2017-0715951R3 Subsequent Reorganization and 2015-0623731R3

Principal Issues: Whether winding-up of subsidiary results in the denial of the paragraph 55(3)(a) exemption.

Position: No.

Reasons: Accepted representation from taxpayer that subsequent reorganization is not part of the same series of transactions as the paragraph 55(3)(a) reorganization.

Author: XXXXXXXXXX
Section: 15(1), 55(2), 55(3)(a), 80.01(4), 88(1)

XXXXXXXXXX                                                                              2017-071595

XXXXXXXXXX, 2017

Dear XXXXXXXXXX:

Re:   XXXXXXXXXX

Advance Income Tax Ruling

This is in reply to your letter dated XXXXXXXXXX in which you requested an advance income tax ruling on behalf of the above-noted taxpayers.  We also acknowledge the information provided in subsequent letters, e-mails and telephone discussions (XXXXXXXXXX).  The information that you provided in such correspondence and in the telephone discussions form part of this letter only to the extent described herein.

We understand that to the best of your knowledge and that of the taxpayers involved, none of the issues described herein is:

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

(ii)  being considered by a tax services office or taxation centre in connection with a previously filed tax return of the taxpayers or a person related to the taxpayers;

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

(iv)  before the courts or if a judgment has been issued, the time limit for appeal to a higher court has expired; or

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

Unless specified otherwise, all statutory references herein are to provisions or parts of the Income Tax Act (Canada), R.S.C. 1985 (5th Supp.) c. 1, as amended to the date hereof (the “Act”) and all references to monetary amounts are in Canadian dollars.

I.    DEFINITIONS

In this ruling application, the following terms have the meanings specified and, where the circumstances so require, the singular should be read as plural and vice versa. Unless otherwise noted, a reference in this ruling to a part, section, subsection, paragraph or subparagraph is a reference to the relevant provisions of the Act.

XXXXXXXXXX Agreement” means the XXXXXXXXXX between Partnership and Subco 1 made as of XXXXXXXXXX, and amended and restated on XXXXXXXXXX and amended and restated again as of XXXXXXXXXX. As set out in the Partnership Dissolution Ruling, the XXXXXXXXXX Agreement was transferred from Partnership to Subco 2 on the dissolution of Partnership;

“Adjusted cost base” or “ACB” has the meaning assigned by section 54 and subsection 248(1);

“Application for Dissolution” means the Form 17, Dissolution Request, for voluntary dissolution to be filed with the XXXXXXXXXX;

“Assumed Liabilities” means the liabilities of Subco 1 at the time of the transfer described in paragraph 16 below, but excluding the Subco 1-Parent Debt and Subco 1 taxes payable;

XXXXXXXXXX means XXXXXXXXXX incorporated under the XXXXXXXXXX on XXXXXXXXXX, and a wholly-owned subsidiary of Parent;

“BCA1” means XXXXXXXXXX;

“BCA2” means XXXXXXXXXX;

XXXXXXXXXX;

“common share” has the meaning assigned by subsection 248(1);

“CRA” means Canada Revenue Agency;

XXXXXXXXXX

“Elected Amounts” means the amounts that Subco 1 and Newco will agree on in their subsection 85(1) election in respect of the transfer by Subco 1 of each of the Transferred Assets to Newco as described in paragraph 16 below;

XXXXXXXXXX GP” means XXXXXXXXXX a corporation governed by the XXXXXXXXXX and the general partner of XXXXXXXXXX LP;

XXXXXXXXXX GP Shares” means the common shares of XXXXXXXXXX GP, currently held by Subco 1;

XXXXXXXXXX LP” means the limited partnership formed pursuant to the laws of XXXXXXXXXX;

“XXXXXXXXXX LP Units” means the XXXXXXXXXX limited partnership units (representing a XXXXXXXXXX% interest) of XXXXXXXXXX LP currently held by Subco 1;

“FMV” means fair market value;

“forgiven amount” has the meaning assigned by subsection 80(1);

“Group” means Parent and the corporations controlled by Parent;

“Initial Newco Share” means the Newco Common Share issued to Subco 1 on the incorporation of Newco as described in paragraph 15 below;

XXXXXXXXXX means XXXXXXXXXX, a partnership in which Parent and an unrelated person are partners;

“Newco” means the corporation incorporated pursuant to the BCA1 as described in paragraph 15 below;

“Newco Common Shares” means the common shares of Newco as described in paragraph 15 below;

“Outstanding Parent-Subco 1 Debt” means the portion of the Parent-Subco 1 Debt owing by Parent to Subco 1 subsequent to the legal set-off described in paragraph 19 below;

“paid-up capital” or “PUC” has the meaning assigned by subsection 89(1);

“Parent” means XXXXXXXXXX a corporation governed by the BCA1;

“Parent-Subco 1 Debt” means the aggregate debt owing by Parent to Subco 1 as described in paragraph 12 below;

“Parent-Subco 1 Note” means the demand non-interest bearing promissory note to be issued by Parent to Subco 1 to evidence the Outstanding Parent-Subco 1 Debt, as described in paragraph 19 below;

“Parent Preferred Shares” means the XXXXXXXXXX Preferred Shares of Parent;

“Partnership” means XXXXXXXXXX a Canadian general partnership that was formed on XXXXXXXXXX and dissolved on XXXXXXXXXX as contemplated in the Partnership Dissolution Ruling.  “Partnership” may also refer to XXXXXXXXXX

“Partnership Dissolution Ruling” means Advance Income Tax Ruling #2015-060144, dated XXXXXXXXXX 2015;

“principal amount” has the meaning assigned by subsection 248(1);

“Proposed Transactions” means the transactions described in paragraphs 14 to 21 below;

“public corporation” has the meaning assigned by subsection 89(1);

“Redemption Dividends” means the dividends deemed to have been received by Subco 1 and Subco 2 pursuant to subsection 84(3) as a result of the redemption of shares as described in the Subco 2 Redemption Ruling;

“restricted financial institution” or “RFI” has the meaning assigned by subsection 248(1);

XXXXXXXXXX

XXXXXXXXXX

XXXXXXXXXX

“Subco 1” means XXXXXXXXXX, a corporation governed by the BCA1;

“Subco 1 Business” means the Transferred Assets and the Assumed Liabilities;

“Subco 1 Common Shares” means the XXXXXXXXXX Common Shares of Subco 1;

“Subco 1-Parent Debt” means the debt owing by Subco 1 to Parent as described in paragraph 13 below;

“Subco 1 Unpaid Amount” means an unpaid amount in respect of a deductible outlay or expense that is owing by Subco 1 to a person with whom Subco 1 is not dealing at arm’s length;

“Subco 2” means XXXXXXXXXX a corporation governed by the BCA2;

“Subco 2 Redemption Ruling” means Advance Income Tax Ruling #2015-062373, dated XXXXXXXXXX 2016;

“Subco 2 Redemption Ruling Proposed Transactions” means the proposed transactions set out in the Subco 2 Redemption Ruling and implemented on XXXXXXXXXX and generally described in Paragraph 9C;

“Subco 3” means XXXXXXXXXX;

“taxable Canadian corporation” has the meaning assigned by subsection 89(1);

“taxable dividend” has the meaning assigned by subsection 89(1);

“taxation year” has the meaning assigned by subsection 249(1); and

“Transferred Assets” means the assets of Subco 1 at the time of the transfer described in paragraph 16 below, including intercompany receivables, Subco 1 bank accounts, the XXXXXXXXXX and XXXXXXXXXX, but excluding the Initial Newco Share, the Parent Preferred Shares, the Parent-Subco 1 Debt, the XXXXXXXXXX GP Shares, the XXXXXXXXXX LP Units, Subco 1 taxes receivable, tax instalments, and input tax credits.

II.   FACTS

1.    XXXXXXXXXX

2.    XXXXXXXXXX

3.    Substantially all of Group’s operations and sales are in Canada. Group has a XXXXXXXXXX workforce of approximately XXXXXXXXXX employees. Substantially all of the Group employees are situated in Canada.

4.    Group’s business is divided into XXXXXXXXXX key segments:

XXXXXXXXXX

5.    Parent is the parent company in Group. Parent is a “public corporation” for the purposes of the Act. The shares of Parent are publicly traded on the XXXXXXXXXX Stock Exchange.

6.    Parent holds all of the issued and outstanding common shares of Subco 2. The shares of Subco 2 are capital property to Parent.1

7.    Subco 1 operates a XXXXXXXXXX in Canada in accordance with terms and conditions specified by the XXXXXXXXXX. Subco 1 holds a XXXXXXXXXX. Subco 1 provides XXXXXXXXXX to Subco 2 pursuant to the XXXXXXXXXX Agreement.

8.    Parent holds all of the issued and outstanding Subco 1 Common Shares with an ACB of $XXXXXXXXXX and a PUC of $XXXXXXXXXX. Subco 1 is currently a public corporation for the purposes of the Act because XXXXXXXXXX. The shares of Subco 1 are capital property to Parent. Subco 1 has no non-capital loss carryforwards and $XXXXXXXXXX of capital loss carryforwards.

9.    Subco 1 holds all of the issued and outstanding XXXXXXXXXX Preferred Shares with an ACB and PUC of $XXXXXXXXXX and a redemption amount of $XXXXXXXXXX Preferred Shares were issued on XXXXXXXXXX, when Subco 1 transferred XXXXXXXXXX Partnership units to a predecessor of Parent in consideration for the issuance by such predecessor of Parent to Subco 1 of XXXXXXXXXX. The transferred Partnership units were valued at $XXXXXXXXXX and the purchase price for the transferred units was that amount. Subco 1 and the predecessor of Parent jointly elected under subsection 85(1) of the Act in respect of the transfer. The transfer was implemented to utilize losses of the predecessor of Parent.

9A.   A predecessor of Parent transferred XXXXXXXXXX Partnership units to Subco 3 in XXXXXXXXXX.  The transfer was implemented to utilize Subco 3’s losses.  A predecessor of Parent re-acquired the XXXXXXXXXX Partnership units in XXXXXXXXXX.  That transfer was implemented to utilize losses of the predecessor of Parent.  Parent subsequently transferred all of its Partnership units to a predecessor of Subco 2 in XXXXXXXXXX. Parent has not directly owned any Partnership units since the latter transfer.

9B.   The Partnership was dissolved on XXXXXXXXXX.  The transactions relating to the dissolution of the Partnership are more particularly described in the Partnership Dissolution Ruling and included the transfer of all of the Partnership units held by one partner (Subco 1) to the other partner (Subco 2) in exchange for preferred shares in the capital of Subco 2 which resulted in the dissolution of the Partnership and Subco 2 becoming the sole owner of all of the property of the Partnership.

9C.   The preferred shares in the capital of Subco 2 issued in exchange for the Partnership units were redeemed on XXXXXXXXXX.  The transactions relating to the redemption of the preferred shares in the capital of Subco 2 are described in the Subco 2 Redemption Ruling and included an exchange of all of the common shares in the capital of Subco 1 held by Parent for a class of preferred shares in the capital of Subco 1 with a fair market value equal to the fair market value of the preferred shares in the capital of Subco 2 and new common shares in the capital of Subco 1.  Parent then transferred the preferred shares in the capital of Subco 1 to Subco 2.  Subco 1 redeemed all of its preferred shares held by Subco 2 in exchange for a promissory note issued by Subco 1.  Subco 2 redeemed all of its preferred shares held by Subco 1 for a promissory note issued by Subco 2.  The redemption of the Subco 1 preferred shares and the Subco 2 preferred shares gave rise to the Redemption Dividends.  The promissory note issued by Subco 1 was set-off against the promissory note issued by Subco 2.

10.   Subco 1 holds all of the issued and outstanding XXXXXXXXXX Preferred Shares with ACB and PUC of $XXXXXXXXXX and redemption amount of $XXXXXXXXXX. The XXXXXXXXXX Preferred Shares were issued on XXXXXXXXXX, when Subco 1 transferred its XXXXXXXXXX% interest in XXXXXXXXXX to a predecessor of Parent in consideration for the issuance by the predecessor of Parent to Subco 1 of XXXXXXXXXX Preferred Shares. Subco 1 and the predecessor of Parent jointly elected under subsection 85(1) in respect of the transfer. The transfer was implemented to utilize the losses of the predecessor of Parent.

10A.  Parent continues to own the interest in XXXXXXXXXX.

11.   The taxation year of each of Parent, Subco 2 and Subco 1 is XXXXXXXXXX. The head office of Parent, Subco 2 and Subco 1 is located at XXXXXXXXXX, and each corporation files its income tax returns at the XXXXXXXXXX Tax Centre and otherwise deals with the XXXXXXXXXX Tax Services Office.

