on or before the second anniversary of the Closing. To the extent such right and option are exercised by H and J, directly or through the Trust A and Trust B, D Co's interest in the Partnership would be decreased to reflect such acquisition. Both H and J have indicated that they will exercise their right to acquire an aggregate of XXXXXXXXXX% interest in the Partnership by making the required capital contributions to the Partnership after the Closing.

18. Pursuant to the Amended Agreement U, for each fiscal period of the Partnership the General Partner will make cash distributions to the Partners generally based upon the earnings of the Partnership. The General Partner will be allocated 0.001% of the Partnership cash distributions to a maximum of $1,000 for each fiscal period of the Partnership. Voting rights of and the remaining Partnership cash distributions to a Limited Partner will be based upon such a Limited Partner's Distribution Percentage at the time of such a vote or distribution, as the case may be. The initial Distribution Percentage of the Partners at the Closing after the initial capital contributions made by D Co. and R Co. as referred to in 17 above will be as follows:

Distribution
Percentage (%)

B Co. XXXXXXXXXX

D Co. XXXXXXXXXX

R Co. XXXXXXXXXX

100.0

The determination of profits or losses of the Partnership by the auditor of the Partnership will be binding upon the Partners. The General Partner will make cash distributions to the Partners from the earnings of the Partnership on a quarterly basis or such more frequent basis as determined by the General Partner. The amount of cash distributions will be determined by the General Partner in its sole discretion provided that:

(a) it will distribute the maximum amount of cash it determines to be available in the circumstances after taking into account operating expenses and current capital expenditures, and reasonable reserves therefore, and required principal and interest on account of third party financing;

(b) notwithstanding (a) above, the earnings of the Partnership calculated in accordance with generally accepted accounting principles in respect of a particular fiscal period of the Partnership must be distributed to the Partners by the General Partner within 60 days after the end of such fiscal period of the Partnership; and

(c) such distributions will be allocated to the General Partner and Limited Partners as follows: (a) 0.001% to a maximum of $1,000 for the General Partner; and (b) the remainder for the Limited Partners in accordance with their Distribution Percentage.

19. Pursuant to the Amended Agreement U, Tax Income and Tax Loss of the Partnership will be allocated at the end of each fiscal period of the Partnership to each of the Partners based upon the total of the amounts received by such a Partner on account of cash distributions by the Partnership in such a fiscal period as provided in 18 above relative to the aggregate total of all such amounts received by all the Partners in the fiscal period (the "Allocation Percentage" for each Partner). If there have been no cash distributions to the Partners in the fiscal period, Tax Income and Tax Loss of the Partnership will be allocated at the end of the fiscal period to each of the Limited Partners in accordance with such a Limited Partner's Distribution Percentage at the end of the fiscal period and nothing to the General Partner (the "Allocation Percentage" for each Partner).

20. Pursuant to the Amended Agreement U, B Co. as the General Partner will be acting as the agent of the Partnership. All activities it will undertake will be in its role as the agent for the Partnership, and as such, will be undertaken on behalf of the Partnership. B Co. must control and have responsibility for the business of the Partnership. B Co. must not carry on any other business other than the management of the business on behalf of the Partnership. XXXXXXXXXX. B Co. is specifically authorized to, among doing many other things,

- make decisions respecting the operation and maintenance of the XXXXXXXXXX Facilities and carry out improvements to the XXXXXXXXXX Facilities;

- select, hire and otherwise deal with employees at the XXXXXXXXXX Facilities or in respect of the business of the Partnership;

- market and trade all the available output from the XXXXXXXXXX Facilities;

- hold title to the property of the Partnership in its name or the name of its designated nominee for the benefit of the Partnership; and

- XXXXXXXXXX to be responsible for the conduct of all XXXXXXXXXX proceedings relating to the operations and activities of the XXXXXXXXXX Facilities.

