2000 Ruling 2000-0022383 - XXXXXXXXXX

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

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

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

Principal Issues:

XXXXXXXXXX .

This aspect of the ruling is similar to that which we ruled favourably on in file # 993252, dated XXXXXXXXXX , 2000. The main issues were the same as previous and included the application of sections 18.1 and 143.2, and subsection 96(2.2).

Position: Similar rulings as issued previously.

Reasons: Based on our reading of the legislation and prior rulings given for files 992719, 993252 and 963097.

XXXXXXXXXX 2000-002238

Attention: XXXXXXXXXX

XXXXXXXXXX, 2000

Dear Sirs:

Re: XXXXXXXXXX
Advance Income Tax Ruling

This is in reply to your letter dated XXXXXXXXXX, and our numerous telephone conversations (XXXXXXXXXX), wherein you requested advance income tax rulings on behalf of XXXXXXXXXX in connection with the proposed transactions described below.

We understand that, to the best of your knowledge and that of the taxpayers involved, none of the issues involved in this ruling

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

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

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

(iv) is before the courts or, if a judgment has been issued, the time limit for appeal to a higher court has not expired, and

(v) is the subject of a ruling previously issued by Revenue Canada or the Canada Customs and Revenue Agency.

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

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

DEFINITIONS

"Aco" means XXXXXXXXXX.

"Bco" means XXXXXXXXXX.

XXXXXXXXXX

"Cco" means XXXXXXXXXX.

"CCRA" means Canada Customs and Revenue Agency.

"Dco" means XXXXXXXXXX.

"Eco" means XXXXXXXXXX.

"Fco" means XXXXXXXXXX.

"Gco" means XXXXXXXXXX.

"General Partner" means XXXXXXXXXX.

"Manager" means XXXXXXXXXX.

"Manager Holdings Inc." means XXXXXXXXXX.

"Manager Services Fee" means the fees that the Manager will be entitled to receive, as described below in paragraph 36.

"Mr. X" means XXXXXXXXXX.

"Mr. Y" means XXXXXXXXXX.

"Mr. Z" means XXXXXXXXXX.

"Partnership" means XXXXXXXXXX.

"XXXXXXXXXX Facilitator" means the corporation to be incorporated by Bco, as described below in paragraph 24.

XXXXXXXXXX

"XXXXXXXXXX Partnership" means XXXXXXXXXX.

"Property" means a motion picture entitled XXXXXXXXXX, referred to below in paragraph 7.

"Regulations" means the regulations to the Act.

XXXXXXXXXX

"Tax Credit" means the film or video production services tax credit, as provided in section 125.5 of the Act.

FACTS

1. The Partnership is a limited partnership formed on XXXXXXXXXX pursuant to the laws of the province of XXXXXXXXXX. The fiscal period of the Partnership ends on XXXXXXXXXX of each year.

2. The Partnership's business is to provide, directly or indirectly, through other limited partnerships, XXXXXXXXXX services in respect of XXXXXXXXXX produced in Canada.

3. The General Partner is the general partner of the Partnership. The General Partner was incorporated pursuant to the laws of the province of XXXXXXXXXX and is a wholly-owned subsidiary corporation of Eco, a corporation incorporated under the federal laws of Canada. The General Partner's obligations with respect to the Partnership are set out in the partnership agreement (the "Partnership Agreement") and include the preparation of financial statements and maintaining of the books and records for the Partnership. All of the issued and outstanding shares of Eco are owned by Mr. X, a resident of Canada. Mr. X, who is the president of the General Partner, is a XXXXXXXXXX and is the initial limited partner of the Partnership. Mr. X has been involved in limited partnership management since XXXXXXXXXX and has served, directly or indirectly, as general partner in XXXXXXXXXX.

4. Manager is a corporation incorporated under the federal laws of Canada on XXXXXXXXXX. It is owned as to XXXXXXXXXX% by Aco and XXXXXXXXXX% by Manager Holdings Inc.

XXXXXXXXXX.

Aco is a public corporation, as defined under subsection 89(1), and was amalgamated pursuant to the laws of XXXXXXXXXX. Aco's head office is at XXXXXXXXXX. Manager Holdings Inc. is an XXXXXXXXXX corporation which is indirectly controlled by Mr. Y, a resident of XXXXXXXXXX.

5. Bco is a company incorporated under the laws of the state of XXXXXXXXXX. Bco is owned by Mr. Z, a Canadian citizen who is resident in XXXXXXXXXX

6. Cco is a corporation incorporated under the laws of the province of XXXXXXXXXX. All of the issued and outstanding shares of Cco are owned by XXXXXXXXXX. Dco is a corporation incorporated under the laws of the province of XXXXXXXXXX. All of the issued and outstanding shares of Dco are owned by XXXXXXXXXX. Cco and Dco are referred to herein collectively as the "Agent".

7. The XXXXXXXXXX Partnership was formed under the laws of the province of XXXXXXXXXX for the exclusive purpose of producing the Property, in Canada.

XXXXXXXXXX.

8. XXXXXXXXXX.

9. The general partner of the XXXXXXXXXX Partnership is XXXXXXXXXX. It is a company that was formed under the laws of the province of XXXXXXXXXX. The XXXXXXXXXX is a subsidiary of Manager. XXXXXXXXXX.

10. XXXXXXXXXX Fco is owned by Gco, which is a taxable Canadian controlled private corporation which is owned by a number of individuals and corporations, all of which operate at arm's length to the other parties noted in this letter.

11. Other than those identified in this letter, there will be no agreements between the parties to the proposed transactions described herein that could reasonably be expected to impact on the rulings given in this letter.

12. The General Partner and the Partnership deal at arm's length with each of the XXXXXXXXXX Provider, the XXXXXXXXXX Facilitator, Manager and the XXXXXXXXXX.

PROPOSED TRANSACTIONS

13. The Agent will offer (the "Offering") limited partnership units, (the "Units") of the Partnership for sale by way of offering memorandum (the "Offering Memorandum") to residents of Canada at a price of $XXXXXXXXXX per Unit (the "Unit Price"). Investors whose subscriptions are accepted will become limited partners of the Partnership ("Limited Partners"). XXXXXXXXXX. The interest of the initial limited partner of the Partnership will be repurchased by the Partnership on the date that the Limited Partners acquire their Units. The repurchase price will be equal in amount to the initial limited partner's $XXXXXXXXXX cost of the initial Partnership unit. The entire Unit Price will be payable on or before XXXXXXXXXX. The Offering Memorandum will contain the following mention:

"THE RULING OBTAINED FROM CANADA CUSTOMS AND REVENUE AGENCY CONTAINS CAVEATS. THE RULING MAY BE VIEWED ON REQUEST".

14. The Offering of the Units will be made in tranches and on a continuous basis the closing of which shall, in no event, be later than XXXXXXXXXX. For administrative expediency, the Primary Loans (described below in paragraph 16) will be advanced by a Canadian chartered bank (the "Bank") and the Secondary Loans (described below in paragraph 17) will be advanced by the Bank or another financial institution or finance company ("FinanceCo") to the Limited Partners on a particular day which will be on or before XXXXXXXXXX. In the meantime, the Partnership will establish a borrowing facility with the Bank (the "Primary Interim Loan Facility") and a borrowing facility with FinanceCo (the "Secondary Interim Loan Facility") in order to meet its commitments after the date of this letter and prior to the date that the Primary and Secondary Loans are advanced. These facilities will be full recourse to the Partnership and will bear interest at an annual rate which shall not be less than the prescribed rate (the "Prescribed Rate") within the meaning of paragraph 4301(c) of the Regulations on the date such loan is advanced. These facilities will be used by the Partnership to invest in the XXXXXXXXXX Partnership which, in turn, will use the proceeds to fund XXXXXXXXXX Expenses (within the meaning of paragraph 25). When the Bank and FinanceCo respectively advance the Primary and Secondary Loans to the Limited Partners, such amounts will be used by the Limited Partners to pay the Unit Price. The Partnership will use these funds to repay amounts owing under the Primary Interim Loan Facility and the Secondary Interim Loan Facility by XXXXXXXXXX.

15. Limited Partners who choose not to pay for the acquisition of their Units in cash by XXXXXXXXXX, will finance approximately $XXXXXXXXXX per Unit through two loan facilities (described below in paragraphs 16 and 17) with the Bank and FinanceCo. (Both the Bank and FinanceCo will deal at arm's length with all the other parties mentioned in this letter). In addition, the Limited Partners may borrow an additional $XXXXXXXXXX per Unit from the Bank on XXXXXXXXXX to satisfy the Unit Price (the "Short-term Loans"). The Short-term Loans will be full recourse to the Limited Partners and will bear interest equal to the Prescribed Rate on XXXXXXXXXX. Principal and interest owing under the Short-term Loans will be repayable no later than XXXXXXXXXX. Each Limited Partner will be responsible to provide his or her own funding for the balance of the Unit Price and for repayment of the Short-term Loan.

16. The first loan facility (the "Primary Loans") will be in an amount equal to approximately $XXXXXXXXXX per Unit. The Primary Loans will be advanced by the Bank to the Limited Partners on XXXXXXXXXX . Principal and interest owing under the Primary Loans will be repayable on XXXXXXXXXX. The Primary Loans, (i) will be secured by a pledge of the Limited Partners' Units, (ii) will be a full recourse debt to the Limited Partners and will bear interest on an annual interest rate which, in no event, will be less than the Prescribed Rate on XXXXXXXXXX.

17. The second loan facility to be provided by FinanceCo to the Limited Partners (the "Secondary Loans") will be in an amount equal to approximately $XXXXXXXXXX per Unit. The Secondary Loans will be advanced by FinanceCo to the Limited Partners on XXXXXXXXXX and will mature on XXXXXXXXXX. The Secondary Loans (i) will be secured by a pledge of the Limited Partners' Units, (ii) will be a full recourse debt to the Limited Partners and (iii) will bear interest on an annual interest rate which, in no event, will be less than the Prescribed Rate on XXXXXXXXXX. Interest accruing on the Secondary Loans will be payable by the Limited Partners each year, commencing on XXXXXXXXXX.

18. As security for repayment of the Primary and Secondary Loans, the Limited Partners will pledge their Units to the Bank and FinanceCo, including all future entitlements from the Partnership. The pledge in favour of FinanceCo will be subordinate to the pledge in favour of the Bank. The Primary and Secondary Loans will be arranged by the Agent on behalf of the Limited Partners.

19. In consideration for arranging the Primary Loans and the Secondary Loans, the Agent will be entitled to receive a fee (the "Loan Arrangement Fee") from each Limited Partner, the amount of which will be equal to the fair market value of such services estimated to be approximately $XXXXXXXXXX per Unit purchased by such Limited Partner. The Agent will also be entitled to receive from the Partnership an amount equal to XXXXXXXXXX% of the total amount advanced under the Primary Interim Loan Facility and the Secondary Interim Loan Facility (the "Interim Loan Arranging Fees").

20. Each Limited Partner will be entitled to a pro rata portion of XXXXXXXXXX% interest in the profits and losses of the Partnership, as well as the capital of the Partnership in the event of dissolution. The Partnership Agreement permits the Partnership to make capital distributions to Limited Partners without concurrent capital distributions to the General Partner. This will not in any way impair the capital of the General Partner, but will potentially provide the Limited Partners with funds to repay indebtedness incurred by them to acquire their interests in the Partnership.

21. The General Partner will file all income tax returns with the XXXXXXXXXX Tax Services Office and is in the process of applying for a business identification number. The registered office of the General Partner is located at XXXXXXXXXX. The General Partner is entitled to XXXXXXXXXX% of the profits and losses of the Partnership, as well as the capital of the Partnership in the event of dissolution.

22. On or before XXXXXXXXXX (the "Closing Date"), the amount of net proceeds from the Offering will be used by the Partnership to subscribe for all limited partnership units of the XXXXXXXXXX Partnership (hereinafter referred to as "XXXXXXXXXX Partnership Units") under a subscription agreement. The Partnership will also acquire limited partnership units of various other XXXXXXXXXX partnerships during the XXXXXXXXXX calendar year. Net proceeds represent proceeds of the Offering less expenses related to the Offering, including legal and accounting fees, trustee and bank fees, commissions, loan arrangement fees and management services fees. The interest of the initial limited partner of the XXXXXXXXXX Partnership will be repurchased by such XXXXXXXXXX Partnership on the date of the subscription by the Partnership. The repurchase price will be equal in amount to the initial limited partner's $XXXXXXXXXX cost of the initial XXXXXXXXXX Partnership unit. The subscription price of $XXXXXXXXXX per XXXXXXXXXX Partnership Unit will be paid in full on or before XXXXXXXXXX. At the end of such period, neither the Partnership nor any person or partnership not dealing at arm's length with the Partnership will owe any amount to the XXXXXXXXXX Partnership or to a person or partnership not dealing at arm's length with the XXXXXXXXXX Partnership.

