2000 External T.I. 9931905 - INVESTMENT TRUST - PURCHASE PLAN

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

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

Principal Issues:

1. Effect of extending period for measuring price?

2. Whether additional Purchase Plan is subject to same provisions that the Reinvestment Plan is subject to?

Position:

1. no change
2. yes

Reasons:

1. The benefit pertains to the fact that there is a discount, not to the period for which the price is determined.

2. The Purchase Plan provides for a discount similar to that of the Reinvestment Plan.

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993190

XXXXXXXXXX, 2000

Dear Sir:

Re: XXXXXXXXXX

This is in reply to your letter of XXXXXXXXXX in which you advised us of two changes to the proposed transactions set out in our advance income tax ruling letter 991185 dated XXXXXXXXXX, 1999 (the "Ruling Letter"). You requested us to confirm that the rulings we issued would not be affected by the changes and that similar rulings would apply with respect to the newly proposed Unit Purchase Plan. We acknowledge our related telephone conversations.

Proposed Transactions

In paragraph 8 of the Ruling Letter, it was stated that the price of Units of the REIT to be acquired under the XXXXXXXXXX Reinvestment Plan (the "Reinvestment Plan") would be equal to XXXXXXXXXX% of the weighted average price of Units of the REIT on the XXXXXXXXXX Stock Exchange for the five trading days immediately preceding the relevant Distribution Date. You have advised us that the price will actually be equal to XXXXXXXXXX% of the weighted average price for the twenty trading days immediately preceding the relevant Distribution Date.

In addition to the Reinvestment Plan set out in the Ruling Letter, you have advised us that a Unit Purchase Plan (the "Purchase Plan") is also being established. Under the Purchase Plan, any Canadian resident Unitholder of the REIT may purchase, for cash, additional Units of the REIT at a price equal to XXXXXXXXXX% of the weighted average price of Units of the REIT on the XXXXXXXXXX Stock Exchange on the effective date of the purchase.

Units will be available for purchase on the last business day of each month and the minimum purchase will be $XXXXXXXXXX in any month, with a maximum purchase of $XXXXXXXXXX per year. The aggregate number of Units that may be issued under the Purchase Plan may not exceed in each year XXXXXXXXXX% of the number (at the commencement of the fiscal year of the REIT) of the outstanding Units of the REIT. If an excess amount is subscribed for, each purchaser will limited on a pro rata basis as to the number of Units that can be purchased.

A Unitholder who participates in and purchases Units of the REIT under the Purchase Plan, need not have participated in the Reinvestment Plan. However, a Unitholder who purchases Units through the Purchase Plan, will automatically participate in the Reinvestment Plan in respect of Units purchased through the Purchase Plan.

Our Comments

Since it is our understanding that the Reinvestment Plan and the Purchase Plan have already been made available to the Unitholders of the REIT, we are not able to issue a supplemental advance income tax ruling. However, pursuant to your request of XXXXXXXXXX that we provide non-binding opinions, we are able to provide the following comments.

It is our view that subsections 105(1) and 52(1) of the Income Tax Act will continue to apply with respect to the Reinvestment Plan, as described in the Ruling Letter. It is also our view that these subsections will similarly apply with respect to the Purchase Plan.

Yours truly,

for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch