2018-0761621R3 Cross-Border Butterfly

Principal Issues: Whether the Canadian Butterfly Transactions, as described below, in the context of a cross-border butterfly, meet legislative and administrative requirements?

Position: Transactions meet requirements.

Reasons: Consistent with law and administrative requirements.

Author: XXXXXXXXXX
Section: 55(2), 55(3)(b), 55(3.1), 55(3.2)(h), 212.1(1), 212.1(1.1), 212.1(1.2)

XXXXXXXXXX                                               2018-076162

XXXXXXXXXX, 2019

Dear XXXXXXXXXX:

Re:   XXXXXXXXXX
         Advance Income Tax Ruling Request

This is in reply to your letter of XXXXXXXXXX, in which you requested an advance income tax ruling on behalf of the above-noted taxpayer.  We also acknowledge the additional information provided to us in subsequent letters and emails, and during our various telephone conversations.

To the best of your knowledge, and that of the taxpayer involved, none of the issues involved in this ruling request is:

(i)   in a previously filed tax return of the taxpayer or a person related to the taxpayer;

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

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

(iv)  the subject of a current or completed court process involving the taxpayer or a person related to the taxpayer; or

(v)   the subject of an advance income ruling previously issued by the Income Tax Rulings Directorate.

I.    ENTITIES INVOLVED

Throughout this letter, the entities below will be referred to as follows:

“AcquisitionCo” means XXXXXXXXXX, a TCC, as described in Paragraph 28;

“Canadian DC” means XXXXXXXXXX, a corporation existing under the BCA 1, as described in Paragraph 15;

“Canadian DC Group” means, collectively, Canadian DC, CanSpinco 1, CanSpinco 2, CanSpinco 3, and CanKeepco 1 to 7;

“Canadian TC” means the unlimited liability company to be incorporated by Foreign SpincoSub under the BCA 8, as described in Paragraph 36;

“CanKeepco 1” means XXXXXXXXXX, a corporation existing under the BCA 1 with Business Number XXXXXXXXXX;

“CanKeepco 2” means XXXXXXXXXX, a corporation existing under the BCA 3 with Business Number XXXXXXXXXX;

“CanKeepco 3” means XXXXXXXXXX, a corporation existing under the BCA 4 with Business Number XXXXXXXXXX;

“CanKeepco 4” means XXXXXXXXXX., a corporation existing under the BCA 5;

“CanKeepco 5” means XXXXXXXXXX, a corporation existing under the BCA 2 with Business Number XXXXXXXXXX;

“CanKeepco 6” means XXXXXXXXXX, a corporation existing under the BCA 6 with Business Number XXXXXXXXXX;

“CanKeepco 7” means XXXXXXXXXX, a corporation existing under the BCA 7 with Business Number XXXXXXXXXX;

“CanKeepco 1 to 7” means, collectively, CanKeepco 1, CanKeepco 2, CanKeepco 3, CanKeepco 4, CanKeepco 5, CanKeepco 6 and CanKeepco 7;

“CanSpinco 1” means XXXXXXXXXX, a corporation existing under the BCA 2 with Business Number XXXXXXXXXX;

“CanSpinco 2” means XXXXXXXXXX, a corporation existing under the BCA 2 with Business Number XXXXXXXXXX;

“CanSpinco 3” means “XXXXXXXXXX, a corporation existing under the BCA 2 with Business Number XXXXXXXXXX;

“Forco 1” means XXXXXXXXXX, a corporation formed under the laws of State 1 that is a Subsidiary Wholly-Owned Corporation of Foreign Pubco;

“Forco 2” means XXXXXXXXXX a corporation formed under the laws of State 1 that is a Subsidiary Wholly-Owned Corporation of Foreign Pubco;

“Forco 3” means XXXXXXXXXX, a corporation formed under the laws of State 2 that is a Subsidiary Wholly-Owned Corporation of Forco 1;

“Forco 4” means XXXXXXXXXX, a corporation formed under the laws of State 3 that is a Subsidiary Wholly-Owned Corporation of Forco 1;

“Forco 5” means XXXXXXXXXX, a corporation formed under the laws of State 3 that is a Subsidiary Wholly-Owned Corporation of Forco 4;

“Forco 6” means XXXXXXXXXX, a corporation formed under the laws of State 3 that is a Subsidiary Wholly-Owned Corporation of Forco 5;

“Forco 7” means XXXXXXXXXX, a corporation formed under the laws of State 3 that is a Subsidiary Wholly-Owned Corporation of Forco 6;

“Foreign Pubco” means XXXXXXXXXX, a corporation existing under the laws of State 1;

“Foreign Pubco Group” means Foreign Pubco, together with its direct and indirect subsidiaries including the Canadian DC Group;

“Foreign Spinco” means the new corporation formed under the laws of State 1, as described in Paragraph 4;

“Foreign SpincoSub” means the new corporation to be formed under the laws of State 1, as described in Paragraph 32;

“Predecessor Corporation” means XXXXXXXXXX, a TCC, prior to its amalgamation with AcquisitionCo to form Sister Canco 5, as described in Paragraph 28;

“Sister Canco 1” means XXXXXXXXXX, XXXXXXXXXX corporation described in Paragraph 16;

“Sister Canco 2” means XXXXXXXXXX, XXXXXXXXXX corporation described in Paragraph 16;

“Sister Canco 3” means XXXXXXXXXX, XXXXXXXXXX corporation described in Paragraph 16;

“Sister Canco 4” means XXXXXXXXXX, XXXXXXXXXX corporation described in Paragraph 16;

“Sister Canco 5” means XXXXXXXXXX, XXXXXXXXXX corporation.  It was formed on an amalgamation of the Predecessor Corporation and AcquisitionCo on XXXXXXXXXX, as described in Paragraph 28;

“Sister Forco 1” means XXXXXXXXXX, as described in Paragraph 28(d);

“Sister Forco 2” means XXXXXXXXXX, as described in Paragraph 28(d); and

“Sister Forco 3” means XXXXXXXXXX, as described in Paragraph 17.

II.   DEFINITIONS

Unless otherwise expressly stated, every reference herein to the “Act” or to a part, section or subsection, paragraph or subparagraph and clause or subclasses is a reference to the relevant provision of the Income Tax Act (Canada), R.S.C. 1985 (5th Supp.) c.1, as amended from time to time and consolidated to the date of this letter and the Income Tax Regulations thereunder are referred to as the “Regulations”.

Unless otherwise noted, all references herein to a currency are a reference to Canadian dollars.

In this letter, the following terms have the meanings specified and, where the circumstances so require, the singular should be read as plural and vice versa:

“ACB” means adjusted cost base, as defined in section 54;

“Additional Canadian DC Cash Transfer” has the meaning described in Paragraph 47;

“Agreed Amount” in respect of a property means the amount that a transferor and transferee have agreed upon in a joint election under subsection 85(1) in respect of a transfer of an Eligible Property;

“Arm’s Length” has the meaning assigned by subsection 251(1);

“Bank” means XXXXXXXXXX;

“BCA 1” means XXXXXXXXXX, as amended;

“BCA 2” means XXXXXXXXXX, as amended;

“BCA 3” means XXXXXXXXXX, as amended;

“BCA 4” means XXXXXXXXXX, as amended;

“BCA 5” means XXXXXXXXXX, as amended;

“BCA 6” means XXXXXXXXXX, as amended;

“BCA 7” means XXXXXXXXXX, as amended;

“BCA 8” means XXXXXXXXXX, as amended;

“Butterfly Percentage” means the proportion, expressed as a percentage, that the aggregate net FMV of the business property owned by Canadian DC that relates to the Canadian Spin Business, is of the aggregate net FMV of all of the business property of Canadian DC, in each case, determined: (a) immediately before the Canadian DC Transfer, and (b) using the principles set out in Paragraphs 42 and 43;

“CRA” means the Canada Revenue Agency;

“Canadian Butterfly Transactions” means the transactions described in Paragraphs 34 to 54;

“Canadian DC Articles” means the certificate of amalgamation and articles of Canadian DC which became effective on XXXXXXXXXX;

“Canadian DC Capital Reorganization” means the reorganization of capital described in Paragraph 37;

“Canadian DC Common Shares” means the existing common shares of Canadian DC;

“Canadian DC Dividend” means the dividend, deemed by subsection 84(3), to have been paid by Canadian DC and received by Canadian TC, arising on the Canadian DC Redemption, as described in Ruling D;

“Canadian DC New Common Shares” means the shares described in Paragraph 37;

“Canadian DC Redemption” has the meaning described in Paragraph 52;

“Canadian DC Redemption Amount” means the redemption of a Canadian Special Share, as described in Paragraph 37;

“Canadian DC Redemption Note” means the promissory note described in Paragraph 52;

“Canadian DC Shares” has the meaning described in Paragraph 37;

“Canadian DC Share Exchange” has the meaning described in Paragraph 38;

“Canadian DC Special Shares” means the shares described in Paragraph 37;

“Canadian DC Transfer” has the meaning described in Paragraph 45;

“Canadian Retained Business 1” has the meaning described in Paragraph 15(b);

“Canadian Spin Business” has the meaning described in Paragraph 15(a);

“Canadian TC Assumed Liability” has the meaning described in Paragraph 48(a);

“Canadian TC Common Shares” means the common shares of Canadian TC, as described in Paragraph 36(a);

“Canadian TC Dividend” means the dividend, deemed by subsection 84(3), to have been paid by Canadian TC and received by Canadian DC, arising on the Canadian TC Redemption, as described in Ruling D;

“Canadian TC Redemption” has the meaning described in Paragraph 51;

“Canadian TC Redemption Amount” has the meaning described in Paragraph 36(b);

“Canadian TC Redemption Note” means the promissory note described in Paragraph 51;

“Canadian TC Special Shares” means the shares described in Paragraph 36(b);

“CDA” means capital dividend account, as defined in subsection 89(1);

“Capital Property” has the meaning assigned by section 54 and subsection 248(1);

“Cash Sweeping 1” has the meaning assigned in Paragraph 23;

“Cash Sweeping 2” has the meaning assigned in Paragraph 23;

“Cash Sweepings” means, collectively, the Cash Sweeping 1 and the Cash Sweeping 2;

“Country 1” means XXXXXXXXXX;

“Country 2” means XXXXXXXXXX;

“Country 3” means XXXXXXXXXX;

“Country 4” means XXXXXXXXXX;

“Distribution Property” has the meaning described in Paragraph 45;

“Eligible Dividend” has the meaning assigned by subsection 89(1);

“Eligible Property” has the meaning assigned by subsection 85(1.1);

“FMV” means fair market value, being the highest price available in an open and unrestricted market between informed prudent parties acting at Arm’s Length and without compulsion to act, expressed in terms of cash;

“Financial Intermediary Corporation” has the meaning assigned by subsection 191(1);

“Foreign Pubco Transfer” has the meaning described in Paragraph 57;

“Foreign Spinco Debts” has the meaning described in Paragraph 57;

“Forgiven Amount” has the meaning assigned by subsections 80(1) and 80.01(1);

“GST” means the Goods and Services Tax imposed under the laws of Canada;

“HST” means the Harmonized Sales Tax imposed under the laws of Canada, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island;

“Non-Resident” has the meaning assigned by subsection 248(1);

“PUC” means “paid-up capital,” as defined in subsection 89(1);

“Paragraph” refers to a numbered paragraph in this letter;

“Post-Canadian Butterfly Transactions” means the transactions described in Paragraphs 55 to 60;

“PC” means “private corporation,” as defined in subsection 89(1);

“Proceeds of Disposition” has the meaning assigned by section 54;

“Proposed Transactions” means the transactions described in Paragraphs 30 to 60;

“PST” means the Provincial Sales Tax imposed under the laws of British Columbia, Manitoba, and Saskatchewan;

“QST” means the Quebec Sales Tax imposed under the laws of Quebec;

“RDTOH” means “eligible refundable dividend tax on hand” and “non-eligible refundable dividend tax on hand,” as defined in subsection 129(4);

“Related Person” means, in relation to a particular person, another person who is related to the particular person by virtue of subsection 251(2), as modified for the purposes of section 55 by paragraph 55(5)(e);

“Retained Business 1” means the XXXXXXXXXX, business described in Paragraph 3(a);

“Retained Business 2” means the XXXXXXXXXX, described in Paragraph 3(c);

“Rulings” means the advance income tax rulings labelled “A” to “H” in this letter;

“Safe-Income Determination Time” has the meaning assigned to that phrase by subsection 55(1);

“Safe Income On Hand” means income earned or realized (as determined pursuant to subsection 55(5)), to the extent that it is on hand, by any corporation after 1971 and before the Safe-income Determination Time for a transaction, event or Series of Transactions or Events;

“Securities Exchange”  means the XXXXXXXXXX;

“Series of Transactions or Events” includes the extended meaning assigned by subsection 248(10);

“Short-Term Preferred Share” has the meaning assigned by subsection 248(1);

“Significant Influence” has the meaning assigned by IAS 28 of the International Financial Reporting Standards;

“Sister Canco 5 Loan Receivable” has the meaning described in Paragraphs 16(j) and 28;

“Specified Investment Business” has the meaning assigned by subsection 125(7);

“Specified Financial Institution” has the meaning assigned by subsection 248(1);

“Spin Business” means XXXXXXXXXX described in Paragraph 3(b);

“Spin-Out” means the distribution of the issued and outstanding Foreign Spinco common shares to the shareholders of Foreign Pubco, as more particularly described in Paragraphs 29 and 58;

“State 1” means XXXXXXXXXX;

“State 2” means XXXXXXXXXX;

“Stated Capital” in respect of the share capital of a corporation has the meaning assigned by the statute by which the corporation is governed at the relevant time;

“Subsidiary Wholly-Owned Corporation” has the meaning assigned by subsection 248(1);

“TCC” means “taxable Canadian corporation,” as defined in subsection 89(1);

“Taxable Canadian Property” has the meaning assigned by subsection 248(1);

“Taxable Dividend” has the meaning assigned by subsection 89(1);

“Taxable Preferred Share” has the meaning assigned by subsection 248(1);

“Taxable RFI Share” has the meaning assigned by subsection 248(1);

“Term Preferred Shares” has the meaning assigned by subsection 248(1);

“Three-Party Share Exchange” means the three-party share exchange among Forco 1, Foreign SpincoSub and Canadian TC, as more particularly described in Paragraph 39;

“Treaty” means the XXXXXXXXXX, as amended; and

“USD” means United States Dollars.

III.  FACTS

FOREIGN PUBCO

1.    Foreign Pubco is the parent company in the Foreign Pubco Group and is governed by the laws of State 1. Foreign Pubco is a Non-Resident corporation. The issued and outstanding shares of Foreign Pubco are common shares that are publicly traded on the Securities Exchange under the symbol “XXXXXXXXXX”.

2.    The shares of Foreign Pubco are widely-held. As of XXXXXXXXXX, there were approximately XXXXXXXXXX outstanding common shares of Foreign Pubco with a market capitalization of approximately $XXXXXXXXXX USD.

As of XXXXXXXXXX, significant shareholders included XXXXXXXXXX.

To the best of Foreign Pubco’s knowledge, currently no person or related group of persons beneficially owns, directly or indirectly, XXXXXXXXXX% or more of the issued and outstanding shares of any class of Foreign Pubco.

There is no person or group of persons that controls Foreign Pubco.

Foreign Pubco’s Businesses

3.    Foreign Pubco, through its direct and indirect subsidiaries (the Foreign Pubco Group), provides XXXXXXXXXX. Foreign Pubco Group’s XXXXXXXXXX.

Headquartered in XXXXXXXXXX, State 2, Foreign Pubco has approximately XXXXXXXXXX employees and maintains business units across Country 1, Country 2, Country 3 and Country 4.

Foreign Pubco’s core businesses include:

XXXXXXXXXX

Total gross operating revenue of the Foreign Pubco Group was approximately $XXXXXXXXXX USD in XXXXXXXXXX, $XXXXXXXXXX USD in XXXXXXXXXX, and $XXXXXXXXXX USD in XXXXXXXXXX.

Foreign Pubco’s Assets and Liabilities

4.    Foreign Pubco’s assets include:

(a)   all of the issued and outstanding common shares of Forco 1;

(b)   all of the issued and outstanding common shares of Forco 2; and

(c)   XXXXXXXXXX Foreign Spinco common shares (being all of the issued and outstanding shares of Foreign Spinco).

Foreign Pubco incorporated Foreign Spinco as a corporation under the laws of State 1 on XXXXXXXXXX, and contributed $XXXXXXXXXX USD to Foreign Spinco on its incorporation in exchange for XXXXXXXXXX Foreign Spinco common shares. Foreign Spinco is a regarded corporation for Country 1 federal income tax purposes.

Foreign Pubco has approximately $XXXXXXXXXX USD (as at XXXXXXXXXX) of long-term debt outstanding that consists of term loan debt, a revolver loan, and senior notes.  Certain of these debts are held by institutional lenders. The senior notes were issued to the public.

A subsidiary of Foreign Pubco also has approximately $XXXXXXXXXX USD of short‑term debt outstanding in respect of obligations collateralized by finance receivables.

5.    Foreign Pubco pays quarterly cash dividends on its shares based on what is currently an annual dividend rate of $XXXXXXXXXX USD.  Approximately $XXXXXXXXXX USD of dividend payments were paid for the year ending XXXXXXXXXX, approximately $XXXXXXXXXX USD for the year ending XXXXXXXXXX, and approximately US$XXXXXXXXXX USD for the year ending XXXXXXXXXX.

In XXXXXXXXXX, the board of directors authorized a repurchase of up to $XXXXXXXXXX USD of the Company’s outstanding common shares, par value $XXXXXXXXXX per share, through XXXXXXXXXX.  Prior repurchases consist of approximately $XXXXXXXXXX USD in XXXXXXXXXX, $XXXXXXXXXX USD in XXXXXXXXXX and $XXXXXXXXXX USD in XXXXXXXXXX. After accounting for these prior repurchases, approximately $XXXXXXXXXX USD of Foreign Pubco common shares may still be repurchased under this program. Repurchases may be made in the open market or through privately negotiated transactions, with the timing and amount of any repurchases subject to market and other conditions.

6.    Foreign Pubco provides a variety of share-based compensation plans (a stock option plan, a restricted stock unit plan and a performance restricted stock unit plan) for its senior executives and employees of the Foreign Pubco Group including the Canadian DC Group. As a result, shares and rights in respect of the shares of Foreign Pubco are granted to officers and employees pursuant to these plans. All such shares are newly-issued by Foreign Pubco.

FOREIGN PUBCO GROUP

Forco 1

7.    Forco 1 is a Non-Resident corporation. All of the issued and outstanding common shares of Forco 1 are owned by Foreign Pubco.

Forco 1 carries on the Spin Business, Retained Business 1 and Retained Business 2 in Country 1, Country 2 and Country 3, directly and indirectly through its subsidiary corporations.

8.    Forco 1’s assets include:

(a)   all of the issued and outstanding Canadian DC Common Shares; 

(b)   all of the issued and outstanding common shares of Forco 3;

(c)   all of the issued and outstanding common shares of Forco 4;

(d)   all of the issued and outstanding common shares of Sister Canco 5; and

(e)   a loan receivable of $XXXXXXXXXX (as at XXXXXXXXXX) from Canadian DC.

Forco 2

9.    Forco 2 is a Non-Resident corporation. All of the issued and outstanding common shares of Forco 2 are owned by Foreign Pubco.

Forco 2 and its subsidiaries exclusively carry on the Spin Business in Country 1.

Forco 3

10.   Forco 3 is a Non-Resident corporation. All of the issued and outstanding common shares of Forco 3 are owned by Forco 1.

Forco 3 carries on the Spin Business.

Forco 4, Forco 5, Forco 6 and Forco 7

11.   Forco 4 is a Non-Resident corporation.  All of the issued and outstanding common shares of Forco 4 are owned by Forco 1.

Forco 4 carries on the Retained Business 1. 

Forco 4’s assets include all of the issued and outstanding common shares of Forco 5.

12.   Forco 5 is a Non-Resident corporation.  All of the issued and outstanding common shares of Forco 5 are owned by Forco 4.

Forco 5 carries on the Retained Business 1. 

Forco 5’s assets include all of the issued and outstanding common shares of Forco 6.

13.   Forco 6 is a Non-Resident corporation.  All of the issued and outstanding common shares of Forco 6 are owned by Forco 5.

Forco 6 carries on the Spin Business. 

Forco 6’s assets include all of the issued and outstanding common shares of Forco 7.

14.   Forco 7 is a Non-Resident corporation.  All of the issued and outstanding common shares of Forco 7 are owned by Forco 6.

Forco 7 carries on the Retained Business 1.

CANADIAN DC GROUP

Canadian DC

15.   Canadian DC is a TCC and a PC. It is governed by the BCA 1.

Canadian DC was formed on an amalgamation of XXXXXXXXXX on XXXXXXXXXX.

Canadian DC’s head office is located at XXXXXXXXXX. It is audited by the XXXXXXXXXX Tax Services Office and it files its federal corporate tax returns with the XXXXXXXXXX Tax Centre.

Canadian DC’s authorized share capital consists solely of common shares (the Canadian DC Common Shares) having XXXXXXXXXX per share. All of the issued and outstanding Canadian DC Common Shares are owned by Forco 1.

Canadian DC actively carries on:

(a)   the Spin Business in Canada (the Canadian Spin Business) indirectly through its direct and indirect Subsidiary Wholly-Owned Corporations: CanSpinco 1, CanSpinco 2 and CanSpinco 3; and

(b)   the Retained Business 1 in Canada (the Canadian Retained Business 1), directly and indirectly, through its direct and indirect Subsidiary Wholly‑Owned Corporations:  CanKeepco 1, CanKeepco 2, CanKeepco 3, CanKeepco 4, CanKeepco 5, CanKeepco 6 and CanKeepco 7 (collectively referred to as CanKeepco 1 to 7).

Canadian DC and its subsidiaries also have limited customers in Country 1 and Country 4, and other jurisdictions consisting of XXXXXXXXXX.

Canadian DC has approximately XXXXXXXXXX employees in the Canadian Retained Business 1.

Canadian DC and its direct and indirect Subsidiary Wholly-Owned Corporations (collectively referred to as the Canadian DC Group) do not carry on the Retained Business 2 in Canada.

16.   Canadian DC’s assets include:

(a)   all of the issued and outstanding common shares of CanSpinco 1;

(b)   all of the issued and outstanding common shares of CanKeepco 1;

(c)   all of the issued and outstanding common shares of CanKeepco 4;

(d)   all of the issued and outstanding common shares of CanKeepco 5;

(e)   all of the issued and outstanding common shares of CanKeepco 6;

(f)   all of the issued and outstanding common shares of CanKeepco 7;

(g)   a loan receivable of $XXXXXXXXXX (as at XXXXXXXXXX) from CanSpinco 1;

(h)   a loan receivable of $XXXXXXXXXX (as at XXXXXXXXXX) from CanKeepco 5;

(i)   A loan receivable of $XXXXXXXXXX (as at XXXXXXXXXX) from Sister Canco 4;

(j)   A loan receivable of $XXXXXXXXXX (as at XXXXXXXXXX) from Sister Canco 5 (the Sister Canco 5 Loan Receivable), as described in Paragraph 28; and

(k)   receivables from third parties that arise from business operations with no fixed terms of repayment.

Canadian DC’s liabilities include:

(i)   a loan payable of $XXXXXXXXXX (as at XXXXXXXXXX) to Forco 1;

(ii)  a loan payable of $XXXXXXXXXX (as at XXXXXXXXXX) to CanKeepco 1;

(iii) a loan payable of $XXXXXXXXXX (as at XXXXXXXXXX) to CanKeepco 3;

(iv)  a loan payable of $XXXXXXXXXX (as at XXXXXXXXXX) to Sister Canco 1;

(v)   a loan payable of $XXXXXXXXXX (as at XXXXXXXXXX) to Sister Canco 2; and

(vi)  a loan payable of $XXXXXXXXXX (as at XXXXXXXXXX) to Sister Canco 3.

Sister Canco 1, Sister Canco 2, Sister Canco 3, Sister Canco 4 and Sister Canco 5 are all TCCs and PCs.  They are outside of the Canadian DC Group and are indirect Subsidiary Wholly-Owned Corporations of Foreign Pubco.

The loans receivable described in Paragraphs 16(g), (h), (i) and (j) are due on demand, non-interest bearing and have no fixed terms of repayment.

With respect to Paragraph 16(i), the loan payable by Canadian DC to Forco 1 arose from ongoing operations and intercompany charges. The charges are for XXXXXXXXXX. In particular, Canadian DC, CanKeepco 1, CanKeepco 2, and Sister Canco 3 pay XXXXXXXXXX to Forco 1 for the use of its XXXXXXXXXX.  This is reflected as inter-company balances among these companies in order to have Canadian DC owe a single amount to Forco 1 and then have CanKeepco 1, CanKeepco 2, and Sister Canco 3 owe corresponding amounts to Canadian DC.  XXXXXXXXXX are allocated at cost and XXXXXXXXXX are allocated at cost plus a XXXXXXXXXX% mark-up. Withholding taxes are paid in relation to the payments made by Canadian DC to Forco 1 as applicable.  This loan bears interest at a rate of Canadian prime + XXXXXXXXXX% and has been interest bearing since it was created in XXXXXXXXXX.

The loans payable described in Paragraphs 16(ii), (iii), (iv), (v) and (vi) are non‑interest bearing and are payable on demand without fixed terms of repayment. All such loans payable arose in the ordinary course of business operations.

The loans payable by Canadian DC to CanKeepco 1 and CanKeepco 3, as described in Paragraphs 16(ii) and (iii), arose from the Cash Sweeping 1 with the balance of such loans payable reduced by intercompany service charges.

For its XXXXXXXXXX taxation year, Canadian DC paid a total of $XXXXXXXXXX of dividends to Forco 1. Canadian DC withheld the requisite amount of tax on the dividends in accordance with Part XIII and the applicable terms of the Treaty. No dividends were paid by Canadian DC to Forco 1 for its XXXXXXXXXX and XXXXXXXXXX taxation years. No dividends are currently contemplated to be paid by Canadian DC to Forco 1 between now and the time of the Proposed Transactions.

CanSpinco 1, CanSpinco 2 and CanSpinco 3

17.   CanSpinco 1 is a TCC and a PC.  All of the issued and outstanding common shares of CanSpinco 1 are owned by Canadian DC.

CanSpinco 1 is actively engaged in the Spin Business through the operation of XXXXXXXXXX across Canada. CanSpinco 1 has approximately XXXXXXXXXX employees.

CanSpinco 1’s assets include:

(a)   all of the issued and outstanding common shares of CanSpinco 2;

(b)   all of the issued and outstanding common shares of CanSpinco 3; and

(c)   a loan receivable of $XXXXXXXXXX (as at XXXXXXXXXX) from CanSpinco 2 that arises primarily from the Cash Sweeping 2.

CanSpinco 1’s liabilities include:

(i)   a loan payable of $XXXXXXXXXX (as at XXXXXXXXXX) to Canadian DC; and

(ii)  a loan payable of $XXXXXXXXXX (as at XXXXXXXXXX) to Sister Forco 3.

The loan payable by CanSpinco 1 to Canadian DC arose from Canadian DC paying contracts or fees on behalf of CanSpinco 1. CanSpinco 1 also leases land from Canadian DC, and some rent is reflected by the payable.

Sister Forco 3 is a Non-Resident corporation and is an indirect Subsidiary Wholly-Owned Corporation of Foreign Pubco. The loan payable to Sister Forco 3 is non-interest bearing.

For its XXXXXXXXXX and XXXXXXXXXX taxation years, CanSpinco 1 paid a total of $XXXXXXXXXX and $XXXXXXXXXX of dividends, respectively, to Canadian DC. No dividends were paid by CanSpinco 1 to Canadian DC in XXXXXXXXXX.

18.   CanSpinco 2 is a TCC and a PC.  All of the issued and outstanding common shares of CanSpinco 2 are owned by CanSpinco 1.

CanSpinco 2 is an operating company involved with the Canadian Spin Business that has operations across Canada. It is a distinct entity from CanSpinco 1 since it was created to XXXXXXXXXX for activities relating to the Canadian Spin Business of CanSpinco 1. This assists with regulatory requirements by having XXXXXXXXXX.

CanSpinco 2’s liabilities include a loan payable of $XXXXXXXXXX (as at XXXXXXXXXX) to CanSpinco 1 that arose primarily from the Cash Sweeping 2.

For its XXXXXXXXXX, XXXXXXXXXX and XXXXXXXXXX taxation years, CanSpinco 2 paid a total of $XXXXXXXXXX, $XXXXXXXXXX and $XXXXXXXXXX of dividends to CanSpinco 1, respectively. No dividends were paid by CanSpinco 2 to CanSpinco 1 in XXXXXXXXXX.

19.   CanSpinco 3 is a TCC and a PC.  All of the issued and outstanding common shares of CanSpinco 3 are owned by CanSpinco 1.

CanSpinco 3 is an operating company involved with the Canadian Spin Business that has a comparably low amount of operations.

For its XXXXXXXXXX taxation year, CanSpinco 3 paid a total of $XXXXXXXXXX dividends to CanSpinco 1. No dividends were paid by CanSpinco 3 to CanSpinco 1 in XXXXXXXXXX.

CanKeepco 1 to 7

20.   CanKeepco 1 is a TCC and a PC. All of the issued and outstanding common shares of CanKeepco 1 are owned by Canadian DC.

CanKeepco 1 is a significant operating company involved with the Canadian Retained Business 1 in XXXXXXXXXX. It has approximately XXXXXXXXXX employees.

CanKeepco 1’s assets include:

(a)   all of the issued and outstanding common shares of CanKeepco 2;

(b)   XXXXXXXXXX% of all of the issued and outstanding common shares of CanKeepco 3; and

(c)   a loan receivable of $XXXXXXXXXX (as at XXXXXXXXXX) from Canadian DC.  

The remaining XXXXXXXXXX% of the issued and outstanding common shares of CanKeepco 3 are owned by CanKeepco 2. 

The majority of the loan receivable from Canadian DC, as described in Paragraph 20(c) arose from the Cash Sweeping 1.

For its XXXXXXXXXX, XXXXXXXXXX and XXXXXXXXXX taxation years, CanKeepco 1 paid a total of $XXXXXXXXXX, $XXXXXXXXXX and $XXXXXXXXXX of dividends, respectively, to Canadian DC. No dividends were paid by CanKeepco 1 to Canadian DC in XXXXXXXXXX.

21.   CanKeepco 2 is a TCC and a PC.  All of the issued and outstanding common shares of CanKeepco 2 are owned by CanKeepco 1.

CanKeepco 2 is involved with the Canadian Retained Business 1 in XXXXXXXXXX.

It is a holding company that owns XXXXXXXXXX% of the issued and outstanding common shares of CanKeepco 3.

For its XXXXXXXXXX, XXXXXXXXXX and XXXXXXXXXX taxation years, CanKeepco 2 paid dividends of $XXXXXXXXXX, $XXXXXXXXXX and $XXXXXXXXXX, respectively, to CanKeepco 1. No dividends were paid by CanKeepco 2 to CanKeepco 1 in XXXXXXXXXX.

CanKeepco 3 is a TCC and a PC. All of the issued and outstanding common shares of CanKeepco 3 are owned equally by CanKeepco 1 and CanKeepco 2.

CanKeepco 3 is an operating company and is involved with the Canadian Retained Business 1 in XXXXXXXXXX. CanKeepco 3 has approximately XXXXXXXXXX employees.

CanKeepco 3’s assets include a loan receivable of $XXXXXXXXXX (as at XXXXXXXXXX) from Canadian DC, which arose primarily from the Cash Sweeping 1.

For its XXXXXXXXXX, XXXXXXXXXX and XXXXXXXXXX taxation years, CanKeepco 3 paid a total of $XXXXXXXXXX, $XXXXXXXXXX and $XXXXXXXXXX of dividends, respectively, to each of CanKeepco 1 and CanKeepco 2. No dividends were paid by CanKeepco 3 to CanKeepco 1 and CanKeepco 2 in XXXXXXXXXX.

22.   CanKeepco 4, CanKeepco 5, CanKeepco 6, and CanKeepco 7 are TCCs and PCs. All of their issued and outstanding common shares are owned by Canadian DC.

These four corporations each XXXXXXXXXX. The function of each of these corporations is to XXXXXXXXXX separately from Canadian DC for commercial and regulatory reasons.

Each of these four corporations was incorporated in a provincial jurisdiction that requires the owner of the XXXXXXXXXX as part of the Canadian Retained Business 1. XXXXXXXXXX.

Each of CanKeepco 4, CanKeepco 5, CanKeepco 6 and CanKeepco 7 does not have income and has negligible assets since their role is solely XXXXXXXXXX.

CanKeepco 4 was never issued a business number and has not filed corporate income tax returns. However, CanKeepco 4 will now file relevant corporate income tax returns.

CanKeepco 5, CanKeepco 6, and CanKeepco 7 have filed corporate income tax returns.

Cash Sweepings

23.   The Canadian DC Group participates in two separate cash sweeping arrangements: one for the Canadian Retained Business 1 (the Cash Sweeping 1) and the other for the Canadian Spin Business (the Cash Sweeping 2) (collectively referred to as the Cash Sweepings).

With respect to the Cash Sweeping 1, Canadian DC is the cash pool head entity and the Cash Sweeping 1 participants are Canadian DC and CanKeepco 1 to 7.  The most material Cash Sweeping 1 participants are Canadian DC, CanKeepco 1 and CanKeepco 3. With respect to the Cash Sweeping 2, CanSpinco 1 is the cash pool head entity and the Cash Sweeping 2 participants are CanSpinco 1, CanSpinco 2 and CanSpinco 3.

None of the Non-Resident members of the Foreign Pubco Group participate in the Cash Sweepings.

Under the Cash Sweepings, each participant maintains one or more separate operating accounts with XXXXXXXXXX (the Bank). Each of these accounts is reviewed by the Bank to determine the consolidated cash position of the operating accounts for the Canadian DC Group. This affects interest charges and fees.

On a daily basis: (a) when excess cash is swept from a participant’s operating bank account to a particular head entity’s operating bank account, it increases the amount payable (or decreases the amount receivable) by the particular head entity to (or from) the particular participant; and (b) when cash is swept from a particular head entity’s operating bank account to a particular participant’s operating bank account, it decreases the amount payable (or increases the amount receivable) by the particular head entity to (or from) the particular participant.

All such loans under the Cash Sweepings do not have fixed terms of repayment and are non-interest bearing.

On an annual basis (except for the XXXXXXXXXX taxation year), all such loans under the Cash Sweepings are repaid, partly or fully, through intercorporate dividend payments or from service charges between the head entity and the participant.

Additional Facts

24.   The Canadian DC Group owns and leases a number of real property assets and buildings. All of these real property assets and buildings are used in the ongoing ordinary operations of the Canadian DC Group and none are known to be assets held for sale or not used in the business operations.

25.   Certain Canadian DC Group employees are eligible and do participate in the share-based compensation plans of the Foreign Pubco Group, as described in Paragraph 6. These plans generally include the issuance of shares of Foreign Pubco based on performance metrics and all such shares are newly-issued by Foreign Pubco.

26.   The Canadian DC Group maintains deferred profit sharing plan and registered retirement savings employer matching plan. Each member of the Canadian DC Group will match XXXXXXXXXX% of the annual earnings of its employees. These plans are funded every pay period and the employee is entitled to the relevant funded amounts (this occurs XXXXXXXXXX). As a result, there is no significant accrual build‑up of liability for contributions or contingent amounts that must be funded or earned in the future.

27.   Canadian DC currently has no registered pension plans with long-term liabilities or material accruals.

28.   Sister Canco 5 XXXXXXXXXX. It primarily has XXXXXXXXXX in Canada.

Canadian DC provides XXXXXXXXXX to Sister Canco 5, which XXXXXXXXXX to Canadian DC.

The majority of the Sister Canco 5 Loan Receivable arose as follows:

(a)   Prior to XXXXXXXXXX, Forco 1 owned XXXXXXXXXX% of all of the issued and outstanding shares of the Predecessor Corporation and the remaining shares were owned by third parties.

(b)   On XXXXXXXXXX, Canadian DC advanced $XXXXXXXXXX (equivalent to $XXXXXXXXXX USD) as a non-interest bearing loan documented with a note to an existing dormant Subsidiary Wholly-Owned Corporation of Forco 1, XXXXXXXXXX. (“AcquisitionCo”).  AcquisitionCo used such loan proceeds to acquire the remaining shares of the Predecessor Corporation (being XXXXXXXXXX% of the issued and outstanding shares) from the third-party vendors.

(c)   Forco 1 transferred all of its shares of the Predecessor Corporation (being XXXXXXXXXX%) to AcquisitionCo in exchange for additional common shares of AcquisitionCo.  No subsection 85(1) election was filed with respect to such share transfer, as the shares of the Predecessor Corporation were not Taxable Canadian Property.

