2003 Ruling 2003-0044483 - SDA DEFERRED SHARE UNITS

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:

1. Whether the issuance of phantom stock units under a portion of the plan are exempt under (k) of the SDA definition?

2. Whether the portion of the plan that provides for DSUs is excluded from the SDA rules pursuant to 6801(d) of the Regulations?

PositionS:

1. Yes
2. Yes

Reasons:

1. The portion of the plan that relates to phantom stock units meets subsection (k) of the SDA definition.

2. The DSU portion of the plan complies with 6801(d) provisions.

XXXXXXXXXX 						2003-004448

XXXXXXXXXX, 2003

Dear XXXXXXXXXX:

Re: Advance Income Tax Ruling Request
XXXXXXXXXX

This is reply to your letter of XXXXXXXXXX in which you requested an advance income tax ruling on behalf of the above-named taxpayer. We also acknowledge our numerous conversations (XXXXXXXXXX) and your letters of XXXXXXXXXX.

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

(i) in an earlier return of the taxpayer 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 taxpayer or a related person,

(iii) under objection by the taxpayer or a related person,

(iv) before the courts, or

(v) the subject of a ruling previously issued by the Directorate to the taxpayer or a related person.

Unless otherwise stated, all references to a statute are to the Income Tax Act (Canada), R.S.C. 1985, c.1 (5th Supp.), as amended to the date of this letter (the "Act"), and all terms and conditions used herein that are defined in the Act have the meaning given in such definition unless otherwise indicated.

This letter is based solely on the facts and proposed transactions described below. The documentation submitted with your request does not form part of the facts and proposed transactions and any references thereto are provided solely for the convenience of the reader.

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

Definitions and Abbreviations

"Account" means the bookkeeping account established by the Company for each Grant to an Eligible Person in which the number of Units of the Eligible Person under the Plan are recorded;

"Applicable Withholding Taxes" means any and all taxes and other source deductions or other amounts which the Company is required by law to withhold and remit to any taxing authority from any amounts to be paid or credited under the Plan;

"Board" means the board of directors of the Company;

"Change in Control" means:

(i) the initial acquisition by any person, or any persons acting jointly or in concert [as determined by the Securities Act (XXXXXXXXXX)], whether directly or indirectly, of voting securities of the Company which, together with all other voting securities of the Company held by such persons, constitutes, in the aggregate, more than 20% of all outstanding voting securities of the Company;

(ii) an amalgamation, arrangement or other form of business combination of the Company with another corporation which results in the holders of voting securities of that other corporation holding, in the aggregate, more than 50% of all outstanding voting securities of the Company resulting from the business combination;

(iii) a sale, disposition, lease or exchange to or with another person or persons (other than a Subsidiary) of property of the Company representing 50% or more of the net book value of the assets of the Company, determined as of the date of the most recently published audited annual or unaudited quarterly interim financial statements of the Company; or

(iv) a change in the composition of the Board over any twelve month period such that more than 50% of the persons who were directors of the Company at the beginning of the period are no longer directors at the end of the period, unless such change is a consequence of normal attrition;

"Committee" means the XXXXXXXXXX of the Board and any other committee or person designated by the Board to administer the Plan;

"Common Shares" means common shares of the Company;

"Company" means XXXXXXXXXX;

"Converted Units" has the meaning as described at 10(e) below [XXXXXXXXXX to the Plan];

"DSU" means a deferred share unit granted, or into which a RSU or a PSU is converted, hereunder;

"DSU Amount" has the meaning as described at 10(l) below [XXXXXXXXXX to the Plan];

"Disability" shall mean the determination that an Eligible Person is eligible for benefits under the Company's long-term disability plan or policies in effect on any relevant date;

"Dividend Market Value" means the average closing price per Common Share of a board lot of Common Shares on XXXXXXXXXX Stock Exchange traded for the last five trading days on such Exchange prior to a dividend payment date;

"Eligible Person" means a person who is, at the relevant time, an employee of the Company or any of its subsidiaries or affiliates;

"Grant" means a grant of a number of Units to an Eligible Person;

"Grant Date" means the date on which a Grant is made, being the date that the Board or Committee resolves to grant Units to an Eligible Person, unless the Board or the Committee resolves to ratify Units granted on an earlier date or to delay the grant of Units to a later date, in which case the Grant Date will be such earlier or later date;

"PSU" means a performance share unit granted hereunder;

"Payment Date" means:

(a) with respect to a particular Grant of RSUs or PSUs, the date upon which the Unit Amount of the Units related to the Grant will be paid to the Eligible Person, which date shall be as soon as practicable after the Redemption Date for that Grant but which shall in no event be later than December 31 of the third calendar year following the end of the calendar year in respect of which the Grant was made;

(b) with respect to a particular Grant of DSUs, or DSUs resulting from the conversion of RSUs or PSUs hereunder, the date upon which the DSU Amount in respect of such DSUs will be paid to the Eligible Person, which date shall be as soon as practicable after the Redemption Date but which shall in no event be later than December 31XXXXXXXXXX of the first calendar year commencing after the Termination Date;

"Plan" means the employee incentive plan to be established by the Company when the XXXXXXXXXX, become effective;

"Public Corporation" has the meaning assigned by subsection 89(1) of the Act;

"Pro-Rated Units" means, at the date of the death, retirement or Disability of an Eligible Person, the number of RSUs or PSUs, as the case may be, credited to the Account of the Eligible Person on that date in respect of each Grant of RSUs or PSUs, which is the same proportion of such Units as: (i) the period from the date of the Grant of such Units to the date of the death, retirement or Disability of the Eligible Person is to (ii) the period from the date of the Grant of such Units to the Redemption Date for such Grant of Units;

"Redemption Date" means:

(a) with respect to a particular Grant of RSUs and PSUs, the date established by the Committee as the date upon which the Redemption Value for that Grant shall be calculated;

(b) with respect to DSUs recorded in the Account of an Eligible Person, the date specified by the Eligible Person, or his or her estate, in an election filed with the Secretary of the Company after the Termination Date, provided that such date shall not be later than

(i) XXXXXXXXXX of the first calendar year after the Termination Date in the case where: (A) the Eligible Person is retiring from the Company in accordance with the retirement plans or policies of the Company then in effect; (B) the employment of the Eligible Person has been terminated following a Change of Control; or, (C) the employment has been terminated for any reason other than death and Disability with regard to DSUs referred to in (ii) of the Termination Date definition; or

(ii) XXXXXXXXXX days after the date of death or Disability in the case of death or Disability of an Eligible Person.

Where the Eligible Person, or his or her estate, fails to make an election within the above-mentioned period, his or her Redemption Date shall be the latest date upon which the Eligible Person could have elected as provided above;

"Redemption Value" means the average closing price per Common Share of a board lot of Common Shares on XXXXXXXXXX Stock Exchange traded for the last XXXXXXXXXX trading days on that Exchange prior to the Redemption Date;

"RSU" means a restricted share unit granted under the Plan;

"Regulations" means the Income Tax Regulations promulgated under the Act;

"Taxable Canadian Corporation" has the meaning assigned by subsection 89(1) of the Act;

"Termination Date" means with respect to

(i) DSUs recorded in the Account of an Eligible Person related to an initial Grant of DSUs (including DSUs credited to such Account as described in 10(g) below with regard to such initially-granted DSUs), the date of the termination of employment of an Eligible Person: (A) upon the retirement from the Company in accordance with the retirement plans or policies of the Company then in effect; (B) upon the death of the Eligible Person; (C) upon the Disability of the Eligible Person; or, (D) for any reason, whatsoever, at any time after the date of a Change of Control. For greater certainty, the date of termination of employment of an Eligible Person as a result of the resignation of the person or termination of employment of the person by the Company or the subsidiary or affiliate then employing the person for any reason other than retirement, death, Disability shall not constitute a "Termination Date" for the purposes of the Plan unless either: (y) the date of such termination of employment occurs after the date of a Change of Control, or (z) the Committee, in its discretion, determines that such date of termination of employment of an Eligible Person shall constitute the "Termination Date", in each of which cases, such date of termination of employment shall constitute the "Termination Date"; and

(ii) DSUs recorded in the Account of an Eligible Person resulting from the conversion of RSUs or PSUs into DSUs in accordance with the terms of the Plan (including DSUs credited to such Account as described in 10(g) below with regard to such DSUs), upon the termination of the employment of the Eligible Person for any reason whatsoever, including, without limitation, death or Disability.

"Unit" means a RSU, PSU or a DSU and "Units" means more than one of any of the same; and

"Unit Amount" has the meaning as described in 10(j) below [XXXXXXXXXX of the Plan].

Facts

1. The Company is a Public Corporation and a Taxable Canadian Corporation. Its Common Shares are listed on the XXXXXXXXXX Exchange and trade under the symbol "XXXXXXXXXX". It has a XXXXXXXXXX fiscal and taxation year end.

2. The name of the Company was formerly XXXXXXXXXX. The Company was incorporated under the CBCA on XXXXXXXXXX.

3. XXXXXXXXXX.

4. The Company obtained an advance income tax ruling from the CCRA in connection with the XXXXXXXXXX.

5. XXXXXXXXXX.

6. The Company files its income tax returns with the XXXXXXXXXX Tax Centre and is located within the area serviced by the XXXXXXXXXX Tax Services Office.

7. XXXXXXXXXX.

8. The Company obtained an advance income tax ruling from the CCRA in connection with a Deferred Share Unit Plan for Directors (see Tax Ruling 2001-010729).

Proposed Plan

9. The Company will establish the Plan for the benefit of its key employees, subject to receipt of a favorable advance income tax ruling from CCRA. The effective date of the Plan will be XXXXXXXXXX or such later date as the Board may determine. The proposed text of the Plan with XXXXXXXXXX was included with your submission. The DSUs are set forth in the Plan by way of XXXXXXXXXX.

10. The relevant terms of the Plan are as follows:

(a) The Company will pay for the costs relating to the administration of the Plan. The Plan will be unfunded and will be administered by the Committee.

(b) The Committee may grant RSUs or PSUs to such Eligible Persons as the Committee, in its discretion, determines as a bonus in recognition of the contributions by such Eligible Persons during the year in respect of which the Grant is made. The Committee may grant DSUs to such Eligible Persons as the Committee, in its discretion, determines, in recognition of the expected contributions of such individuals, after the date of the Grant of DSUs, to future success of the Company. No DSUs will be granted unless they meet the conditions of paragraph 6801(d) of the Regulations. Such Units will be credited to the Account of the Eligible Person forthwith after the Grant is made. RSUs, PSUs and DSUs will be subject to such vesting and other conditions as the Committee may determine. Additionally, the PSUs will be subject to such performance criteria or multipliers as the Committee may determine.

(c) The Committee may also grant additional forms of units in the future through the addition of a schedule setting forth the terms relating to such additional units.

(d) The date of payment for all amounts related to RSUs and PSUs, other than those that are converted into DSUs as described in 10(e) below [XXXXXXXXXX to the Plan], shall in no event be later than XXXXXXXXXX of the third calendar year following the end of the calendar year in respect of which a Grant of RSUs or PSUs was made. The date of payment for all amounts related to DSUs shall in no event be later than XXXXXXXXXX of the first calendar year commencing after the Termination Date.

(e) At any time during the period starting on the date which is XXXXXXXXXX days before the Redemption Date and ending on the date which is XXXXXXXXXX days before the Redemption Date for any particular Grant of RSUs or PSUs, the Eligible Person granted such Units may elect in writing to convert some or all of the number of such RSUs or PSUs which the Committee, in the Grant of RSUs or PSUs, may have determined may be converted into DSUs (such number is referred to as "Converted Units"). The number of Converted Units must be evenly divisible by XXXXXXXXXX. No such election may be made in respect of any Pro-Rated Units. On the Redemption Date for those Units which are to be Converted Units, the conversion of the Converted Units into DSUs shall be deemed to occur, and the Account of the Eligible Person shall be deemed to be adjusted, as follows:

(i) the number of RSUs recorded in the Account shall be deemed to be adjusted by deducting from such number of RSUs the number of RSUs which are the subject of the election to become Converted Units and by increasing the number of DSUs by such number; and

(ii) the number of PSUs recorded in the Account shall be deemed to be adjusted by deducting from such number of PSUs the number of PSUs which are the subject of an election to become Converted Units and by increasing the number of DSUs by such number as results from dividing:

a. the product that results from multiplying (i) the number of PSUs which are the subject of the election to become Converted Units by (ii) the Redemption Value of the Common Shares and by (iii) such performance criteria or performance multiplier, if any, as was established in the discretion of the Committee for such PSUs in the Grant of such PSUs, by

b. the Redemption Value of the Common Shares utilized in such calculation.