12.   Parent is indebted to Subco 1 (the “Parent-Subco 1 Debt”), which indebtedness is evidenced by promissory notes issued by Parent to Subco 1. This indebtedness arose as a result of the XXXXXXXXXX dividends paid on the Parent Preferred Shares, each of which was satisfied through the issuance of a non-interest bearing demand promissory note of Parent. The promissory notes are issued by Parent in payment of the dividends on the XXXXXXXXXX.  Subco 1 accepted the promissory notes in full payment and satisfaction of the dividends payable to Subco 1 under the Parent Preferred Shares.  The current aggregate principal amount of the Parent-Subco 1 Debt is approximately $XXXXXXXXXX. Parent will continue to issue promissory notes to Subco 1 in payment of accrued dividends until the winding-up of Subco 1 as described below, and the principal amount of such future promissory notes will be added to the Parent-Subco 1 Debt.  Subco 1 will accept the promissory notes in full payment and satisfaction of the dividends that will be due to Subco 1 on the Parent Preferred Shares.  The cost amount to Subco 1 of the Parent-Subco 1 Debt is equal to the principal amount owing thereunder.

13.   Subco 1 is indebted to Parent in the aggregate amount of approximately $XXXXXXXXXX (the “Subco 1-Parent Debt”). The Subco 1-Parent Debt consists of demand non-interest bearing advances made by Parent to Subco 1. The cost amount to Parent of the Subco 1-Parent Debt is equal to the principal amount owing thereunder.

III.  PROPOSED TRANSACTIONS

Following receipt of this letter, the following transactions will be undertaken in the order set out below:

14.   Parent will repay in cash an amount of the Parent-Subco 1 Debt equal to the Subco 1 Unpaid Amounts. Subco 1 will repay the Subco 1 Unpaid Amounts in cash.

15.   Subco 1 will incorporate a new corporation (“Newco”) under the provisions of the BCA1. The authorized share capital of Newco will consist of an unlimited number of common shares (the “Newco Common Shares”). On incorporation, Subco 1 will subscribe for 1 Newco Common Share for $XXXXXXXXXX (the “Initial Newco Share”).

16.   Subco 1 will transfer the Transferred Assets to Newco in consideration for (i) the issuance to Subco 1 of Newco Common Shares; and (ii) the assumption of the Assumed Liabilities by Newco. Subco 1 and Newco will jointly elect under subsection 85(1) in prescribed form and manner and within the time referred to in subsection 85(6) with respect to the transfer of the Transferred Assets to Newco. The Elected Amounts in respect of the Transferred Assets will be as follows:

i)    in the case of capital property (other than depreciable property of a prescribed class) and inventory, an amount equal to the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii); and

ii)   in the case of depreciable property of a prescribed class, an amount equal to the least of the amounts described in subparagraphs 85(1)(e)(i), (ii) and (iii).

In addition, in each case, the Elected Amount in respect of any particular property will not exceed the FMV of that property, nor will it be less than the amount permitted under paragraph 85(1)(b). The amount of the Assumed Liabilities that is allocated to a particular property that is the subject of an election under subsection 85(1), as described herein, will not exceed the Elected Amount for that particular property. The amount of the Assumed Liabilities that is allocated to a particular property that is not the subject of an election under subsection 85(1), as described herein, will not exceed the FMV of such particular property. The amount added to the stated capital account maintained for the Newco Common Shares will equal the amount by which the aggregate cost of Newco (determined pursuant to subsection 85(1), where relevant) of the Transferred Assets exceeds the aggregate amount of the Assumed Liabilities.

17.   [Intentionally Deleted].

18.   Parent will declare and pay dividends on the Parent Preferred Shares equal to the accrued dividends in respect of such shares up to the date of the winding-up of Subco 1 as required pursuant to the terms of the Parent Preferred Shares and to eliminate Parent’s obligation to pay such dividends prior to the cancellation of such shares. Such dividends will be paid and satisfied by the issuance to Subco 1 of additional non-interest bearing demand promissory notes of Parent.  The payment of such dividends by the issuance of promissory notes is to avoid having to circle cash from Parent to Subco 1 back to Parent.