(d)   AcquistionCo amalgamated with the Predecessor Corporation to form Sister Canco 5 on XXXXXXXXXX.  There was no paragraph 88(1)(d) designation filed.

On the amalgamation: (i) AcquisitionCo’s loan payable to Canadian DC became Sister Canco 5’s liability to Canadian DC; and (ii) shares of Sister Forco 1 and Sister Forco 2 that the Predecessor Corporation owned immediately before the amalgamation became property of Sister Canco 5 on the amalgamation.

(e)   On XXXXXXXXXX, Sister Canco 5 disposed of its Sister Forco 1 shares and Sister Forco 2 shares to Forco 1 for $XXXXXXXXXX USD.  Sister Canco 5 incurred a capital loss of approximately $XXXXXXXXXX with respect to such disposition, as the aggregate ACB of those shares exceeded the sale price of those shares.  No withholding tax applied to this transaction.

In addition to the $XXXXXXXXXX advanced by Canadian DC to AcquisitionCo, as described in Paragraph 28(b), there is an amount of $XXXXXXXXXX owed by Sister Canco 5 to Canadian DC that was the result of a prior revolver loan of up to $XXXXXXXXXX with a maturity date of XXXXXXXXXX.

Further, after the amalgamation, an additional $XXXXXXXXXX loan amount arose from additional funding that Canadian DC provided to Sister Canco 5, including making cash advances to fund payroll and operational expenses of Sister Canco 5 and earnout payments.

The Sister Canco 5 Loan Receivable is non-interest bearing and is due on demand with no fixed terms of repayment.

IV.   OVERVIEW OF THE SPIN-OUT

29.   Foreign Pubco announced on XXXXXXXXXX, its intention to separate the existing company into two independent, publicly-traded companies (the Spin‑Out) as follows:

(a)   the Spin Business including the Canadian Spin Business will be transferred, directly or indirectly, to a new corporation (Foreign SpincoSub) to be incorporated by Forco 1 under the laws of State 1. Following which, Forco 1 will distribute Foreign SpincoSub to Foreign Pubco, as described in Paragraph 55, and Foreign Pubco will distribute Foreign SpincoSub to Foreign Spinco, as described in Paragraph 57; and

(b)   the Retained Business 1 and the Retained Business 2 will be retained by Foreign Pubco.

To accomplish the Spin-Out as described in Paragraph 58, Foreign Pubco will pay a dividend-in-kind of Foreign Spinco common shares to its public shareholders, which shares will be traded on the Securities Exchange.  After the Spin-Out, Foreign Pubco shareholders will own XXXXXXXXXX% of the equity in each of the two publicly-traded companies, being Foreign Pubco and Foreign Spinco.

The Spin-Out is expected to occur at the end of XXXXXXXXXX. No court order is required with respect to the Spin-Out.

V.    PROPOSED TRANSACTIONS

INITIAL GLOBAL SPIN-OUT STEPS

30.   Subsidiaries of Foreign Pubco will complete certain non-Canadian restructuring transactions to transfer subsidiaries in Country 1 and Country 3 that are part of the Spin Business to Forco 1. This will generally occur on a tax-deferred basis for Country 1 and Country 3 tax purposes as follows:

(a)   Certain intercompany debts owed between companies in Country 3 that are direct or indirect Subsidiary Wholly-Owned Corporations of Foreign Pubco will be repaid;

(b)   Forco 6 will distribute all of its shares of Forco 7 to Forco 5 as a dividend payment;

(c)   Forco 5 will distribute all of its shares of Forco 6 to Forco 4 as a dividend payment; and

(d)   Forco 4 will distribute all of its shares of Forco 6 to Forco 1 as a dividend payment.

31.   Foreign Pubco will transfer all of its shares of Forco 2 to Forco 1 as a contribution of capital.

32.   Forco 1 will incorporate Foreign SpincoSub under the laws of State 1 as a regarded corporation for Country 1 federal income tax purposes.  Forco 1 will subscribe for shares of Foreign SpincoSub upon its incorporation for cash consideration.

33.   Forco 1 will contribute all of its shares of Forco 2, Forco 3 and Forco 6 to Foreign SpincoSub as a contribution of capital on a tax-deferred basis for Country 1 and Country 3 tax purposes.

After the completion of the transactions described in Paragraphs 30, 31, 32 and 33, Foreign SpincoSub will own all of the Spin Business except for the Canadian Spin Business.

CANADIAN BUTTERFLY TRANSACTIONS

34.   The Canadian Butterfly Transactions will occur in the order presented below unless otherwise indicated, subject to the following exceptions:

(a)   the applicable election forms will be filed within the applicable due dates following the completion of the Canadian Butterfly Transactions;

(b)   the formation of Canadian TC; and

(c)   entering into ancillary agreements, such as separation agreements or employee benefit plans, as described in Paragraph 54.

Prior to the Canadian Butterfly Transactions, Canadian DC, Canadian TC, Forco 1, and Foreign SpincoSub will enter into a binding commitment agreement to complete all of the Canadian Butterfly Transactions.  This agreement will be: (i) equivalent to an agreed closing agenda, and (ii) contingent on the commencement of the Canadian Butterfly Transactions described in Paragraph 36.

Preliminary Canadian Butterfly Steps

35.   CanSpinco 1 will:

(a)   repay its entire loan payable to Canadian DC with cash; and

(b)   pay a dividend to Canadian DC with cash. The dividend amount will not exceed $XXXXXXXXXX USD.

Canadian Butterfly Transactions

Incorporation of Canadian TC

36.   Foreign SpincoSub will incorporate Canadian TC under the BCA 8 as an unlimited liability company.

Canadian TC will be a TCC and a PC.

The authorized share capital of Canadian TC will consist of:

(a)   an unlimited number of voting, fully participating common shares (the “Canadian TC Common Shares”); and

(b)   an unlimited number of preferred shares (the “Canadian TC Special Shares”), having the following attributes:

(i)   each Canadian TC Special Share will be redeemable, subject to applicable law, at any time at the option of Canadian TC at a redemption amount (the “Canadian TC Redemption Amount”) equal to the quotient obtained when

(A)   the amount by which the aggregate FMV, at the time of the Canadian DC Transfer, of all of the CanSpinco 1 common shares so transferred to Canadian TC, and the Additional Canadian DC Cash Transfer, if any, as described in Paragraph 47, exceeds the Canadian TC Assumed Liability, if any, as described in Paragraph 48(a),

is divided by:

(B)   the number of Canadian TC Special Shares issued as consideration therefor,

      plus the amount of all declared but unpaid dividends thereon;

(ii)  each Canadian TC Special Share will be retractable, subject to applicable law, at any time at the option of the holder for an amount equal to the Canadian TC Redemption Amount plus the amount of all declared but unpaid dividends thereon;

(iii) the holder of each Canadian TC Special Share will be entitled to a non-cumulative dividend if and when declared by the board of directors of Canadian TC from time to time;

(iv)  the holder of each Canadian TC Special Share will not be entitled to vote at meetings of shareholders of Canadian TC, other than as provided under the BCA 8;

(v)   except with the consent in writing of the holders of all of the Canadian TC Special Shares, no dividend shall at any time be declared and paid on, or declared and set apart for payment on, the Canadian TC Common Shares unless, after the payment of such dividend, the realizable value of the assets of Canadian TC would not be less than the aggregate Canadian TC Redemption Amount of all of the Canadian TC Special Shares then outstanding, plus any declared but unpaid dividends thereon; and

(vi)  in the event of the dissolution, liquidation or winding-up of Canadian TC, whether voluntary or involuntary, or any other distribution of assets of Canadian TC among its shareholders for the purpose of winding-up its affairs, the holders of Canadian TC Special Shares will be entitled to receive from the assets of Canadian TC an amount equal to the aggregate Canadian TC Redemption Amount (plus any declared but unpaid dividends thereon) before any amount will be paid or any assets of Canadian TC are distributed upon any liquidation, dissolution or winding-up of Canadian TC to the holders of the Canadian TC Common Shares. After payment to the holders of Canadian TC Special Shares of the amount so payable to them, such holders shall not be entitled to share in any further distribution of the assets of Canadian TC.

Foreign SpincoSub will subscribe for Canadian TC Common Shares on its incorporation for nominal cash consideration. Canadian TC will adopt a XXXXXXXXXX taxation year-end.

Reorganization of the Capital of Canadian DC and the Canadian DC Share Exchange

37.   Canadian DC will reorganize its capital (the Canadian DC Capital Reorganization) by filing articles of amendment to amend the Canadian DC Articles under the BCA 1, to create and authorize the issuance of the following new classes of shares:

(a)   an unlimited number of common shares (the Canadian DC New Common Shares), with terms and conditions identical to the Canadian DC Common Shares immediately before such amendment, except that each Canadian DC New Common Share will entitle the holder to XXXXXXXXXX votes per share (instead of XXXXXXXXXX per share); and

(b)   an unlimited number of preferred shares (the Canadian DC Special Shares), having the following attributes:

(i)   each Canadian DC Special Share will be redeemable, subject to applicable law, at any time at the option of Canadian DC, for an amount (the Canadian DC Redemption Amount) equal to the amount obtained by multiplying the aggregate FMV, immediately prior to the Canadian DC Share Exchange, of all of the issued and outstanding Canadian DC Common Shares by the Butterfly Percentage, and then dividing such product by the number of the Canadian DC Special Shares issued on the Canadian DC Share Exchange, plus any declared but unpaid dividends thereon; 

(ii)  each Canadian DC Special Share will be retractable, subject to applicable law, at any time at the option of the holder thereof for an amount equal to the Canadian DC Redemption Amount, plus any declared but unpaid dividends thereon;

(iii) the holder of each Canadian DC Special Share will be entitled to a non-cumulative dividend if and when declared by the board of directors of Canadian DC;

(iv)  the holder of each Canadian DC Special Share will not be entitled to vote at any meetings of the shareholders of Canadian DC, other than as provided under the BCA 1;

(v)   except with the consent in writing of the holders of all of the Canadian DC Special Shares, no dividend shall at any time be declared and paid on, or declared and set apart for payment on any other class of Canadian DC shares unless, after the payment of such dividend, the realizable value of the net assets of Canadian DC would not be less than the aggregate Canadian DC Redemption Amount of all of the Canadian DC Special Shares then outstanding, plus any declared but unpaid dividends thereon; and

(vi)  in the event of the dissolution, liquidation or winding-up of Canadian DC, whether voluntary or involuntary, or any other distribution of assets of Canadian DC among its shareholders for the purpose of winding-up its affairs, the holders of Canadian DC Special Shares will be entitled to receive from the assets of Canadian DC an amount equal to the aggregate Canadian DC Redemption Amount (plus any declared but unpaid dividends thereon) before any amount will be paid or any assets of Canadian DC are distributed upon any liquidation, dissolution or winding-up of Canadian DC to the holders of any other class of Canadian DC shares. After payment to the holders of Canadian DC Special Shares of the amount so payable to them, such holders shall not be entitled to share in any further distribution of the assets of Canadian DC.

(The Canadian DC New Common Shares and the Canadian DC Special Shares are collectively referred to as the Canadian DC Shares.)

38.   As part of the Canadian DC Capital Reorganization, Forco 1 will exchange each issued and outstanding Canadian DC Common Share for one Canadian DC New Common Share and one Canadian DC Special Share (the Canadian DC Share Exchange).

The aggregate FMV of the Canadian DC New Common Shares and Canadian DC Special Shares, immediately following the Canadian DC Share Exchange, will equal the aggregate FMV of the Canadian DC Common Shares immediately before the Canadian DC Share Exchange.

In connection with the Canadian DC Share Exchange:

(a)   Canadian DC and Forco 1 will not make a joint election under the provisions of subsection 85(1); and

(b)   under the BCA 1, Canadian DC will add to the Stated Capital accounts of the Canadian DC New Common Shares and the Canadian DC Special Shares issued on the Canadian DC Share Exchange an aggregate amount equal to Stated Capital of the Canadian DC Common Shares immediately before the Canadian DC Share Exchange.

The Stated Capital of the Canadian DC Common Shares will be allocated between the Canadian DC New Common Shares and the Canadian DC Special Shares, based on the proportion that the aggregate FMV of the Canadian DC New Common Shares and the Canadian DC Special Shares, as the case may be, is of the aggregate FMV of all of the Canadian DC New Common Shares and the Canadian DC Special Shares issued on the Canadian DC Share Exchange.

For greater certainty, the aggregate PUC of the Canadian DC New Common Shares and the Canadian DC Special Shares will be subject to the application of subsection 86(2.1).

All of the Canadian DC Common Shares so exchanged will be cancelled following the Canadian DC Share Exchange.

Three-Party Share Exchange

39.   Following the Canadian DC Share Exchange, pursuant to a three-party transfer agreement between Forco 1, Canadian TC and Foreign SpincoSub (the Three‑Party Share Exchange), Forco 1 will transfer all of its Canadian DC Special Shares to Canadian TC in the following manner:

(a)   Canadian TC will agree to pay the purchase price for the Canadian DC Special Shares transferred to it by Forco 1, on the Three-Party Share Exchange, by issuing Canadian TC Common Shares to Foreign SpincoSub having an aggregate FMV at that time, equal to the aggregate FMV, at the time of the transfer, of the Canadian DC Special Shares so transferred to it by Forco1, as described in Paragraph 39(b).

Canadian TC, Foreign SpincoSub and Forco 1 will agree that the Canadian TC Common Shares will be issued by Canadian TC to Foreign SpincoSub in respect of, and by virtue of, the disposition by Forco 1 of the Canadian DC Special Shares to Canadian TC;

(b)   Forco 1 will agree to pay the purchase price for the Foreign SpincoSub common shares issued to it by Foreign SpincoSub, as described in Paragraph 39(c) by transferring all of its Canadian DC Special Shares to Canadian TC; and

(c)   Foreign SpincoSub will agree to pay the purchase price for the Canadian TC Common Shares issued to it by Canadian TC, as described in Paragraph 39(a), by issuing Foreign SpincoSub common shares to Forco 1 having an aggregate FMV at that time equal to the aggregate FMV of the Canadian TC Common Shares so issued to it, which aggregate FMV, will, in turn, be equal to the aggregate FMV, at the time of the transfer, of the Canadian DC Special Shares so transferred by Forco 1 to Canadian TC, as described in Paragraph 39(b).

Canadian TC will hold the Canadian DC Special Shares as Capital Property.

By virtue of the disposition, by Forco 1, of the Canadian DC Special Shares to Canadian TC, as described in Paragraph 39(b), and pursuant to the BCA 8, the amount added to the Stated Capital of the Canadian TC Common Shares issued by Canadian TC to Foreign SpincoSub, as described in Paragraph 39(a), will be an amount equal to the Stated Capital of the Canadian DC Special Shares so transferred by Forco 1 to Canadian TC.

For greater certainty, the aggregate PUC of the Canadian TC Common Shares will be subject to the application of paragraph 212.1(1.1)(b).

The aggregate FMV, at the time of the transfer, of the Canadian DC Special Shares so transferred by Forco 1 to Canadian TC, as described in Paragraph 39(b), will exceed the amount that Canadian TC will add to the Stated Capital of the Canadian TC Common Shares so issued to Foreign SpincoSub, as described in Paragraph 39(a).

For greater certainty, the purchase price paid by Canadian TC for the Canadian DC Special Shares, as described in Paragraph 39(a), will be an amount equal to the aggregate FMV of those shares at the time of their transfer by Forco 1 to Canadian TC, which purchase price will be the amount that an Arm’s-Length purchaser would pay for those shares.

40.   Immediately following the Three-Party Share Exchange:

(a)   Forco 1 will own all of the issued and outstanding Foreign SpincoSub common shares;

(b)   Foreign SpincoSub will own all of the issued and outstanding Canadian TC Common Shares; and

(c)   Canadian TC will own all of the issued and outstanding Canadian DC Special Shares.

No person other than Foreign SpincoSub will acquire shares in the capital of Canadian TC, as part of a Series of Transactions or Events that includes the Taxable Dividends described in Ruling D (except for the Canadian TC Special Shares that will be issued by Canadian TC to Foreign SpincoSub on the Three‑Party Share Exchange, and redeemed by Canadian TC, as described in Paragraph 51).

41.   The aggregate FMV, immediately before the Canadian DC Transfer, of the Foreign SpincoSub common shares owned by Forco 1 will be equal to or approximate the amount determined by the following formula:

      (A × B/C) + D

as found in subparagraph (b)(iii) of the definition of “permitted exchange” in subsection 55(1) on the assumption that Forco 1 is the participant, Canadian DC is the distributing corporation and Foreign SpincoSub is the acquiror.

For greater certainty, immediately before the Canadian DC Transfer:

(a)   Forco 1 will own all of the issued and outstanding Foreign SpincoSub common shares,

(b)   Foreign SpincoSub will own all of the issued and outstanding Canadian TC Common Shares, and

(c)   Canadian TC will own all of the issued and outstanding Canadian DC Special Shares.

Classification of Canadian DC Types of Property

42.   Immediately before the Canadian DC Transfer, the property of Canadian DC will be determined on a consolidated look-through basis by including the appropriate pro rata share of the assets of any corporation over which Canadian DC has the ability to exercise Significant Influence.

The assets of Canadian DC, determined on a consolidated look-through basis as described in Paragraph 42, will be classified into the following three types of property for purposes of the definition of “distribution” in subsection 55(1) as follows:

(a)   cash or near-cash property, comprising all of the current assets of the Canadian DC Group, including cash, short-term deposits, marketable securities (except for portfolio investments), accounts receivable (including HST/GST/PST/QST receivables), inventory and prepaid expenses;

(b)   business property, comprising all of the assets of the Canadian DC Group, other than cash or near-cash property, any income from which would, for purposes of the Act, be income from an active business (other than a Specified Investment Business) including goodwill; and

(c)   investment property, comprising all of the assets of the Canadian DC Group, other than cash or near-cash property, any income from which would, for purposes of the Act, be income from property or from a Specified Investment Business.

For greater certainty, for purposes of the determinations described in Paragraphs 42 and 43:

(d)   any tax accounts such as the balance of any non-capital losses of the Canadian DC Group or the balance of any RDTOH or CDA, if any, will not be considered property;

(e)   the amount of any deferred or future income tax receivable will not be considered property;

(f)   advances and loans receivable of the Canadian DC Group, or portions thereof (including those owing from non-arm’s length persons) that (i) are due within the next XXXXXXXXXX, (ii) have no fixed terms of repayment, (iii) are due on demand, (iv) are all advances or loans receivable from the Cash Sweepings, or (v) is the Sister Canco 5 Loan Receivable, will be considered cash or near-cash property;

(g)   the real properties, leasehold interests in real property, as described in Paragraph 24, and XXXXXXXXXX of the Canadian DC Group, will be considered business property since they are used in business operations;

(h)   any amount recorded as a capital lease asset for accounting purposes represents only an accounting entry and will not be considered property;

(i)   income tax instalments and other taxes receivable (excluding HST/GST/PST/QST) within a year, which relate to either an assessment, additional assessment, reassessment or variance thereof received prior to the Canadian DC Transfer, or a return filed for a taxation year for which no assessment, additional assessment, reassessment or variance thereof has been received prior to the Canadian DC Transfer, will be classified as cash or near-cash property. Income and other taxes receivable (excluding HST/GST/PST/QST) that relate to taxation years for which a return has not been filed will not be considered property;

(j)   HST/GST/PST/QST receivables recorded for financial statement purposes will not be considered property, except to the extent that such balances represent amounts of HST/GST/PST/QST receivable recorded on the financial statements which relate to reporting periods ending prior to the Canadian DC Transfer, for which a return has been filed;

(k)   Canadian DC will be considered to have Significant Influence over a corporation if it has Significant Influence over that corporation or over any other corporation that has Significant Influence over that corporation, or if Canadian DC in combination with corporations over which it has Significant Influence have Significant Influence over that corporation.

For greater certainty, immediately before the Canadian DC Transfer:

(i)   Canadian DC will be considered to have Significant Influence over each of CanSpinco 1, CanSpinco 2, CanSpinco 3 and CanKeepco 1-7;

(ii)  CanSpinco 1 will be considered to have Significant Influence over each of CanSpinco 2 and CanSpinco 3;

(iii) CanKeepco 1 will be considered to have Significant Influence over CanKeepco 2 and CanKeepco 3; and

(iv)  CanKeepco 2 will be considered to have Significant Influence over CanKeepco 3;

(l)   for the purposes of determining the aggregate FMV of each type of property of Canadian DC, the aggregate FMV of the shares of the capital stock of any corporation over which any of the corporations described in Paragraph 42(k), has the ability to exercise Significant Influence, and of any indebtedness receivable by any such corporation from a corporation over which it has Significant Influence, will be allocated among the types of property described in Paragraphs 42(a), (b) and (c), by multiplying the aggregate FMV of the shares of the capital stock, or the indebtedness receivable from the particular corporation, as the case may be, by the proportion that the aggregate net FMV of each type of property owned by the particular corporation (as determined in accordance with the principles described in Paragraphs 42 and 43) is of the aggregate net FMV of all property owned by such corporation (as determined in accordance with the principles described in Paragraphs 42 and 43); and

(m)   any amount recorded as a long-term deposit for accounting purposes that is legally a receivable with no fixed terms of repayment and non‑interest bearing, will be considered as an account receivable that is cash or near‑cash property.

43.   In determining, on a consolidated look-through basis, the net FMV of each type of property of the Canadian DC Group immediately before the Canadian DC Transfer, the liabilities of Canadian DC and any corporation over which Canadian DC exercises Significant Influence will be allocated to, and will be deducted in the calculation of, the net FMV of each type of property of Canadian DC and such corporation, in the following manner:

(a)   in determining the net FMV of each type of property of a corporation over which Canadian DC exercises Significant Influence immediately before the Canadian DC Transfer, the liabilities of that corporation (other than an amount owing by such corporation to another corporation that has the ability to exercise Significant Influence over the debtor corporation) will be allocated to, and deducted in the calculation of, the net FMV of each type of property of that particular corporation as follows:

(i)   current liabilities of such corporation will be allocated to each cash or near-cash property of the corporation in the proportion that the FMV of each such property is of the FMV of all cash or near-cash property of the corporation. To the extent that the total amount of current liabilities to be allocated to the cash or near-cash property exceeds the total FMV of all the cash or near-cash property, such corporation will be considered to have a negative amount of cash or near-cash property;

(ii)  following the allocation of current liabilities to each cash or near-cash property as described in Paragraph 43(a)(i), provided that the net FMV of the cash or near-cash property of such corporation is positive, any receivables (including HST/GST/PST/QST receivables, and accounts receivables owing from non-arm’s length persons other than any amount owing by such corporation to another corporation that has the ability to exercise Significant Influence over the debtor corporation), inventories and prepaid expenses of such corporation will be reclassified as business property of such corporation and excluded from the net FMV of the cash or near-cash property, to the extent that such property will be collected, sold, used or consumed in the ordinary course of business to which such property relates;

(iii) liabilities, other than current liabilities, of such corporation that relate to a particular property will be allocated to the particular property (and effectively to the type of property to which the particular property belongs) to the extent of its FMV.  Any excess of such liabilities over the FMV of a particular property and liabilities that pertain to a particular type of property, but not to a particular property, will then be allocated to that particular type of property. To the extent that the total amount of liabilities that are to be allocated to a particular type of property as described in Paragraph 43(a)(iii) exceeds the total FMV of that type of property, such corporation will be considered to have a negative amount of that type of property; and

(iv)  If any liabilities remain after the allocations described in Paragraphs 43(a)(i) and (iii) are made, such excess unallocated liabilities will then be allocated to each type of property of such corporation, based on the relative net FMV of each type of property immediately prior to the allocation of such excess unallocated liabilities. However, where a corporation is considered to have a negative amount of a type of property because of Paragraph 43(a)(i) or (iii), for purposes of allocating those remaining liabilities, the net FMV of that type of property will be deemed to be nil resulting in none of those remaining liabilities being allocated to that type of property.

(b)   In determining, on a consolidated look-through basis, the net FMV of each type of property of Canadian DC immediately before the Canadian DC Transfer, Canadian DC will include the appropriate pro rata share of the net FMV of each type of property of any corporation over which Canadian DC exercises Significant Influence and, for greater certainty, the appropriate negative amount of such type of property of any such corporation, as determined in accordance with Paragraph 43(a), and any liabilities of Canadian DC will be allocated to, and be deducted in the calculation of, the net FMV of each type of property of Canadian DC in the following manner:

(i)   current liabilities of Canadian DC will be allocated to the cash or near-cash property of Canadian DC in the proportion that the FMV of each such property is of the aggregate FMV of all cash or near-cash property of Canadian DC. The allocation of current liabilities as described in Paragraph 43(b)(i) will not exceed the aggregate FMV of all the cash or near-cash property of Canadian DC;

(ii)  following the allocation of current liabilities to each cash or near‑cash property in Paragraph 43(b)(i), any remaining net aggregate FMV of any accounts receivable (including HST/GST/PST/QST receivables and accounts receivable owing from non-arm’s length persons other than any amount owing by such corporation to Canadian DC that Canadian DC has ability to exercise Significant Influence over the debtor corporation), inventories and prepaid expenses of Canadian DC will be reclassified as business property and excluded from the cash or near-cash property to the extent that such property will be collected, sold, used or consumed in the ordinary course of the business to which such property relates.

For greater certainty, the Sister Canco 5 Loan Receivable will be XXXXXXXXXX, as it is used or consumed in the ordinary course of Canadian DC’s business to which such property relates. However, accounts receivable that pertain to the Canadian Retained Business 1 and that are transferred by Canadian DC to Canadian TC, will not be reclassified as business property and will be treated solely as cash or near cash property;

(iii) liabilities of Canadian DC, other than current liabilities, that relate to a particular property will be allocated to the particular property (and effectively to the type of property to which the particular property belongs) to the extent of its FMV. Any excess of such liabilities over the FMV of a particular property and liabilities that pertain to a particular type of property, but not to a particular property, will then be allocated to that particular type of property, but not in excess of the net FMV of that type of property after the allocation of liabilities to a particular property as described in Paragraph 43(b)(iii); and

(iv)  if any liabilities remain after the allocations described in Paragraphs 43(b)(i) and(iii) are made, such excess unallocated liabilities will then be allocated to each type of property of Canadian DC, on the basis of the relative net FMV of each type of property immediately prior to the allocation of such excess unallocated liabilities, but after the allocation of the liabilities described in Paragraphs 43(b)(i) and (iii).

(c)   For greater certainty, for the purposes of the determinations in Paragraphs 42 and 43:

(i)   no amount will be considered to be a liability unless it represents a legal liability which is capable of quantification;

(ii)  the amount of any deferred or future income tax liability will not be considered a liability because such amount does not represent a legal liability;

(iii) current liabilities will include amounts with no fixed terms of repayment and amounts normally classified as current liabilities, including accounts payable, bonuses payable, vacation payable, and the portion of any long-term debt or advance due within one year, owing to both arm’s length and non-arm’s length parties (other than as described in Paragraph 43(c)(vi));

(iv)  income or other taxes due and payable within a year (excluding HST/GST/PST/QST), as well as any corresponding interest and penalties, which relate to either an assessment, additional assessment, reassessment or variance thereof received prior to the Canadian DC Transfer or a return filed for a taxation year for which no assessment, additional assessment, reassessment or variance thereof has been received prior to the Canadian DC Transfer, will be classified as current liabilities.

Income and other taxes payable (excluding HST/GST/PST/QST) that relate to taxation years for which a return has not been filed will be classified as contingent liabilities unless they represent Non-Resident withholding tax or similar non-income taxes which are payable pursuant to the applicable legislation;

(v)   HST/GST/PST/QST payables recorded for financial statement purposes will not be considered a liability, except to the extent that such balances represent amounts of HST/GST/PST/QST payable recorded on the financial statements which relate to reporting periods ending prior to the Canadian DC Transfer for which a return was filed, in which case such balances will be treated as  current liability;

(vi)  notwithstanding Paragraphs 43(a)(i) and (b)(i), amounts payable by corporations within the Canadian DC Group that arose under the Cash Sweepings will be treated as current liabilities allocable to cash;

(vii) any amount collected from customers and recorded as deferred revenue for financial statement purposes will not be considered a liability provided it does not represent a true legal liability capable of quantification; and

(viii)     any amount recorded as a capital lease liability (or as liabilities associated with a capital lease) for accounting purposes represents only an accounting entry and will not be considered a liability.

44.   Based on the principles described in Paragraphs 42 and 43, to the best of its knowledge, the Canadian DC Group will have cash or near-cash property and business property, but no investment property at the time of the Canadian DC Transfer.

Distribution of Distribution Property to Canadian TC

45.   Immediately after the determination of the types of property and the aggregate net FMV of each type of property described in Paragraphs 42 and 43, Canadian DC will transfer (the Canadian DC Transfer), and will become legally obligated to transfer the Additional Canadian DC Cash Transfer, if any, as described in Paragraph 47, a proportionate share of each type of its property (the Distribution Property) to Canadian TC, such that immediately following the Canadian DC Transfer, the Additional Canadian DC Cash transfer, if any, and the Canadian TC Assumed Liability, if any, as described in Paragraph 48(a), the net FMV of each type of property so transferred to Canadian TC (determined in each case on the basis of the principles described in Paragraphs 42 and 43) will be equal to or approximate that proportion of the net FMV of all property of Canadian DC of that type, determined immediately before the Canadian DC Transfer that:

(a)   the aggregate FMV, immediately before the Canadian DC Transfer, of all the Canadian DC Special Shares owned by Canadian TC at that time,

is of

(b)   the aggregate FMV, immediately before the Canadian DC Transfer, of all the issued and outstanding Canadian DC Shares at that time.

The Distribution Property will consist of: (i) all of Canadian DC’s CanSpinco 1 common shares, and (ii) the Additional Canadian DC Cash Transfer, if any.

The current estimated FMV of the Distribution Property (i.e., the Canadian Spin Business) and of the Spin Business, using XXXXXXXXXX financial information, is approximately $XXXXXXXXXX USD and $XXXXXXXXXX USD, respectively.

For greater certainty, any cash and near-cash property transferred by Canadian DC to Canadian TC will not include the Sister Canco 5 Loan Receivable.

46.   The expression “approximate that proportion” described in Paragraphs 45 and 50 means that the discrepancy from that proportion, if any, would not exceed XXXXXXXXXX% determined as a percentage of the aggregate net FMV of each type of property of Canadian DC that Canadian TC has received (or Canadian DC has retained) as compared to what Canadian TC would have received (or Canadian DC would have retained) had it received (or retained) its appropriate pro rata share of the aggregate net FMV of that type of property of Canadian DC.

47.   No later than XXXXXXXXXX after the date of the Canadian DC Transfer, and in the event that immediately prior to the time of the Canadian DC Transfer, Canadian DC has cash or near cash property with a positive aggregate net FMV, Canadian DC will transfer to Canadian TC any required additional cash or near cash property (the Additional Canadian DC Cash Transfer) necessary to ensure that the aggregate net FMV of:

(a)   the Additional Canadian DC Cash Transfer (if any is required to be made), as described in Paragraph 47;

(b)   the cash or near-cash property of Canadian DC transferred to Canadian TC, as described in Paragraph 45; and

(c)   the Canadian TC Assumed Liability (if any is required to be assumed), as described in Paragraph 48(a),

will be equal to or approximate that proportion, as described in Paragraphs 45(a) and (b), of the aggregate net FMV of all cash or near-cash property of Canadian DC, determined immediately before the Canadian DC Transfer and applying the principles described in Paragraphs 42 and 43.

48.   As consideration for the Distribution Property, Canadian TC will:

(a)   assume all or a portion of certain liabilities of Canadian DC (the Canadian TC Assumed Liability), if required; and

(b)   issue Canadian TC Special Shares to Canadian DC having an aggregate FMV at that time equal to the amount by which the aggregate FMV of the CanSpinco 1 common shares transferred by Canadian DC to Canadian TC at that time and the Additional Canadian DC Cash Transfer (if that transfer is required to be made), as described in Paragraph 47, exceeds the Canadian TC Assumed Liability (if any is required to be assumed), as described in Paragraph 48(a).

At the time the Canadian TC Special Shares are issued, there will be no declared and unpaid dividends thereon, nor any such dividends declared prior to the redemption of such shares, as described in Paragraph 51.

Canadian DC will hold the Canadian TC Special Shares as Capital Property.

49.   Canadian TC will jointly elect with Canadian DC, in prescribed form and within the time limit referred to in subsection 85(6), to have the rules in subsection 85(1) apply to the transfer by Canadian DC of the CanSpinco 1 common shares to Canadian TC on the Canadian DC Transfer.  The Agreed Amount in respect of the election will be an amount equal to the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii), which amount will not be less than the amount permitted under paragraph 85(1)(b).

The amount added to the Stated Capital of the Canadian TC Special Shares issued by Canadian TC to Canadian DC, as described in Paragraph 48(b), will not exceed the aggregate cost (determined pursuant to subsection 85(1), where applicable) to Canadian TC of the CanSpinco 1 common shares and the Additional Canadian DC Cash Transfer, if any, less the amount of the Canadian TC Assumed Liability, if any, as described in Paragraph 48(a).

For greater certainty:

(a)   the increase to the aggregate PUC of the Canadian TC Special Shares issued by Canadian TC to Canadian DC, as described in Paragraph 48(b) will not exceed the maximum amount that could be added to the aggregate PUC of such shares, having regard to subsection 85(2.1);

(b)   the amount of any liabilities assumed by Canadian TC which are allocated to a particular property: (i) that is the subject of an election under subsection 85(1), will not exceed the Agreed Amount for that particular property; or (ii) that is not the subject of an election under subsection 85(1), will not exceed the FMV of that particular property; and

(c)   no subsection 85(1) election will be made for the cash or near-cash property.

The CanSpinco 1 common shares will be Eligible Property at the time of the Canadian DC Transfer.

50.   Immediately following the Canadian DC Transfer, taking into account the Additional Canadian DC Cash Transfer, if any, the Canadian TC Assumed Liability, if any, the aggregate net FMV of each type of property retained by Canadian DC (determined in each case on the basis of the principles described in Paragraphs 42 and 43) will be equal to or approximate that proportion of the net FMV of all property of Canadian DC of that type, determined applying those principles, immediately before the Canadian DC Transfer that:

(a)   the aggregate FMV, immediately before the Canadian DC Transfer, of all the Canadian DC New Common Shares owned by Forco 1 at that time,

      is of

(b)   the aggregate FMV, immediately before the Canadian DC Transfer, of all the issued and outstanding Canadian DC Shares at that time.

Share Redemptions

51.   Immediately following the Canadian DC Transfer, Canadian TC will redeem all of the Canadian TC Special Shares owned by Canadian DC (the Canadian TC Redemption) for an amount equal to the aggregate Canadian TC Redemption Amount.

There will be no declared and unpaid dividends on the Canadian TC Special Shares on the Canadian TC Redemption.

In satisfaction of the aggregate Canadian TC Redemption Amount for such shares, Canadian TC will issue a promissory note (the Canadian TC Redemption Note), payable to Canadian DC on demand without interest, having a principal amount and FMV equal to the aggregate Canadian TC Redemption Amount of the Canadian TC Special Shares so redeemed.

Canadian DC will accept the Canadian TC Redemption Note in full payment of the redemption price of the Canadian TC Special Shares owned by Canadian DC, and will assume the full risk of the note being dishonoured.

Canadian TC will not designate the Canadian TC Dividend to be an Eligible Dividend under subsection 89(14).

52.   Immediately following the Canadian DC Transfer, Canadian DC will redeem all of the Canadian DC Special Shares owned by Canadian TC (the Canadian DC Redemption) for an amount equal to the aggregate Canadian DC Redemption Amount.

There will be no declared and unpaid dividends on the Canadian DC Special Shares on the Canadian DC Redemption.

In satisfaction of the aggregate Canadian DC Redemption Amount for such shares, Canadian DC will issue a promissory note (the Canadian DC Redemption Note), payable to Canadian TC on demand without interest, having a principal amount and FMV equal to the aggregate Canadian DC Redemption Amount of the Canadian DC Special Shares so redeemed.

Canadian TC will accept the Canadian DC Redemption Note in full payment of the redemption price of the Canadian DC Special Shares owned by Canadian TC, and will assume the full risk of the note being dishonoured.

Canadian DC will not designate the Canadian DC Dividend to be an Eligible Dividend under subsection 89(14).

Promissory Notes Set-Off

53.   Immediately following the Canadian DC Redemption and the Canadian TC Redemption, Canadian DC and Canadian TC will enter into a set-off agreement, pursuant to which the principal amount owing by Canadian DC to Canadian TC under the Canadian DC Redemption Note and the principal amount owing by Canadian TC to Canadian DC under the Canadian TC Redemption Note will be set-off in full against each other.  Following the set-off, each such note will be considered to be paid in full and will be cancelled.

Transitional Services Agreements, Separation Agreements, Management Services Agreements, or Lease Agreements

54.   Prior to the Canadian DC Transfer, Canadian DC and Canadian TC will enter into one or more transitional services agreements, separation agreements, management services agreements, or lease agreements.  Such agreements will be contingent and will become effective only upon the contribution, by Foreign Pubco, of Foreign SpincoSub to Foreign Spinco, on the Foreign Pubco Transfer, as described in Paragraph 57.

POST-CANADIAN BUTTERFLY TRANSACTIONS

FINAL GLOBAL SPIN-OUT STEPS

Distribution of Foreign SpincoSub to Foreign Pubco

55.   After the transactions described in Paragraph 53, Forco 1 will distribute all of its  Foreign SpincoSub common shares to Foreign Pubco pursuant to a dividend payment under State 1 corporate law. Such distribution of dividend to Foreign Pubco will be tax-deferred for Country 1 federal income tax purposes.

Foreign Spinco Borrowing

56.   Foreign Spinco will raise cash by: (a) borrowing from third-party lenders, such as banks; and (b) issuing debt securities to third-party investors, to fund its acquisition of the Foreign SpincoSub common shares from Foreign Pubco, as described in Paragraph 57.

Foreign SpincoSub will not owe any debts.

Foreign Pubco Transfer

57.   Foreign Pubco will transfer all of its Foreign SpincoSub common shares to Foreign Spinco (the Foreign Pubco Transfer).

In consideration for the Foreign Pubco Transfer, Foreign Spinco will:

(a)   pay cash;

(b)   issue debt securities; and

(c)   issue a number of Foreign Spinco common shares,

to Foreign Pubco.

The number of Foreign Spinco common shares that will be issued to Foreign Pubco, as described in Paragraph 57(c):

(i)   will have an aggregate FMV, at the time of their issuance, equal to the amount by which the aggregate FMV of the Foreign SpincoSub common shares so transferred to Foreign Spinco at that time, exceeds the total amount of the cash and the debt securities issued to Foreign Pubco, as described in Paragraphs 57(a) and (b), respectively; and

(ii)  will be sufficient for Foreign Pubco to distribute those Foreign Spinco common shares to its public shareholders on the Spin-Out, as described in Paragraph 58.

The total amount of the money that Foreign Spinco will borrow, as described in Paragraphs 56(a) and (b), and the debt securities that Foreign Spinco will issue to Foreign Pubco, as described in Paragraph 57(b), will be approximately $XXXXXXXXXX USD (the Foreign Spinco Debts).

The Foreign Spinco Debts will not be secured debts or debts related to a particular property of Foreign Spinco.  In the event of default on the Foreign Spinco Debts, the creditors of the Foreign Spinco Debts will have the ability to seek a claim against all of the property of Foreign Spinco including the shares of Canadian TC.

Spin-Out Foreign Spinco to Foreign Pubco Shareholders

58.   After the transactions described in Paragraph 57, Foreign Pubco will distribute (Spin-Out) all of its Foreign Spinco common shares to its shareholders pro rata based upon their shareholdings pursuant to a dividend payment under State 1 corporate law. The common shares of Foreign Spinco will be listed on the Securities Exchange and will be available to be publicly traded after the Spin-Out.

The Spin-Out will occur on a tax-deferred basis under the taxation laws of Country 1 for both Foreign Pubco and its shareholders.

After the Spin-Out:

(a)   the only property that Foreign Spinco will own will be the Foreign SpincoSub common shares, and Foreign SpincoSub will own, among other things, all of the issued and outstanding Canadian TC Common Shares; and

(b)   as part of a Series of Transactions or Events that includes the Taxable Dividends described in Ruling D, Foreign Spinco will continue to own all of the Foreign SpincoSub common shares, and Foreign SpincoSub will continue to own all of the Canadian TC Common Shares.

Repayment of Foreign Pubco Indebtedness

59.   After the Spin-Out, Foreign Pubco will use the cash received from Foreign Spinco, as described in Paragraph 57(a), to repay certain of its existing debts.

60.   After the Spin-Out, Foreign Pubco will assign the debt securities received from Foreign Spinco, as described in Paragraph 57(b), to certain of its creditors in repayment of certain of its existing debts.

VI.   ADDITIONAL INFORMATION

61.   XXXXXXXXXX

62.   Neither Canadian DC nor Canadian TC is, or will be, at the time of the Proposed Transactions a Financial Intermediary Corporation. However, each of Canadian DC and Canadian TC is, or will be, a Specified Financial Institution.

63.   None of the shares of Canadian DC or Canadian TC has been, or will be, at any time during the implementation of the Proposed Transactions:

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

(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)   a share that is issued or acquired as part of a transaction, event or Series of Transactions or Events of the type described in subsection 112(2.5);

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

(e)   issued for consideration that is or includes:

(i)   an obligation of the type described in subparagraph 112(2.4)(b)(i); or

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

64.   No property has or will become property of Canadian DC or a corporation controlled by it, and no liabilities have been or will be incurred by Canadian DC or a corporation controlled by it, in contemplation of and before the Canadian DC Transfer, otherwise than in a transaction described in subparagraphs 55(3.1)(a)(i) to (iv).

65.   Foreign Pubco is not aware of an anticipated or expected acquisition of control or takeover of Foreign Pubco, Foreign Spinco, Foreign SpincoSub, Canadian DC, or Canadian TC.

66.   As part of a Series of Transactions or Events that includes the Taxable Dividends described in Ruling D, there was not and will not be:

(a)   a disposition of property in the circumstances described in subparagraph 55(3.1)(b)(i);

(b)   an acquisition of control in the circumstances described in subparagraph 55(3.1)(b)(ii); or

(c)   an acquisition of shares in the circumstances described in subparagraph 55(3.1)(b)(iii).

67.   At no time, during the course of a Series of Transactions or Events that includes the Taxable Dividends described in Ruling D, will:

(a)   XXXXXXXXXX% or more of the FMV of any one of the Foreign Spinco common shares be derived, directly or indirectly, from one or more of the Canadian TC Common Shares owned by Foreign SpincoSub; or

(b)   XXXXXXXXXX% or more of the FMV of any one of the Foreign SpincoSub common shares be derived, directly or indirectly, from one or more of: (i) the Canadian DC Special Shares owned by Canadian TC; or (ii) the Canadian TC Common Shares owned by Foreign SpincoSub.

More specifically:

(I)   immediately following the Canadian DC Transfer, the aggregate FMV of the Canadian TC Common Shares owned by Foreign SpincoSub will not exceed $XXXXXXXXXX USD; and

(II) during the portion of the Series of Transactions or Events, which includes the Taxable Dividends described in Ruling D, commencing immediately prior to the Three-Party Share Exchange and ending at the completion of that Series of Transactions or Events, the aggregate FMV of the issued and outstanding Foreign SpincoSub common shares and Foreign Spinco common shares, in each case, will not be less than $XXXXXXXXXX USD.

For greater certainty, the Proposed Transactions constitute a Series of Transactions or Events that includes the Taxable Dividends described in Ruling D.

For the purposes of Paragraph 67, in determining the portion of the FMV of any one of the shares or debt of a particular corporation which is derived from one or more of the shares of another corporation, any indebtedness of the particular corporation that is not a secured debt or a debt related to a particular property will be considered to reduce the FMV of each property of the particular corporation (or indirectly the FMV derived from one or more of the shares owned by the particular corporation (in the case of Foreign Spinco, indirectly the FMV derived from one or more of the Canadian TC Common Shares owned by Foreign SpincoSub)) pro rata in proportion to the relative aggregate FMV of all property of the particular corporation.

68.   At no time, during the course of a Series of Transactions or Events that includes the Taxable Dividends described in Ruling D, will the shares of the capital stock of Canadian DC, Canadian TC, Foreign Pubco, Foreign Spinco, Foreign SpincoSub, or Forco 1 be acquired by any person or partnership who was not related to the vendor or, as part of the series, ceased to be related to the vendor, otherwise than as described herein (taking into consideration paragraph 55(3.2)(c), if applicable).

69.   The Canadian DC Common Shares will not be Taxable Canadian Property at the time those shares are exchanged by Forco 1 for the Canadian DC New Common Shares and the Canadian DC Special Shares on the Canadian DC Share Exchange.

The Canadian DC Special Shares will not be Taxable Canadian Property at the time those shares are transferred by Forco 1 to Canadian TC on the Three-Party Share Exchange.

The Foreign SpincoSub common shares will not be Taxable Canadian Property at the time those shares are transferred by:

(a)   Forco 1 to Foreign Pubco, as described in Paragraph 55; and

(b)   Foreign Pubco to Foreign Spinco, as described in Paragraph 57.

Accordingly, Forco 1 will not apply for a clearance certificate under section 116 in respect of the dispositions of: (i) its Canadian DC Common Shares on the Canadian DC Share Exchange; (ii) its Canadian DC Special Shares on the Three‑Party Share Exchange; and (iii) its Foreign SpincoSub common shares to Foreign Pubco, as described in Paragraph 55, and will not file a Canadian income tax return to report the dispositions of those shares.

Further, Foreign Pubco will not apply for a clearance certificate under section 116 in respect of the disposition of its Foreign SpincoSub common shares to Foreign Spinco, as described in Paragraph 57, and will not file a Canadian income tax return to report the disposition of those shares.

70.   Canadian DC will not have a RDTOH balance at the end of the taxation year in which the Canadian DC Dividend is deemed to have been paid.

Canadian TC will not have a RDTOH balance at the end of the taxation year in which the Canadian TC Dividend is deemed to have been paid.

71.   The dividend that Canadian DC will receive from CanSpinco 1 on the CanSpinco 1 common shares, as described in Paragraph 35(b), will not exceed the Safe Income On Hand, determined immediately before the Safe Income Determination Time for the dividend that is attributable to Canadian DC’s CanSpinco 1 common shares.

Further, the amount of each dividend that:

(a)   Canadian DC received from CanSpinco 1 on its CanSpinco 1 common shares in XXXXXXXXXX and XXXXXXXXXX, as described in Paragraph 17;

(b)   CanSpinco 1 received from CanSpinco 2 on its CanSpinco 2 common shares in XXXXXXXXXX, XXXXXXXXXX and XXXXXXXXXX, as described in Paragraph 18;

(c)   CanSpinco 1 received from CanSpinco 3 on its CanSpinco 3 common shares in XXXXXXXXXX, as described in Paragraph 19;

(d)   Canadian DC received from CanKeepco 1 on its CanKeepco 1 common shares in XXXXXXXXXX, XXXXXXXXXX and XXXXXXXXXX, as described in Paragraph 20;

(e)   CanKeepco 1 received from CanKeepco 2 on its CanKeepco 2 common shares in XXXXXXXXXX, XXXXXXXXXX and XXXXXXXXXX, as described in Paragraph 21; and

(f)   CanKeepco 1 and CanKeepco 2 received from CanKeepco 3 on their CanKeepco 3 common shares in XXXXXXXXXX, XXXXXXXXXX and XXXXXXXXXX, as described in Paragraph 21,

in each case, did not exceed the Safe Income On Hand, immediately before the Safe Income Determination Time for those dividends, that was attributable to those respective shares described in Paragraphs 71(a), (b), (c), (d), (e) and (f), as the case may be, on which each such dividend was paid.

72.   Any repurchases of Foreign Pubco common shares pursuant to the stock repurchase plan, as described in Paragraph 5, are independent of, and unrelated to, the Proposed Transactions and would occur regardless of whether the Proposed Transactions are undertaken.

73.   Dividends are generally paid by Canadian DC to Forco 1 every XXXXXXXXXX depending on the cash needs within the members of the Foreign Pubco Group in Country 1 and Country 2.  A dividend has not been paid recently and the Foreign Pubco Group has decided to refrain from paying dividends by Canadian DC to Forco 1 until after the Canadian Butterfly Transactions in order to ensure that there is an appropriate split of cash between the Canadian Spin Business and the Canadian Retained Business 1 that Canadian DC will continue to carry on after the Canadian Butterfly Transactions.

Consequently, following the Proposed Transactions, Canadian DC may pay XXXXXXXXXX dividends to Forco 1 on the Canadian DC New Common Shares owned by Forco 1.  The decision to pay any such dividends will be made in accordance with the cash management and distribution policies of the Foreign Pubco Group, and will be independent of, and unrelated to, the Proposed Transactions. A requisite amount of tax will be withheld on any such dividends in accordance with Part XIII and the applicable terms of the Treaty.