23. Pursuant to the partnership agreement of the XXXXXXXXXX Partnership, XXXXXXXXXX% of the profits and losses of the XXXXXXXXXX Partnership, and XXXXXXXXXX % of the capital of the XXXXXXXXXX Partnership in the event of dissolution, will be allocated to its limited partners on a pro rata basis. The XXXXXXXXXX . will have a XXXXXXXXXX% interest in the profits and losses of the XXXXXXXXXX Partnership, as well as in the capital of the XXXXXXXXXX Partnership in the event of dissolution. Other than in the event of dissolution, the partnership agreement for the XXXXXXXXXX Partnership will permit the XXXXXXXXXX Partnership to make capital XXXXXXXXXX to its limited partners without concurrent capital distributions to the XXXXXXXXXX. or any other general partner. This will not in any way impair the capital of the XXXXXXXXXX or other general partner, as the case may be, but, as noted above in paragraph 20, will potentially provide the Limited Partners with funds to repay indebtedness incurred to acquire their interests in the Partnership.

24. Bco will incorporate a wholly-owned subsidiary under the laws of XXXXXXXXXX (the "XXXXXXXXXX Facilitator"). The XXXXXXXXXX will enter into an agreement with the XXXXXXXXXX Facilitator (the "XXXXXXXXXX Arrangement Agreement") pursuant to which the XXXXXXXXXX Facilitator will agree to arrange for the provision of XXXXXXXXXX services for the Property. The XXXXXXXXXX Facilitator will agree to be solely responsible for the payment of the XXXXXXXXXX expenses pertaining to the Property. In consideration for its services, XXXXXXXXXX will agree to pay the XXXXXXXXXX Facilitator a fee (the "XXXXXXXXXX Arrangement Fee"). The XXXXXXXXXX Arrangement Fee will include a fee (the "Fixed Fee") equal to approximately XXXXXXXXXX% of the XXXXXXXXXX Expenses (as defined below in paragraph 25) incurred by it, plus the following amounts:

XXXXXXXXXX.

The Fixed Fee is payable to the XXXXXXXXXX Facilitator on or before XXXXXXXXXX Until any portion of the Fixed Fee is needed by the XXXXXXXXXX Facilitator to pay the XXXXXXXXXX Fee (see paragraph 28, below), the XXXXXXXXXX Facilitator will invest the available portion of the Fixed Fee in a financial institution at fair market value interest rates.

The XXXXXXXXXX will also agree to lend the XXXXXXXXXX Facilitator an amount equal to approximately XXXXXXXXXX% (the "XXXXXXXXXX Loan") of the estimated XXXXXXXXXX Expenses. The XXXXXXXXXX Facilitator is obliged to repay at least XXXXXXXXXX% of the XXXXXXXXXX Loan on or before XXXXXXXXXX. The XXXXXXXXXX Loan will be non-interest bearing until XXXXXXXXXX, at which time it will become interest bearing at a commercial rate of interest.

25. XXXXXXXXXX.

26. XXXXXXXXXX.

27. XXXXXXXXXX.

28. XXXXXXXXXX.

29. XXXXXXXXXX.

30. XXXXXXXXXX.

31. XXXXXXXXXX.

32. XXXXXXXXXX.

33. XXXXXXXXXX.

34. XXXXXXXXXX.

35. XXXXXXXXXX.

36. XXXXXXXXXX.

37. XXXXXXXXXX.

38. XXXXXXXXXX.

39. XXXXXXXXXX.

40. XXXXXXXXXX.

41. XXXXXXXXXX .

42. XXXXXXXXXX .

43. XXXXXXXXXX .

44. The Partnership and the XXXXXXXXXX Partnership will be tax shelters within the meaning assigned by subsection 237.1(1). The General Partner and the XXXXXXXXXX will apply for a tax shelter identification number for the Partnership and for the XXXXXXXXXX Partnership, respectively, and upon receipt of the number, will file annual tax shelter information returns, pursuant to and in accordance with subsections 237.1(2) and (7).