On the Redemption Date for the Units which are the subject of an election to become Converted Units, from and after the deemed adjustment to the Account of the Eligible Person as set forth above, the entitlements of the Eligible Person, with regard to the RSUs and PSUs which have been converted into DSUs, shall cease and the Eligible Person shall thereupon have the entitlements with regard to the additional number of DSUs deemed to be recorded in the Account of the Eligible Person.

(f) If ordinary course cash dividends are paid on Common Shares, the Account of each Eligible Person that contains RSUs or PSUs shall be credited with additional RSUs or PSUs, as the case may be, on each dividend payment date in respect of which ordinary course cash dividends are paid on Common Shares. The number of additional RSUs or PSUs, as applicable, shall be calculated by dividing: (i) the amount obtained by multiplying the amount of the dividend declared and paid per Common Share by the aggregate number of RSUs or PSUs, as applicable, recorded in the Eligible Person's Account on the record date for the payment of such dividend, by (ii) the Dividend Market Value, with fractions computed to three decimal places.

(g) If ordinary course cash dividends are paid on Common Shares, the Account of each Eligible Person whose Account then contains DSUs shall be credited with additional DSUs on each dividend payment date in respect of which ordinary course cash dividends are paid on Common Shares. The number of additional DSUs shall be calculated by dividing: (i) the amount obtained by multiplying the amount of the dividend declared and paid per Common Share by the aggregate number of DSUs recorded in the Eligible Person's Account on the record date for the payment of such dividend, by (ii) the Dividend Market Value, with fractions computed to three decimal places.

(h) Subject to (i) below, in the event of the declaration of any stock dividend, subdivision, consolidation, reclassification, exchange or other change with respect to the Common Shares, or a merger, consolidation, spin-off, or other distribution (other than ordinary course cash dividends) of the Company's assets to its shareholders, the Account of each Eligible Person and the Units outstanding under the Plan shall be adjusted as the Board may deem appropriate to reflect the event.

(i) No amount will be paid to, or in respect of, an Eligible Person under the Plan or pursuant to any other arrangement, and no Units shall be granted to such Eligible Person to compensate for a downward fluctuation in the price of Common Shares, nor will any other form of benefit be conferred upon, or in respect of, an Eligible Person for such purpose. For greater certainty, the PSUs multiplier will not be used for such purpose.

(j) Subject to the Plan provisions dealing with early redemption of RSUs and PSUs (see (k) below), in respect of each Grant of RSUs or PSUs, an Eligible Person who remains an employee of the Company or any subsidiary or affiliate of the Company from the Grant Date to the Redemption Date for the Grant shall be entitled to receive on the relevant Payment Date an amount (in each case, the "Unit Amount") in respect of each of the RSUs and PSUs granted in the Grant, calculated as follows:

(i) in respect of RSUs, the product that results from multiplying: (A) the number of RSUs related to that Grant recorded in the Eligible Person's Account on the Redemption Date, by (B) the Redemption Value of the Common Shares; and

(ii) in respect of PSUs, the product that results from multiplying: (A) the number of PSUs related to that Grant recorded in the Eligible Person's Account on the Redemption Date, by (B) the Redemption Value of the Common Shares and, by (C) such performance criteria or performance multiplier, if any, as was established in the discretion of the Committee for such PSUs in the Grant.

Upon payment in full of the value of the Unit Amount less any Applicable Withholding Taxes on the Payment Date, the Units in respect of which the Unit Amount has been paid shall be cancelled.

(k) The Plan provides for the early redemption of RSUs and PSUs in the event of death, retirement or Disability, or upon the occurrence of a Change of Control [XXXXXXXXXX of the Plan] as follows:

(i) Upon the death of an Eligible Person prior to the redemption of the RSUs or PSUs credited to the Account of the Eligible Person, the beneficiary of the Eligible Person, where applicable, (or, in the absence of a valid designation of a beneficiary, the estate of a deceased Eligible Person) shall be entitled to be paid the Redemption Value of the Pro-Rated Units calculated in accordance with (j) above (with the day prior to the date of his or her death being deemed to be the Redemption Date for the purposes of such calculation) within XXXXXXXXXX days of the date of death. Such an Eligible Person shall forfeit effective on the date of death, and the estate of such an Eligible Person shall not be entitled to any payment in respect of, the number of RSUs or PSUs credited to the Account of such Eligible Person which is greater than the number of Pro-Rated Units and such number of RSUs or PSUs shall be cancelled.