74.   Following the Proposed Transactions, Canadian TC may pay XXXXXXXXXX dividends to Foreign SpincoSub on the Canadian TC Common Shares owned by Foreign SpincoSub. The decision to pay any such dividends will be made in accordance with the new cash management and distribution policies that will be maintained by the group of companies that Foreign Spinco owns, and will be independent of, and unrelated to, the Proposed Transactions. A requisite amount of tax will be withheld on any such dividends in accordance with Part XIII and the applicable terms of the Treaty.

75.   Foreign Pubco, Forco 1 and Canadian DC are, and will remain to be, Related Persons throughout the course of any Series of Transactions or Events that includes the Taxable Dividends as described in Ruling D.

76.   The Canadian DC Special Shares and the Canadian TC Special Shares will not be Taxable RFI Shares. However, those shares will be Short-Term Preferred Shares, Term Preferred Shares and Taxable Preferred Shares.

The acquisition, by Canadian DC, of the Canadian TC Special Shares, as described in Paragraph 48, will occur outside the ordinary course of Canadian DC’s businesses.

The acquisition, by Canadian TC, of the Canadian DC Special Shares, as described in Paragraph 39(a), will occur outside the ordinary course of Canadian TC’s business.

77.   Canadian DC and Canadian TC will have a “substantial interest” (as defined in paragraph 191(2)(a)) in each other at all relevant times.

78.   The Proposed Transactions will not result in Canadian DC or a person Related to Canadian DC described herein being unable to pay its existing tax liabilities.

79.   It is expected that share-based compensation plans and post-retirement benefit plans (other than defined benefit plans) will be established by Foreign Spinco for employees of Canadian TC, similar to those currently available for employees of Canadian DC who are working in the Canadian Spin Business, with the exception that the shares issued under those plans will be Foreign Spinco common shares (or rights in respect of such shares) instead of Foreign Pubco common shares.

80.   Each of Canadian DC and Canadian TC will have the financial capacity to honour, upon presentation for payment, the amount payable under the promissory note issued by it as part of the Proposed Transactions.

VII.  PURPOSES OF THE PROPOSED TRANSACTIONS

81.   The purpose of the Proposed Transactions is to facilitate the Spin-Out of the Spin Business to the shareholders of Foreign Pubco.

Over the past several years, the Retained Business 1, the Retained Business 2 and the Spin Business have been moving in significantly different directions with little operational overlap. The Spin-Out is part of the Foreign Pubco Group’s plan to enhance the success of each business by creating XXXXXXXXXX independent public corporations that will be leaders in their respective fields and drive growth and value creation for shareholders. This will enable the XXXXXXXXXX corporations to better focus on their respective fields and allocate resources, incentivize employees, attract capital and investors, and set dividend policies.

82.   The purpose of Forco 1 incorporating Foreign SpincoSub, as described in Paragraph 32, and of Foreign Pubco transferring all of its Foreign SpincoSub common shares to Foreign Spinco on the Foreign Pubco Transfer, as described in Paragraph 57, is to achieve the greatest possible administrative convenience, in terms of having Foreign SpincoSub (instead of Foreign Spinco) be the direct shareholder of all of the operating subsidiaries carrying on the Spin Business around the world.

83.   The purpose of CanSpinco 1 repaying its loan payable to Canadian DC with cash, as described in Paragraph 35(a), is to ensure that there is no loan owed between the subsidiaries of Foreign Spinco and the subsidiaries of Foreign Pubco in order to achieve the desired separation on the Spin-Out.

84.   The purpose of CanSpinco 1 paying a cash dividend to Canadian DC, as described in Paragraph 35(b), is a precautionary measure to ensure that the pro rata distribution requirement set out in the definition of “distribution” in subsection 55(1), with respect to the cash or near cash property of Canadian DC that Canadian DC will transfer to Canadian TC on the Canadian DC Transfer, as described in Paragraph 45, is met.

85.   The purpose of Foreign SpincoSub incorporating Canadian TC under the BCA 8 as an unlimited liability company, as described in Paragraph 36, is to ensure that Canadian TC will be a disregarded entity for Country 1 tax purposes, such that the transfer, by Canadian DC, of its CanSpinco 1 common shares to Canadian TC on the Canadian DC Transfer, will be viewed as a direct transfer of the CanSpinco 1 common shares by Canadian DC to Foreign SpincoSub.

86.   The purpose of giving the Canadian DC New Common Shares XXXXXXXXXX votes per share, as described in Paragraph 37(a), is to make the Canadian DC New Common Shares different from the Canadian Common Shares (XXXXXXXXXX per share) so as to ensure that, for the purposes of subsection 86(1), all of the Canadian DC Common Shares owned by Forco 1 are being disposed of for “other shares” of the capital stock of Canadian DC on the Canadian DC Share Exchange.

87.   The purpose of the Three-Party Share Exchange, as described in Paragraph 39, is to:

(a)   allow the Canadian DC Special Shares to be transferred by Forco 1 to Canadian TC, and the Foreign SpincoSub common shares to be received by Forco 1, on a “permitted exchange” as defined in subsection 55(1); and

(b)   ensure that Foreign SpincoSub will not be deemed by paragraph 55(3.2)(h) to be a transferee corporation (as defined in subsection 55(1)) in relation to Canadian DC for the purposes of paragraph 55(3.1)(b).

88.   The reason for:

(a)   Canadian DC adding to the Stated Capital of the Canadian New Common Shares and the Canadian DC Special Shares issued to Canadian DC, an aggregate amount equal to the Stated Capital of the Canadian DC Common Shares, as opposed to their aggregate PUC, immediately before the Canadian DC Share Exchange, as described in Paragraph 38(b); and

(b)   Canadian TC adding to the Stated Capital of the Canadian TC Common Shares issued to Foreign SpincoSub, an amount equal to the Stated Capital of the Canadian DC Special Shares, as opposed to their aggregate PUC, so transferred by Forco 1 to Canadian TC on the Three-Party Share Exchange, as described in Paragraph 39,

is because: (i) with respect to Paragraph 88(a), the PUC of the class of the Canadian DC Common Shares has not been determined; and (ii) with respect to Paragraph 88(b), the PUC of the class of the Canadian DC Special Shares has not been determined.

89.   The purpose of Foreign Spinco incurring the Foreign Spinco Debts, as described in Paragraph 57, is to balance the debt levels owed by Foreign Spinco and Foreign Pubco after the Spin-Out, as compared to the existing debt level of Foreign Pubco.

VIII. RULINGS

Provided that the preceding statements constitute a complete and accurate disclosure of all of the relevant facts, Additional Information and the purposes of the Proposed Transactions, and provided that the Proposed Transactions are completed in the manner described above, our Rulings are set forth below:

A.    The provisions of subsections 86(1) and (2.1) will apply, and the provisions of subsection 86(2) will not apply, to the Canadian DC Share Exchange.

B.    As a result of the Three-Party Share Exchange:

(a)   the provisions of subparagraph 212.1(1.1)(a)(ii) and subsection 84(1) will not apply to deem a dividend to have been paid by Canadian TC, or to have been received by Forco 1, on the Three-Party Share Exchange;

(b)   the provisions of paragraph 212.1(1.1)(b) will apply to reduce the aggregate PUC of the Canadian TC Common Shares that Canadian TC issued to Foreign SpincoSub on the Three-Party Share Exchange, to an amount equal to the aggregate PUC, immediately before the transfer, of the Canadian DC Special Shares so transferred by Forco 1 to Canadian TC, as described in Paragraph 39(b); and

(c)   the aggregate cost to Canadian TC of the Canadian DC Special Shares that Canadian TC acquired from Forco 1 on the Three-Party Share Exchange will be equal to the aggregate FMV at that time of those Canadian DC Special Shares.

C.    Subject to the application of subsection 69(11), the provisions of subsection 85(1) will apply to the transfer, by Canadian DC, of its CanSpinco 1 common shares to Canadian TC on the Canadian DC Transfer, such that the Agreed Amount in respect of each transfer of Eligible Property will be deemed to be the transferor’s Proceeds of Disposition and the transferee’s cost of such property pursuant to paragraph 85(1)(a).

For greater certainty, paragraph 85(1)(e.2) will not apply to the Canadian DC Transfer.

D.    Subsection 84(3) will apply to:

(a)   the Canadian TC Redemption, to deem Canadian TC to have paid, and Canadian DC to have received; and

(b)   the Canadian DC Redemption, to deem Canadian DC to have paid, and Canadian TC to have received,

a dividend that is a Taxable Dividend, on the Canadian TC Special Shares and the Canadian DC Special Shares, respectively, equal to the amount, if any, by which the aggregate amount paid upon such redemption exceeds the aggregate PUC in respect of such shares immediately before such redemption and such dividend:

(c)   will be included, pursuant to subsection 82(1) and paragraph 12(1)(j), in computing the income of the recipient corporation;

(d)   will be deductible, pursuant to subsection 112(1), by the recipient corporation;

(e)   will not be a dividend to which any of subsections 112(2.1), (2.2), (2.3) and (2.4) apply;

(f)   will be excluded, pursuant to paragraph (j) of the definition of Proceeds of Disposition, in determining the Proceeds of Disposition to the recipient corporation of the shares which are redeemed;

(g)   will not be subject to tax under Part IV, except as provided in paragraph 186(1)(b);

(h)   will not be subject to tax under Part IV.1 or Part VI.1; and

(i)   will, by virtue of subsection 112(3), reduce any loss that would otherwise be determined for the particular recipient corporation as a result of the Canadian TC Redemption or the Canadian DC Redemption, as the case may be.

E.    By virtue of the provisions of paragraph 55(3)(b), subsection 55(2) will not apply to the Taxable Dividends referred to in Ruling D, provided that:

(a)   XXXXXXXXXX% or more of the FMV of any one of the Foreign SpincoSub common shares, is not, at any time during the course of a Series of Transactions or Events that includes the Taxable Dividends described in Ruling D, derived, directly or indirectly, from one or more of the Canadian TC Common Shares owned by Foreign SpincoSub, or of the Canadian DC Special Shares owned by Canadian TC;

(b)   XXXXXXXXXX% or more of the FMV of any one of the Foreign Spinco common shares, is not, at any time during the course of a Series of Transactions or Events that includes the Taxable Dividends described in Ruling D, derived, directly or indirectly, from one or more of the Canadian TC Common Shares owned by Foreign SpincoSub; or

(c)   as part of a Series of Transactions or Events that includes the Taxable Dividends referred to in Ruling D, there is not:

(i)   an acquisition of property in the circumstances described in paragraph 55(3.1)(a);

(ii)  a disposition of property in the circumstances described in subparagraph 55(3.1)(b)(i);

(iii) an acquisition of control in the circumstances described in subparagraph 55(3.1)(b)(ii); or

(iv)  an acquisition of shares in the capital stock of Canadian DC in the circumstances described in subparagraph 55(3.1)(b)(iii),

that has not been described herein and, for greater certainty, subsection 55(3.1) will not apply to deny the exemption under paragraph 55(3)(b).

F.    The set-off and cancellation of the Canadian DC Redemption Note held by Canadian TC and the Canadian TC Redemption Note held by Canadian DC, as described in Paragraph 53, will not give rise to a Forgiven Amount, and neither Canadian DC nor Canadian TC will realize any gain or incur any loss therefrom.

G.    The provisions of subsections 15(1), 56(2), 69(4) and 246(1) will not, in and of themselves, be applied, as a result of any of the Proposed Transactions.

H.    The provisions of subsection 245(2) will not be applied, as a result of the Proposed Transactions, in and of themselves, to redetermine the tax consequences confirmed in the Rulings.

The Rulings are given subject to the limitations and qualifications set out in Information Circular 70-6R8 issued by the CRA on November 1, 2018, and are binding on the CRA provided that the Proposed Transactions are completed on or before XXXXXXXXXX.

The 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

We make no comment as to whether any of the properties described in this letter including the Canadian DC Common Shares, the Canadian DC Special Shares or the Foreign SpincoSub common shares, would or would not constitute Taxable Canadian Property.

1.    Unless otherwise confirmed, nothing in the Rulings 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 Stated Capital or PUC of any share, or the ACB or FMV of any property, referred to herein;

(b)   any other tax account of any corporation referred to herein;

(c)   the characterization of any property described herein to the holder thereof;

(d)   the Safe Income On Hand attributable to any shares of any corporation referred to herein; or

(e)   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, 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.

Yours truly,

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

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