Leased Premises and Purchased Assets

21. K Co. currently owns lands that abut the Leased Premises. If the Leased Premises were subleased by K Co. to the Partnership, the Planning Act would be contravened because the Leased Premises would abut these lands. In order to comply with the Planning Act, prior to the Closing, K Co. will surrender to N Co. part of the lands leased by N Co. to K Co. under the Head Lease (the "Surrendered Land"). The Surrendered Land will be adjacent to the lands owned directly by K Co. Pursuant to the Agreement S and Agreement T, the Partnership will sub-lease the Leased Premises (except for the Surrendered Land) from K Co. (the "Sublease") and the Partnership will lease from N Co. the Surrendered Land (the "Lease") effective on the Closing. However, the Agreement S will terminate on XXXXXXXXXX if the Closing has not occurred by that date, in which case the parties will not enter into the Agreement T. The Subsidiaries, as the landlords of the Head Leases, will provide their consent on the Sublease and Lease. The Real Property Agreements, which do not include the Head Leases, will be assigned to the Partnership. Pursuant to the Agreement T, the Partnership will be responsible for K Co.'s obligations under the Head Leases, except for Retirement (see 27 below) and financial obligations including payment of rent. There will be no option to purchase the Leased Premises by the Partnership at any time during the course of the Sublease and Lease, or any other time. There will be no option of further renewing the term of the Sublease and Lease after the last Other Renewal Term. The Leased Premises include all lands, buildings, structures, works, Improvements and fixtures necessary for the rehabilitation, operation or maintenance of:

(a) XXXXXXXXXX A and XXXXXXXXXX B;

XXXXXXXXXX

22. The initial term of the Sublease and Lease under the Agreement T will run from the date of Closing until XXXXXXXXXX (the "Initial Term"). This lease term was chosen based on a "base case" view of economic value to A Co., using its current project rate of return requirements, and with critical assumptions about operating performance, future spending on repairs and replacement of key plant components, and the state of the XXXXXXXXXX market XXXXXXXXXX. However, subject to replacement of key plant components, A Co.'s engineering due diligence has indicated that there are no known impediments to prevent a XXXXXXXXXX plant from operating for more than XXXXXXXXXX.

23. The Partnership will have the option to renew the Sublease and Lease beyond the Initial Term for up to XXXXXXXXXX years under the Agreement T as follows:

(a) the Partnership can give K Co. (in its capacity as landlord under the Sublease and in its capacity as agent of N Co. under the Lease for this purpose) a written notice of its exercise of the option to renew the Sublease and Lease not more than four years and at least three years prior to the expiry of the Initial Term, in which case, the Sublease and Lease will be renewed for one year (the "First Renewal Term"); and

(b) thereafter, the Partnership can give K Co. (in its capacity as landlord under the Sublease and in its capacity as agent of N Co. under the Lease for this purpose) a written notice of its exercise of the option to renew the Sublease and Lease not more than 24 months and at least 12 months prior to the expiry of the First Renewal Term or the Other Renewal Term, as the case may be, in which case, the Sublease and Lease will be renewed for two years (the "Other Renewal Term"), the Partnership has an option to renew the Sublease and Lease for up to XXXXXXXXXX consecutive Other Renewal Terms.

24. Pursuant to the Agreement T, in consideration for subleasing and leasing the Leased Premises to the Partnership, the Partnership will pay to K Co. the following amounts:

(a) Initial Lease Payment payable on Closing in respect of the Initial Term. XXXXXXXXXX ;

(b) Base Rent, being a series of fixed annual rentals over the Initial Term of the Sublease and Lease, XXXXXXXXXX;

(c) Supplemental Rent, being a series of variable annual rentals computed in accordance with a formula based on a function of the net XXXXXXXXXX output of the XXXXXXXXXX Facilities and XXXXXXXXXX prices in the relevant calendar year. The Supplemental Rent will be payable to K Co. in two instalments each year with payments being payable on the last day of June and December of each year of the Sublease and Lease term, each time in respect of the previous six months. The Partnership will be required to make an estimate of the amount owed for a given period and remit that estimated amount at the end of the period. For example, the December instalment will relate to the period from July 1 to December 31 of that year. Within 45 days after each payment the Partnership is to provide K Co. with a detailed calculation of the final Supplemental Rent payable in the period, together with a reconciliation of the amount payable to the amounts paid as installments. If, after this detailed calculation, it is found that the Partnership owes K Co. additional Supplemental Rent, the Partnership will be required to pay it immediately. If, instead, it is found that K Co. received more Supplemental Rent than it was entitled to, K Co. is required to pay to the Partnership, within 30 days of receipt of the detailed calculation, the excess payment; and

(d) Additional Rent, being any amount payable by the Partnership pursuant to the Sublease and Lease in addition to Base Rent and Supplemental Rent. Additional Rent will be deemed to be rent pursuant to the Agreement T.