(ii) Upon the retirement from the Company or any subsidiary or affiliate of the Company of an Eligible Person, or the Disability of an Eligible Person, in either case prior to the redemption of the RSUs or PSUs credited to the Account of such Eligible Person, the Eligible Person shall be entitled to be paid the Redemption Value of the Pro-Rated Units accordance with and at the date provided for in (j) above, notwithstanding the retirement or Disability of the Eligible Person. Such an Eligible Person shall forfeit effective on the date of retirement or Disability, and shall not be entitled to any payment in respect of, the number of RSUs or PSUs credited to the Account of such Eligible Person which is greater than the number of Pro-Rated Units and such number of RSUs or PSUs shall be cancelled.

(iii) Upon the occurrence of a Change of Control prior to the redemption of the RSUs or PSUs credited to the Account of an Eligible Person under the Plan, the Eligible Person shall be entitled to be paid the Redemption Value of such RSUs and PSUs calculated in accordance with (j) above (with the day prior to the date of the occurrence of the Change of Control being deemed to be the Redemption Date for purposes of such calculation) within XXXXXXXXXX days of the date of the Change of Control. Notwithstanding the foregoing, this provision shall not apply to any Eligible Person who is a party to a Change of Control or other agreement with the Company which addresses the effect of a Change of Control upon any Units granted to such Eligible Person and the provisions of such agreement shall continue to apply to any Units then held by such Eligible Person.

The Plan does not permit the payment of amounts related to DSUs until after the Termination Date.

(l) On the Redemption Date for DSUs recorded in the Account of an Eligible Person, such Eligible Person shall be entitled to receive on the relevant Payment Date the amount (the "DSU Amount") that results from multiplying: (i) the number of DSUs recorded in the Eligible Person's Account on the Redemption Date, by (ii) the Redemption Value of the Common Shares.

(m) Except for termination of employment specified in the expression "Termination Date", any Eligible Person who has been granted a Unit and who resigns or whose employment is terminated (with or without cause) prior to the Redemption Date, will no longer participate in the Plan and will immediately (effective on the date of termination of employment) and forever forfeit any right or entitlement they may have had in their Units without liability or compensation to such Eligible Person or any other person. For the purposes of the Plan, the date of termination of employment of an Eligible Person shall be the actual date upon which the Eligible Person ceases to be recorded on the books and records of the Company or any subsidiary or affiliate of the Company as an employee. The date of such termination of employment shall not be the last date of any period of notice of termination unless there is agreement to that effect between the Company and the Eligible Person.

(n) The Committee may from time to time amend or suspend the Plan in whole or in part and may at any time terminate the Plan. However, any such amendment, suspension, or termination shall not adversely affect the right of any Eligible Person with respect to Units credited to such Eligible Person at the time of such amendment, suspension or termination, without the consent of the affected Eligible Person. If the Committee terminates the Plan, no new Units will be credited to the Account of an Eligible Person, but previously credited Units shall remain outstanding, shall be entitled to credit for dividends paid on Common Shares and shall be paid in accordance with the terms and conditions of the Plan existing at the time of termination. The Plan will finally cease to operate for all purposes when the last remaining Eligible Person receives payment in satisfaction of all Units recorded in the Eligible Person's Account.

(o) As long as any DSUs are outstanding and have not been redeemed, any amendment, suspension or termination of the Plan shall be such that the Plan continuously meets the requirements of paragraph 6801(d) of the Regulations, or any successor provision thereto.

11. The Plan covers employees resident in Canada as well as non-resident employees.

12. Where an Eligible Person is an employee of a subsidiary or affiliate of the Company, that respective subsidiary or affiliate may reimburse the Company for any amount paid under the Plan in respect of such employee.

Purpose of the Proposed Plan

13. The Plan will be established to assist and encourage key employees of the Company to work toward and participate in the long-term growth and development of the Company. When granted, Units will allow such employees to participate in the long-term success of the Company to promote a greater alignment of interests between such employees and the shareholders.