19.   The principal amount owing under the Subco 1-Parent Debt will be set-off against an equal principal amount owing under the Parent-Subco 1 Debt (as decreased pursuant to the repayment described in paragraph 14 and as increased pursuant to the dividends paid and notes issued in paragraph 18), in full satisfaction of (i) the Subco 1-Parent Debt, and (ii) an equal principal amount owing under the Parent-Subco 1 Debt. Subsequent to the set-off, the remaining principal amount owing under the Parent-Subco 1 Debt will be referred to as the “Outstanding Parent-Subco 1 Debt”. All promissory notes previously issued by Parent to Subco 1 evidencing the Parent-Subco 1 Debt (including those notes issued in paragraph 18) will be marked cancelled, and Parent will issue a new demand non-interest bearing promissory note (the “Parent-Subco 1 Note”) to Subco 1 evidencing the Outstanding Parent-Subco 1 Debt.

20.   For greater certainty, Subco 1 will reduce the stated capital of the Subco 1 Common Shares to $XXXXXXXXXX without making any payment to Parent as the shareholder of the Subco 1 Common Shares.  The PUC of a Subco 1 Common Share has never exceeded its ACB.

21.   Subco 1 will undertake a voluntary dissolution under of the BCA1. In connection with the dissolution:

i)    All of the remaining property of Subco 1 (including the Newco Common Shares, the Parent-Subco 1 Note and the Parent Preferred Shares) will be distributed to, and all of the remaining liabilities of Subco 1 will be discharged or assumed by, Parent;

ii)   The Parent Preferred Shares distributed to Parent on the winding-up will be cancelled by Parent;

iii)  The Parent – Subco 1 Note will be settled as a result of the winding-up of Subco 1 as a matter of law, due to the merger of rights of debtor and creditor. Parent will file an election under subsection 80.01(4) to deem the Parent-Subco 1 Note to have been settled for an amount equal to Subco 1’s cost amount of the Parent-Subco 1 Note;

iv)   An irrevocable power of attorney will be granted by Subco 1 to Parent; and

v)    Subco 1 will file an Application for Dissolution in due course.

IV.   ADDITIONAL INFORMATION

22.   The Proposed Transactions are not part of the same series of transactions or events that include the Redemption Dividends.  The Proposed Transactions would have been implemented regardless of whether the Subco 2 Redemption Ruling Proposed Transactions were completed.  The Subco 2 Redemption Ruling Proposed Transactions would have been implemented regardless of whether the Proposed Transactions are completed.  For greater certainty, it was not necessary to implement the Subco 2 Redemption Ruling Proposed Transactions in order to implement the Proposed Transactions.

23.   Each of Parent and Subco 1 is a “taxable Canadian corporation”.

24.   XXXXXXXXXX

25.   The FMV of the Subco 1-Parent Debt will be equal to the principal amount of the Parent-Subco 1 Debt that will be repaid by way of set-off as described in Paragraph 19.

25A.  The repayment of part of the Parent-Subco 1 Debt by set-off described in Paragraph 19 will not result in the novation, cancellation or other settlement of the balance of the Parent-Subco 1 Debt owing after such repayment.

25B.  The Parent-Subco 1 Debt is not a commercial debt obligation and was incurred by Parent on capital account.

26.   None of the purposes for the declaration and payment of the dividends on the Parent Preferred Shares described in Paragraph 18 are set out in subsection 55(2.1).

27.   The Parent Preferred Shares will not at any time during a series of events or transactions that includes the Proposed Transactions be:

(a)   the subject of any undertaking or agreement that is a “guarantee agreement”, within the meaning referred to in subsection 112(2.2);

(b)   the subject of a “dividend rental arrangement” referred to in subsection 112(2.3), as that term is defined in subsection 248(1);

(c)   the subject of any secured undertaking of the type described in paragraph 112(2.4)(a);

(d)   issued for consideration that is or includes:

(i)   an obligation of the type described in subparagraph 112(2.4)(b)(i), other than an obligation of a corporation that is related (otherwise than by reason of a right referred to in paragraph 251(5)(b)); or

(ii)  any right of the type described in subparagraph 112(2.4)(b)(ii); or

(e)   issued or acquired as part of a transaction or event or series of transactions or events of the type described in subsection 112(2.5).