PURPOSE OF THE PROPOSED TRANSACTIONS

45. The purpose of the proposed transactions is to XXXXXXXXXX.

RULINGS

Provided that the statement of facts, proposed transactions and the purposes thereof all as described above, is accurate and constitutes complete disclosure of all of the representations, relevant facts, proposed transactions and the purposes thereof and provided further that all of the proposed transactions are carried out as described above, and that the offering documents or executive summary contain a reference, such as described in paragraph 13 above in respect of the existence of caveats in the rulings given and provided that the final documents described above are materially as submitted in draft, and provided that the Partnership and the XXXXXXXXXX Partnership are partnerships at law, we provide the following rulings:

A. Pursuant to subsection 18.1(15), section 18.1 will not apply to restrict the deductibility of the XXXXXXXXXX Expenses (including the XXXXXXXXXX Reimbursements payable to the XXXXXXXXXX by the XXXXXXXXXX Partnership, as described in paragraphs 25 and 33 above) incurred by the XXXXXXXXXX Partnership pursuant to the proposed transactions, provided that before the end of the taxation year in which the particular XXXXXXXXXX expenditures are made, amounts included in computing the XXXXXXXXXX Partnership's income for that year (other than any portion of such an amount that is the subject of a reserve claimed by the XXXXXXXXXX Partnership for the year under the Act) in respect of the Property, exceed XXXXXXXXXX% of such XXXXXXXXXX Expenses.

B. The XXXXXXXXXX Expenses of the XXXXXXXXXX Partnership (including the XXXXXXXXXX Reimbursements payable to the XXXXXXXXXX by the XXXXXXXXXX Partnership as described in paragraphs 25 and 33 above) incurred after the date of this letter, will, subject to the application of subsections 143.2(6) and (10) of the Act and subject to the provision of section 18.1 of the Act, be deductible in computing the income of the XXXXXXXXXX Partnership pursuant to section 9(1) of the Act, to the extent that:

(i) XXXXXXXXXX;

(ii) XXXXXXXXXX; and

(iii) XXXXXXXXXX.

C. Subject to the application of paragraphs (b), (b. 1) and (c) of subsection 96(2.2), the at-risk amount, within the meaning of subsection 96(2.2), of the Partnership in the XXXXXXXXXX Partnership, at the end of the 2000 fiscal year of such XXXXXXXXXX Partnership, will be equal to the amount of the Partnership's investment in XXXXXXXXXX Partnership Units (as described in paragraph 22 above), to the extent that the Partnership or a person with whom the Partnership does not deal at arm's length, does not receive or obtain any amount or benefit referred to in paragraph 96(2.2)(d), other than an amount or benefit excluded by one of subparagraphs (i), (iii), (vi) or (vii) of that paragraph XXXXXXXXXX.

D. Subject to the application of paragraphs (b), (b.1) and (c) of subsection 96(2.2), the at-risk amount, within the meaning of subsection 96(2.2), of a Limited Partner in the Partnership, at the end of the XXXXXXXXXX taxation year of the Partnership, will be equal to the amount of the Limited Partner's investment in Units as described above in paragraphs 13 and 14, to the extent that the Limited Partner, or a person with whom the Limited Partner does not deal at arm's length, does not receive or obtain any amount or benefit referred to in paragraph 96(2.2)(d), other than an amount or benefit excluded by virtue of one of subparagraphs (i), (iii), (vi), or (vii) of that paragraph.

E. XXXXXXXXXX.

F. XXXXXXXXXX.

G. Provided interest in respect of their particular Secondary Loan (as described above in paragraph 17) is paid by a Limited Partner no later than 60 days after the end of each of the Limited Partner's taxation years in which the Secondary Loan is outstanding, and provided "bona fide" repayment arrangements are made in accordance with the provisions of paragraph 143.2(7)(a), XXXXXXXXXX Accordingly, the existence of a Secondary Loan, where the above provisos are also met, will not in and of itself, result in the application of subparagraph 143.2(6)(b)(i) to reduce the cost of a Limited Partner's Unit or the cost of the XXXXXXXXXX Services in respect of such indebtedness. However, if a Limited Partner funds any portion of their investment in the Partnership with limited-recourse financing, the provisions of subsection 143.2(6) will apply.