Subject to paragraph 36 below, the above-noted rentals are absolutely net to K Co. Unless it is specified in the Agreement T, K Co. will not be responsible during the term of the Sublease and Lease for any costs, charges, taxes, levies, impositions, expenses or outlays of any nature whatsoever arising from or relating to the Leased Premises, the Sublease and Lease, the use of the Leased Premises by the Partnership, or any services or supplies provided by K Co. under the Agreement T.

25. The payment of the Initial Lease Payment to K Co. will be guaranteed by A Co. pursuant to the Agreement S. Although the entire amount of the Initial Lease Payment is due and payable on the Closing, K Co. has agreed that if the Partnership is unable to obtain satisfactory financing prior to the Closing XXXXXXXXXX, it will defer payment of up to $XXXXXXXXXX (the "Deferred Amount") of the Initial Lease Payment for a period XXXXXXXXXX.

26. Pursuant to the W-Agreement, title to XXXXXXXXXX W will be passed to K Co. from the Partnership upon the collection by K Co. of such XXXXXXXXXX W at the Leased Premises. XXXXXXXXXX K Co. also provides services to the Partnership in respect of transporting XXXXXXXXXX W XXXXXXXXXX materials. In compensation for the transfer and assumption of the title of XXXXXXXXXX W XXXXXXXXXX, and provision of transport services, fees will be charged to the Partnership as described in 44 below. The fees XXXXXXXXXX calculated on the basis of net XXXXXXXXXX output XXXXXXXXXX will be included as a component of Supplemental Rent referred to in 24 above.

27. Retirement and the cost thereof will be the responsibility of K Co. and K Co. will have the obligation to XXXXXXXXXX. K Co's Retirement obligation will survive the expiry or termination of the Sublease and Lease and Head Leases. XXXXXXXXXX.

28. If the Sublease and Lease are renewed for one or more additional periods after the Initial Term, there will be a single Base Rent payment of $XXXXXXXXXX on the first day of the First Renewal Term or Other Renewal Term. Supplemental Rent for each of the First Renewal Term or Other Renewal Term will be computed on the same basis as during the Initial Term.

29. The Partnership may terminate the Sublease and Lease:

(a) at any time after XXXXXXXXXX and after giving 12 months notice and by payment of $XXXXXXXXXX in full settlement of all Sublease and Lease obligations, if the Partnership, acting reasonably, determines that the continued operation of the XXXXXXXXXX site as XXXXXXXXXX is no longer economically viable. This payment obligation will be guaranteed by A Co. and C Co.;

(a) if K Co. or the Subsidiaries have defaulted on certain obligations; or

(b) if the Partnership's leasehold interest is terminated due to any cause beyond the control of the Partnership.

30. The title to and ownership of all Improvements existing as of the Closing will remain in K Co. The title to and ownership of all Improvements from time to time made to the Leased Premises on or after the Closing, including all alteration and expansions thereof and replacements thereto, other than Tenant's Property, will immediately and automatically remain, pass to and become vested in K Co. or N Co., as the case may be, without any compensation to the Partnership. XXXXXXXXXX.

31. Before the viability of XXXXXXXXXX A XXXXXXXXXX can be confirmed with any degree of certainty, considerable feasibility study will be required. The Partnership will undertake such a study to review the technical and commercial case for XXXXXXXXXX A. XXXXXXXXXX Until such time as the Partnership is successful in restarting the XXXXXXXXXX A XXXXXXXXXX , the Partnership is required to maintain the XXXXXXXXXX A in accordance with the industry standard. Similarly, if the XXXXXXXXXX A is XXXXXXXXXX and the XXXXXXXXXX B is XXXXXXXXXX B will have to be maintained in a similar manner. The Lay-Up Costs associated with this requirement include security, XXXXXXXXXX, repairs and maintenance as described in 14 and 15 above. The Lay-Up Costs do not encompass costs to be incurred for the XXXXXXXXXX of the XXXXXXXXXX A or XXXXXXXXXX B nor costs of the feasibility study for such XXXXXXXXXX.

32. During the term of the Sublease and Lease, the Partnership has to maintain certain minimum handback condition in respect of the Leased Premises XXXXXXXXXX Generally, the Leased Premises XXXXXXXXXX are to be handed back to K Co. at the expiry of the term of the Sublease and Lease in effectively their condition at the Closing, subject to normal wear and tear, and regular repair and maintenance. The condition of the Leased Premises XXXXXXXXXX will be subject to an independent review every 5 years.

33. If K Co. decides to not lease or operate the XXXXXXXXXX A and XXXXXXXXXX B after termination of the Agreement T, the Partnership will be required, unless directed otherwise by K Co., to carry out all necessary actions for the safe shut down XXXXXXXXXX as described in 15 above at the expiry or termination of the Sublease and Lease. The shut down process XXXXXXXXXX could take from 3 months to more than 12 months to complete, depending on the level of resources applied, XXXXXXXXXX.

Purchased Assets and Tenant's Property

34. At the Closing, C Co. will purchase the XXXXXXXXXX inventories for $XXXXXXXXXX under a separate contract. Some of this inventory may be subsequently sold to the Partnership. The Partnership will purchase other tangible and intangible personal assets (the "Purchased Assets") used in connection with the operation of the XXXXXXXXXX A and XXXXXXXXXX B from K Co. for $XXXXXXXXXX pursuant to the Agreement S. The payment of this amount to K Co. will be guaranteed by A Co.

35. Title to the Purchased Assets and to any tangible personal property subsequently acquired by the Partnership (the "Tenant's Property") will rest with the Partnership. The Tenant's Property consists of:

(a) all trade fixtures, all tangible personal property, inventory (excluding XXXXXXXXXX Inventory), furniture, machinery, equipment, vehicles, tools, spare parts and furnishings not in the nature of fixtures relating to or used by the Partnership in the operation of the XXXXXXXXXX Facilities;

(b) all unexpired, transferable warranties and guarantees for third parties with respect to any item of the personal property referred to in (a) above;

(c) all intellectual property necessary for the operation, maintenance and rehabilitation of the XXXXXXXXXX Facilities, that are used by the Partnership;

(d) all financed equipment (i.e., leased or subject to bona fide conditional sale or title retention agreement in favour of arm's length commercial lenders or vendors) used by the Partnership in the operation of the XXXXXXXXXX Facilities regardless of its degree of affixation to the XXXXXXXXXX Facilities; XXXXXXXXXX

(e) XXXXXXXXXX.

36. K Co. and N Co. will bear all property taxes in respect of the XXXXXXXXXX Facilities other than Purchased Assets and Tenant's Property. XXXXXXXXXX.

37. K Co. has the option, exercisable within 180 days prior to the termination of the Sublease and Lease, to purchase the Partnership's interest in any of the Purchased Assets and Tenant's Property at its fair market value. However, if the Sublease and Lease are terminated as a result of an event of default caused by the Partnership, K Co. has an option to buy the Purchased Assets and Tenant's Property for $1.

Operation of the XXXXXXXXXX Facilities

38. In the production of XXXXXXXXXX from the XXXXXXXXXX A or XXXXXXXXXX B, there are six main groups of staff (i.e., these staffs are not involved with the activities relating to human resources, finance and business planning, business support, XXXXXXXXXX trading, legal and administration in respect of site facilities management) XXXXXXXXXX.

XXXXXXXXXX

39. XXXXXXXXXX.

40. Separate XXXXXXXXXX provincial regulations are imposed on environmental control and monitoring, and requirements on protection of workers from other health and safety hazards.

