2001 Income Tax Severed Letter 2001-0104811 - PARTNERSHIP; REWARD POINTS

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: although significant changes were contemplated, for business reasons the taxpayer decided to merely make minor changes

Position: n/a

Reasons: n/a

XXXXXXXXXX 2001-010481

XXXXXXXXXX, 2001

Dear XXXXXXXXXX:

Re: XXXXXXXXXX
XXXXXXXXXX
Supplementary Advance Income Tax Ruling

This is in reply to your letter of XXXXXXXXXX, and is supplemental to our advance income tax ruling number 2001-009722 dated XXXXXXXXXX, 2001 (the "Ruling").

As a result of your letter, the following change will be made to the Ruling:

1. In DEFINITIONS, (c) "Ancillary Agreements" delete the reference to "Participation and Services Agreement" and insert "Brandname Commercial Participation Agreement" in its place.

2. Add the following in DEFINITIONS:

"(e.1) "Brandname Commecial Agreement" shall mean the XXXXXXXXXX to be exectuted by ParentCo and Partnership as described in paragraphs 14 to 18 below;"

3. In DEFINITIONS, (dd) delete the term,"Participation and Services Agreement", and its definition.

4. In paragraph 8, delete the following:

"The only shares of NewCo that will be issued at this time will be XXXXXXXXXX common shares and XXXXXXXXXX preferred shares which will be issued to ParentCo. The XXXXXXXXXX preferred shares will provide no participation rights in profit distribution or on liquidation of the Partnership, but will allow ParentCo to control NewCo and the Partnership."

In its place, insert the following:

"The only shares of NewCo that will be issued at this time will be XXXXXXXXXX common shares."

5. Delete the last sentence in paragraph 10.

6. In paragraph 12, delete the second paragraph and insert the following in its place:

"Partnership will immediately lend $XXXXXXXXXX to ParentCo and such loan will be repayable by ParentCo no later than XXXXXXXXXX . The terms of the loan will include the provision of a fixed rate of return payable by ParentCo on the amount loaned."

7. In paragraph 14 and 15 and in RULINGS D and E, delete the reference to, "The Participation and Services Agreement" and insert "The Brandname Commercial Participation Agreement" in its place.

8. In paragraph 17, delete, in the first sentence, the reference to "Program" and insert "Points" in its place.

9. Insert the following at the end of the sentence in paragraph 24:

Immediately prior to the IPO, ParentCo will subscribe for XXXXXXXXXX preferred shares of NewCo. The XXXXXXXXXX preferred shares will provide no participation rights in profit distribution or on liquidation of the Partnership, but will allow ParentCo to control NewCo and the Partnership.

Notwithstanding the above change, we confirm that the Ruling will continue to be binding on the Canada Customs and Revenue Agency in the manner described therein, provided the Asset Purchase Agreement, the Partnership Agreement and the Ancillary Agreements have been entered into on or before XXXXXXXXXX.

If we can be of any further assistance, please contact the writer.

Yours truly,

XXXXXXXXXX
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch