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At the 2000 Canadian Tax Foundation Conference, the Canada Customs and Revenue Agency announced a change in the administrative position relating to the application of paragraph 85(1)(b) in a situation where there is a transfer of property with liabilities in excess of cost amount and the excess is allocated to another property or is assumed by the purchaser in consideration for the delivery by the vendor of a promissory note in the amount of the excess. It is our position that, if the total non-share consideration so considered to have been given by the purchaser for the property exceeds the amount agreed upon by the vendor and purchaser in their election under subsection 85(1), paragraph 85(1)(b) will apply to increase the amount agreed upon. ... C would issue shares to S for the balance of the consideration. In view of the fact that C is assuming $75 of the debt as a partial repayment of the amount owing to S, you submit that paragraph 85(1)(b) should not apply to increase the elected amount in respect of the subsequent transfer of the property. ...

Cameron (613) 347-1361 November 5, 2003 Dear Sir: Re: XXXXXXXXXX (the "Company") We are writing in response to your letter dated May 9, 2003 requesting consideration of certain issues raised on behalf of the Company with regard to a mining property referred to as the "XXXXXXXXXX property", located in XXXXXXXXXX. In particular, you requested consideration of whether: (a) taking into account the information you have provided on behalf of the Company, we would remain of the view that the mine at the XXXXXXXXXX property would constitute a mine which "has come into production in reasonable commercial quantities" for purposes of subparagraph (f)(vi) to the definition of "Canadian exploration expense" ("CEE") contained in subsection 66.1(6) of the Income Tax Act (the "Act"); and (b) if a new ore zone (referred to as "XXXXXXXXXX") is developed in the manner contemplated in a feasibility study prepared for the Company, such development would be considered a "new mine" for purposes of paragraph (g) to the above definition of CEE. ... Our Comments After reviewing the situation regarding the mine at the XXXXXXXXXX property, including consideration of the information submitted with your letter, Natural Resources Canada has indicated it is their view that: i) the mine came into production in reasonable commercial quantities in XXXXXXXXXX; ii) since being closed in XXXXXXXXXX the mine has been kept on care and maintenance and has not lost the characteristics of a mine; and iii) the development program envisioned in the above feasibility study to access and mine XXXXXXXXXX would constitute an extension of the existing mine at the XXXXXXXXXX property. ...

Where individual D sells ("sale") her Cco shares to Aco for cash consideration and Aco then gifts those Cco shares to Cco, whether subsection 84.1(1) will apply to deem Aco to have paid a dividend to individual D. ... Individual D will sell ("sale") her non-voting Cco shares to Aco for cash consideration. ... However, Cco will not be deemed to have paid a dividend to Aco under subsection 84(3), as Cco will not pay any consideration to Aco with respect to the share gift. ...

Qualifying medical expenses, as defined in subsection 118.2(2) of the Act, include a premium, contribution or other consideration paid under a "private health services plan" ("PHSP"), which is defined in subsection 248(1) of the Act. ... Based on our review of the proposed legislative amendments to the Ontario Income Tax Act with respect to the Premium, it is our view that the Premium established under the proposed amendments does not represent consideration paid under a PHSP, but is a tax imposed under the Ontario Income Tax Act. ... Moreover, even if the Premium represented consideration paid under a contract of insurance, it is our view that such a premium would still not qualify for the medical expense tax credit. ...

Finally, you ask us to consider that instead of writing the loss off pursuant to subsection 50(1) of the Act, the consequences of selling the debt arm's length for nominal consideration (which is the fair market value). ... Generally, while we agree that the debt forgiveness rules will not apply where a shareholder-creditor sells the debt to an arm's length person for nominal consideration if the consideration represents fair market value, it is a question of fact whether the parties to such an arrangement are truly dealing at arm's length. ...

As you noted in your letter, paragraph 7(1.5)(b) of the Act provides that a taxpayer may not receive any consideration for the exchanged shares other than new shares as described in the paragraph. ... It should be noted that rights that are provided within the terms of the shares received will not generally be considered to constitute additional consideration. ... Accordingly, you may wish to provide your comments with respect to exchangeable shares to the Department of Finance for their consideration. ...

To constitute a gift, it is generally understood that there must be a voluntary transfer of property without consideration. ... Further, it could be argued, depending on the facts, that in return for the donation the taxpayer is receiving consideration in the form of the loan which would also disqualify the donation from being considered a gift. Even if it could be established that the loan does not constitute consideration for the donation, subsections 118.1(16) or 110.1(6) of the Act may apply to deem the fair market value of the gift to be nil. ...

Cameron (613) 347-1361 November 5, 2003 Dear Sir: Re: XXXXXXXXXX (the "Company") We are writing in response to your letter dated May 9, 2003 requesting consideration of certain issues raised on behalf of the Company with regard to a mining property referred to as the "XXXXXXXXXX property", located in XXXXXXXXXX. In particular, you requested consideration of whether: (a) taking into account the information you have provided on behalf of the Company, we would remain of the view that the mine at the XXXXXXXXXX property would constitute a mine which "has come into production in reasonable commercial quantities" for purposes of subparagraph (f)(vi) to the definition of "Canadian exploration expense" ("CEE") contained in subsection 66.1(6) of the Income Tax Act (the "Act"); and (b) if a new ore zone (referred to as "XXXXXXXXXX") is developed in the manner contemplated in a feasibility study prepared for the Company, such development would be considered a "new mine" for purposes of paragraph (g) to the above definition of CEE. ... Our Comments After reviewing the situation regarding the mine at the XXXXXXXXXX property, including consideration of the information submitted with your letter, Natural Resources Canada has indicated it is their view that: i) the mine came into production in reasonable commercial quantities in XXXXXXXXXX; ii) since being closed in XXXXXXXXXX the mine has been kept on care and maintenance and has not lost the characteristics of a mine; and iii) the development program envisioned in the above feasibility study to access and mine XXXXXXXXXX would constitute an extension of the existing mine at the XXXXXXXXXX property. ...

Individual has not made a gift due to consideration received. In short charitable credits are not transferable under the Act. ... Your proposed certifigift arrangement contemplates that a person would transfer an amount of money to an entity in exchange for a certifigift which would ultimately be used by the holder of the certifigift as partial consideration for the purchase of goods from a particular retailer. ... A gift is a voluntary transfer of property by a person without valuable consideration. ...

Holdco will incorporate a subsidiary ("Acquireco") and subscribe for 99 common shares for nominal consideration. 4. Targetco will subscribe for one share of Acquireco for nominal consideration. 5. To avoid reciprocal shareholdings between Targetco and Acquireco, Acquireco will incorporate a subsidiary company, Subco, for nominal cash consideration. 6. ...