41. XXXXXXXXXX.

42. XXXXXXXXXX.

43. XXXXXXXXXX.

44. XXXXXXXXXX.

45. For accounting purposes the Partnership will adopt the following policies with regard to the expenditures discussed above:

(a) For Canadian statutory accounting purposes, the Sublease and Lease will be recorded as a capital lease with the value of the capital asset (being the portion of the present value of the fixed amounts as described in 24 above) amortized over the lesser of the period of expected use and the Initial Term and the implicit financing costs charged to income each year.

(b) For XXXXXXXXXX statutory accounting purposes and for A Co.'s internal reporting purposes, the Sublease and Lease will be recorded as an operating lease, with the Initial Lease Payment being recorded as a prepayment in relation to the full Initial Term, and the other fixed amounts as described in 24 above being charged to income in the year the expense is incurred.

(c) The following items will be charged to income in the year the expenses are incurred:

(i) Supplemental Rent,

(ii) Additional Rent,

(iii) the payments under the W-Agreement, and

(iv) the Lay-up Costs.

(d) Retirement Costs, with related revalorization adjustments, will be accrued and expensed over the period from the time that the shut down dates XXXXXXXXXX become known, and the related costs are reasonably determinable, to the shut down dates XXXXXXXXXX.

(e) Improvements will be amortized over the period from the time the expenditure is incurred to the lesser of the period of expected use and the end of the Initial Term.

46. On the Closing, the Partnership will offer employment to those employees of K Co. who are actively working at the XXXXXXXXXX Development. The terms of their employment with the Partnership will not be less favourable than the terms of their employment with K Co. and, without limitation, but subject to the provisions of the Agreement S, will require that the employment and benefit terms and conditions recognize the past service of such employees with K Co. and O Co. The Pension Plan is fully funded and is a registered pension plan. The Supplemental Pension Plan is not funded and is not a registered pension plan.

47. On the Closing, the Partnership will assume K Co.'s liability with respect to the Supplemental Pension Liability and the Benefit Liability in return for compensation computed as set out in 48 below.

48. Within six months of the Closing, an independent actuarial report that sets out the quantum of the present value (the "Benefit Adjustment Amount") of the assumed Supplemental Pension Liability and Benefit Liability will be obtained. K Co. will pay the Benefit Adjustment Amount to the Partnership in 72 monthly instalments commencing on the first anniversary of the Closing. Interest at a reasonable market rate will be charged to K Co. by the Partnership on the outstanding receivable of the Benefit Adjustment Amount.

Purpose of Proposed Transactions

49. XXXXXXXXXX.

50. XXXXXXXXXX.

Rulings Given

Provided that the preceding statements constitute a complete and accurate disclosure of all the relevant facts, proposed transactions, and purpose of the proposed transactions and provided further that the proposed transactions are carried out as described above, our rulings are as follows:

A. For the purpose of allocating Tax Income and Tax Loss of the Partnership for a particular fiscal period to B Co., D Co., R Co. and the Trust A in proportion to their respective Allocation Percentage pursuant to section 96 of the Act:

(a) The amount of Initial Lease Payment incurred and payable or paid by the Partnership in the fiscal period will be considered as the cost of a leasehold interest and will be included in computing the additions to the capital cost of depreciable property of the Partnership in Class 13 of Schedule II of the Regulations.

(b) The amounts of Base Rent incurred and payable or paid by the Partnership in the fiscal period will be deductible in computing income of the Partnership for the fiscal period pursuant to section 9 of the Act, provided that the amounts are reasonable.

(c) The amounts of a portion of Supplemental Rent (to the extent it is not in respect of XXXXXXXXXX referred to in 26 and 44 above) incurred and payable or paid by the Partnership net of any refund thereof in the fiscal period will be deductible in computing income of the Partnership for the fiscal period pursuant to section 9 of the Act, provided that the amounts are reasonable.

(d) The amounts of a portion of Supplemental Rent (to the extent it is in respect of XXXXXXXXXX referred to in 26 and 44 above) incurred and payable or paid by the Partnership net of any refund in the fiscal period will be deductible in computing income of the Partnership for the fiscal period pursuant to section 9 of the Act, provided that the amounts are reasonable.

(e) The amounts of fees incurred and payable or paid by the Partnership in the fiscal period in respect of XXXXXXXXXX W or transportation of XXXXXXXXXX W material referred to in 44 above will be deductible in computing income of the Partnership for the fiscal period pursuant to section 9 of the Act, provided that the amounts are reasonable.

(f) The amounts of Lay-Up Costs incurred and payable or paid by the Partnership in the fiscal period will be deductible in computing income of the Partnership for the fiscal period pursuant to section 9 of the Act, provided that the amounts are reasonable.

(g) The amounts of Retirement Costs incurred and payable or paid by the Partnership in the fiscal period will be deductible in computing income of the Partnership for the fiscal period pursuant to section 9 and not be precluded from deduction by virtue of paragraph 18(1)(a) of the Act, provided that the amounts are reasonable.

(h) The amounts received by the Partnership in the fiscal period in respect of the Benefit Adjustment Amount will be included in computing income of the Partnership for the fiscal period by virtue of paragraph 12(1)(x) of the Act.

(i) The costs of Improvements (excluding amounts expended for items that are considered to be a building or structure or part thereof pursuant to subsection 1102(5) or (5.1) of the Regulations) incurred and payable or paid by the Partnership in the fiscal period within the term of the Sublease will be included in computing the additions to the capital cost of depreciable property of the Partnership in Class 13 of Schedule II of the Regulations.

(j) For the purpose of calculating capital cost allowance under Schedule III and paragraph 1100(1)(b) of the Regulations, subject to the restrictions in subparagraph 1100(1)(b)(i) and subsection 1100(3) of the Regulations, with respect to the additions within the Initial Term to the capital cost of depreciable property of the Partnership in Class 13 of Schedule II of the Regulations, the Sublease and Lease will be deemed to terminate at the end of the First Renewal Term.

B. Where each of B Co., D Co. and R Co. remains a Partner at any time in its respective taxation year, by virtue of XXXXXXXXXX of the Act, the salaries and wages (to the extent that they would be qualified as "salary or wages" within the meaning of the expression in subsection 248(1) of the Act) incurred and payable or paid by the Partnership to its employees engaged directly in performing the functions in respect of XXXXXXXXXX production at the XXXXXXXXXX A and XXXXXXXXXX B as described in 38 above or in performing the functions incidental to such production as required XXXXXXXXXX in a fiscal period of the Partnership coinciding with or ending in the respective taxation year of such a corporation multiplied by the corporation's respective Allocation Percentage that is attributable to the corporation, will be considered, for the purpose of section 5204 of the Regulations, to be "cost of labour" and "cost of manufacturing and processing labour" of the corporation for its respective taxation year.

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 Regulations which, if enacted into law, could have an effect on the rulings provided herein. The above rulings are given subject to the limitations and qualifications set out in Information Circular 70-6R4 dated January 29, 2001 as amended and is binding on the Canada Customs and Revenue Agency provided that the Closing for the proposed transactions is prior to XXXXXXXXXX. To the extent that the Trust A and R Co. do not become the Limited Partners pursuant to the Amended Agreement U by XXXXXXXXXX, then the above rulings will no longer be binding on the Canada Customs and Revenue Agency against the Trust A, R Co. or both the Trust A and R Co., as the case may be.

Nothing in this ruling letter should be construed as confirming the cost of any property or the amount of any expense described herein. Furthermore, the rulings given above do not imply acknowledgement, acceptance or confirmation by Canada Customs and Revenue Agency of any tax consequences arising out of the facts and proposed transactions described herein except as expressly stated in the above under the heading of Rulings Given. In particular, we are not ruling nor expressing opinions on the Additional Rent, termination payment of $XXXXXXXXXX referred to in 29 above, and the costs of XXXXXXXXXX feasibility study referred to in 31 above.

Yours truly,

for Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Legislation Branch