H. Neither the XXXXXXXXXX services provided to the Partnership by Manager, as described under paragraph 35 above, nor the XXXXXXXXXX in respect thereof, will constitute an at-risk adjustment (as the term is defined in subsection 143.2(2)) to the Limited Partners or the Partnership and, accordingly, subparagraph 143.2(6)(b)(ii) will not apply to reduce the cost of a Limited Partner's Unit, the Partnership's cost of a XXXXXXXXXX Partnership Unit or the amount of any expenditure of the Partnership or of the XXXXXXXXXX Partnership in respect of such services.

I. XXXXXXXXXX.

J. The XXXXXXXXXX Partnership's entitlement to the XXXXXXXXXX Fee will not, in and of itself, result in the application of paragraph 96(2.2)(d) to reduce either the at-risk amount of the Partnership in the XXXXXXXXXX Partnership or the at-risk amount of the Limited Partners in the Partnership.

K. The XXXXXXXXXX Partnership's entitlement to the XXXXXXXXXX Fee will not, in and of itself, constitute an at-risk adjustment within the meaning of subsection 143.2(2). Accordingly, the XXXXXXXXXX Fee will not result in the application of subparagraph 143.2(6)(b)(ii) to reduce the cost of a Limited Partner's Unit, the Partnership's cost of a XXXXXXXXXX Partnership Unit or the amount of any expenditure of the Partnership or of the XXXXXXXXXX Partnership.

These rulings are given subject to the general limitations and qualifications set forth in Information Circular 70-6R3 (the "Circular") issued by the CCRA on December 30, 1996, and are binding provided the proposed transactions are completed on or before XXXXXXXXXX. These rulings are based on the draft documents provided to us and are based on the Act in its present form and do not take into account the effect of any proposed amendments. Except as expressly stated, our rulings do not imply acceptance, approval or confirmation of any income tax implications of the facts or proposed transactions. In particular, nothing in this letter should be interpreted as confirming, either expressly or implicitly:

(i) the reasonableness or fair market value of any expenditures referred to in this letter;

(ii) the proper reporting, based on established case law principles or rules of law, or well-accepted business principles, applicable in the determination of the timing of the deduction of the cost of any of the XXXXXXXXXX Expenses incurred by the XXXXXXXXXX Partnership (see Ruling B, above), the Manager Services Fee incurred by the Partnership (see Ruling G, above), or the management fee incurred by the XXXXXXXXXX Partnership (see Ruling F, above);

(iii) whether the XXXXXXXXXX will be an eligible XXXXXXXXXX corporation in respect of the Property for the purposes of section 125.5;

(iv) whether Property will qualify as an accredited XXXXXXXXXX, within the meaning of section 9300 of the Regulations;

(v) the existence of a reasonable expectation of profit of any of the parties mentioned in this letter;

(vi) whether the XXXXXXXXXX Facilitator, the XXXXXXXXXX Partnership, or the XXXXXXXXXX will be acting as legal agents for XXXXXXXXXX in respect of the making of XXXXXXXXXX;

(vii) the applicability or non-applicability of section 247 or subsection 245(2);

(viii) the GST implications of any of the proposed transactions;

(ix) except as expressly stated above in the Rulings, the applicability or non-applicability of paragraph 96(2.2)(d) or subsection 143.2(2). In this regard, it is our view that if any amount of gross revenue related to the Property is ascertainable, whether contingent or otherwise, at the time that a Limited Partner acquires an interest in the Partnership, or at the time the Partnership acquires a unit of the XXXXXXXXXX Partnership, this would affect the at-risk amount or the at-risk adjustment of the Limited Partner and the Partnership, to the extent that the amount or benefit in respect of such ascertainable revenue was granted for any of the purposes stipulated in paragraph 96(2.2)(d) or subsection 143.2(2); and

(x) any other tax consequences of the proposed transactions or of related transactions or events that are not described herein.

As stated in paragraph 7 of the Circular, rulings are not provided for transactions that are not seriously contemplated and are hypothetical in nature. Therefore, notwithstanding that the Partnership will be subscribing for limited partnership interests in a number of XXXXXXXXXX limited partnerships (refer to paragraph 22, above), we are not ruling on the Partnership's investment in any limited partnerships other than their investment in the XXXXXXXXXX Partnership Units, nor are we ruling in respect of XXXXXXXXXX or other XXXXXXXXXX except for the Property, all as described herein.

OPINION

XXXXXXXXXX.

As indicated in paragraph 22 of the Circular, an expression of opinion is not an advance income tax ruling and, accordingly, is not binding on the CCRA.

Yours truly,

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