27A.  Subco 1 did not acquire the Parent Preferred Shares in the ordinary course of the business carried on by it.

27B.  Subco 1 will not, at any time during a series of transactions that includes the Proposed Transactions, be an RFI or a corporation described in any of paragraphs (a) to (f) of the definition of “financial intermediary corporation” in subsection 191(1).

V.    PURPOSE OF THE PROPOSED TRANSACTIONS

28.   The purpose of the Proposed Transactions is to simplify the corporate structure of Group by eliminating the upstream shareholding between Parent and Subco 1. This simplification will reduce the complexity and cost of administration and compliance.

28A.  The reduction of the stated capital of the Parent Preferred Shares to $XXXXXXXXXX described in Paragraph 20 is for greater certainty and has no other purpose.

VI.   RULINGS

Provided that the preceding statements constitute a complete and accurate disclosure of all of the relevant facts, proposed transactions and the purposes of the Proposed Transactions, the Proposed Transactions are completed in the manner described above, and there are no other transactions which may be relevant to the rulings:

A.    The set-off and cancellation of the Subco 1-Parent Debt and an equal portion of the Parent-Subco 1 Debt, as described in paragraph 19, will not give rise to a “forgiven amount” for the purposes of section 80, and neither Subco 1 nor Parent will realize any gain or incur any loss therefrom.

B.    The provisions of subsection 88(1) will apply to the winding-up of Subco 1 as described in paragraph 21 and in particular, paragraph 88(1)(a) will apply to determine the proceeds of disposition of each property of SubCo 1, including the Parent Preferred Shares.

C.    The distribution of the Parent Preferred Shares to Parent on the winding-up of Subco 1 and the cancellation of such shares by Parent as described in paragraph 21 will not give rise to a deemed dividend under subsection 84(3).

D.    Provided that the election referred to in paragraph 80.01(4)(c) is filed in a timely manner, subsection 80.01(4) will apply to the cancellation of the Parent-Subco 1 Note as a result of the winding-up of Subco 1 described in paragraph 21 above.

E.    The implementation of the Proposed Transactions will not, in and by itself, cause subsection 55(2) to apply to the Redemption Dividends.

F.    Subsections 15(1), 56(2) and 246(1) will not apply to the Proposed Transactions.

G.    The provisions of subsection 245(2) will not apply to redetermine the tax consequences confirmed in the rulings given above.

The above rulings are given subject to the limitations and qualifications set forth in Information Circular 70-6R7 issued on April 22, 2016, and are binding on the CRA provided that the Proposed Transactions are completed before XXXXXXXXXX.

The above rulings are based on the Act in its present form and do not take into account any proposed amendments to the Act, which if enacted, could have an effect on the rulings provided herein.

COMMENTS

Unless otherwise expressively confirmed, nothing in this ruling should be construed as implying that the CRA has confirmed, reviewed, made any determination, or accepted any method for the determination in respect of:

a)    the FMV or ACB of any property referred to herein or the PUC in respect of any share referred to herein;

b)    whether subsection 55(2) applied or applies to the dividends described in Paragraph 12;

c)    the outstanding balance of various tax accounts such as RDTOH, LRIP, non-capital losses, or CDA for any of the corporate entities described herein; and

d)    any provincial tax consequences of the Proposed Transactions or any other tax consequence relating to the facts, proposed transactions or any transaction or event taking place either prior to the Proposed Transactions or subsequent to the Proposed Transactions, whether described in this letter or not, other than those specifically described in the rulings given above, including whether any of the Proposed Transactions would also be included in a series of transactions or events that includes other transactions or events that are not described in this letter.

Nothing in this letter should be construed as confirmation, express or implied, that, for the purpose of any of the rulings given above, any adjustment to the FMV of the properties transferred or the redemption amount of the shares issued as consideration, whether pursuant to a price adjustment clause or otherwise, will be effective retroactively to the time of the transfer or issuance of shares.  Furthermore, none of the rulings given in this letter are intended to apply to, or in the event of, the operation of a price adjustment clause, since such adjustment will be due to circumstances that do not constitute proposed transactions that are seriously contemplated.  The general position of the CRA with respect to price adjustment clauses is stated in Income Tax Folio S4-F3-C1, Price Adjustment Clauses, dated March 28, 2013.

Yours truly,

XXXXXXXXXX
for Division Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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