Rulings Given

Provided that the preceding statements constitute a complete and accurate disclosure of all of the relevant facts, proposed Plan and purpose of the proposed Plan, and provided that the terms of the Plan are as described above and that no schedule as described in 10(c) above is added, we rule as follows:

A. The Plan will not constitute an "employee benefit plan" as that term is defined in subsection 248(1) of the Act.

B. Provided the Plan remains unfunded, the Plan will not constitute a retirement compensation arrangement, as that term is defined in subsection 248(1) of the Act.

C. The portion of the Plan that relates to the DSUs will be a prescribed plan or arrangement as described in paragraph 6801(d) of the Regulations and will therefore be excluded from the definition of a salary deferral arrangement, as contained in subsection 248(1) of the Act.

D. The portion of the Plan that relates to RSUs and PSUs will not constitute a "salary deferral arrangement" as that term is defined in subsection 248(1) of the Act by reason of paragraph (k) of that definition.

E. No amount will be included in the income of an Eligible Person pursuant to section 3, subsection 5(1), section 6, paragraph 56(1)(a) or subparagraph 115(1)(a)(i) of the Act, solely as a result of a Grant of Units under the Plan.

F. Except to the extent Ruling H applies to amounts received by an Eligible Person's legal representative, the amounts received under the Plan by or on behalf of an Eligible Person who is a resident of Canada, including Applicable Withholdings Taxes, will be included in the income of the Eligible Person pursuant to paragraph 5(1) of the Act in the year of receipt.

G. Except to the extent that Ruling H applies to amounts received by an Eligible Person's legal representative, the amount received under the Plan by or on behalf of an Eligible Person who is not a resident of Canada at the time of the receipt, to the extent the amount is attributable to services performed in Canada and, if the Eligible Person was resident in Canada at the time he or she performed the services, outside Canada, including Applicable Withholding Taxes, will be included the income of the Eligible Person pursuant to subsection 5(1) and subparagraph 115(1)(a)(i) of the Act in the year of receipt.

H. All amounts payable under the Plan to the Eligible Person's estate or to or on behalf of a beneficiary of an Eligible Person, as a result of an Eligible Person's death, will constitute a right or thing held by the deceased Eligible Person at the time of death for the purposes of subsections 70(2) and 70(3) of the Act.

I. Subject to paragraph 18(1)(a) and section 67 of the Act, where the Company makes a payment of an amount described in the above rulings in respect of services provided by an employee of the Company throughout the Eligible Person's entire period of participation in satisfaction of all or any part of the Eligible Person's interest under the Plan, the Company will be entitled to deduct the amount paid including any Applicable Withholding Taxes, in calculating its income for the year in which the payment is made in accordance with section 9 of the Act.

J. Subject to paragraph 18(1)(a) and section 67 of the Act, where a subsidiary or an affiliate as described on 12 above (referred to herein as the "Employer") has a legal obligation to repay the Company for the payment of an amount described in the above rulings in respect of services provided by an Eligible Person who was employed by the Employer throughout the Eligible Person's entire period of participation in the Plan in satisfaction of all or any part of the Eligible Person's interest under the Plan, the Employer will be entitled to deduct the amount paid including any Applicable Withholding Taxes, in calculating its income for the year in which the payment is made in accordance with section 9 of the Act.

K. Subject to paragraph 18(1)(a) and section 67 of the Act, where the Company makes a payment of an amount described in the above rulings in respect of services provided by an Eligible Person, and the Eligible Person was employed by the Company and/or one or more Employers during the Eligible Person's period of participation in the Plan, in satisfaction of all or any part of the Eligible Person's interest under the Plan, the Company will be entitled to deduct a portion of the amount paid in accordance with section 9 of the Act in calculating its income for the year in which the payment is made and each Employer will be entitled to deduct in accordance with section 9 of the Act in calculating its income for the year in which the payment is made, that portion of the amount that each Employer has a legal obligation to repay to the Company, provided the total of all of the deductions made does not exceed the amount paid by the Company.

The above advance income tax rulings, which are based on the Act and Regulations in their present form and do not take into account any proposed amendments thereto, are given subject to the general limitations and qualifications set out in Information Circular 70-6R5 Advance Income Tax Rulings, dated May 17, 2002, and are binding on the CCRA provided the proposed Plan is implemented before XXXXXXXXXX.

Yours truly,

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