30 November 1996 Ruling 9703773 - MUTUAL FUND LIMITED PARTNERSHIP

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

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

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

Principal Issues:

1.Would the ability of holders of units in the Funds (as defined in the ruling) to exchange their units for units of new funds in the XXXXXXXXXX family (these new funds were not previously listed in the ruling and may or may not be created in the future), taint the rulings/opinions given (in particular the 18.1 opinion)?

Position:

1.No.

Reasons:

1.In order to taint the ruling/opinions, there would have to be a significant change in the facts, such that it could be argued that the particular "right to receive production", as contemplated in draft 18.1, was not identified in the ruling request. However, the simplified prospectus filed in XXXXXXXXXX, contemplated the exchange feature. Therefore, the right to receive production, on which we have already ruled, remains the same. (Note: Even if this was not the case, and we said this is a new right to receive production, they would only no longer qualify for grandfathering from the application of 18.1 under paragraph 1(b) of the coming-into-force provisions, but it appears they would never-the-less qualify under paragraph 1(c).)

XXXXXXXXXX							970377

Attention: XXXXXXXXXX

XXXXXXXXXX, 1997

Dear Sirs:

Re: XXXXXXXXXX
Advance Tax Ruling #970034, Dated XXXXXXXXXX, 1997 (the "Ruling")

This is in reply to your facsimile transmission dated XXXXXXXXXX, concerning the Ruling. Any capitalized but undefined terms used herein shall have the meanings ascribed thereto in the Ruling.

You have advised that the Manager may from time to time establish or assume the management of new mutual funds (the "New Funds") not presently included in the Funds referred to in paragraph 2 of the Ruling, but under no circumstances will the Partnership become entitled to distribute units in the New Funds, and consequently the Partnership will not pay any sales commissions in respect of the sale of units in the New Funds.

Holders of Deferred Sales Charge Units are able to exchange their units in a Fund for units in another Fund (as described in paragraphs 18 - 20 of the Ruling). In addition, holders of Deferred Sales Charge Units will be able to exchange their units in a Fund for deferred sales charge units in a New Fund (if any) having an equal fair market value as the units in the Fund (the "New Funds Exchange"), under the same terms and conditions as described in paragraphs 18 - 20 of the Ruling. As a consequence, when units in a New Fund, that were obtained pursuant to a New Funds Exchange, are subsequently redeemed, the Partnership shall be entitled to receive a redemption fee calculated on the same basis as the Deferred Sales Charge referred to in paragraph 17 of the Ruling. The Partnership will also be entitled to receive a distribution fee, calculated in the manner described in paragraph 22 of the Ruling, in respect of the average daily net asset value per outstanding unit of the New Funds which investors received upon a New Fund Exchange.

In our opinion, the above information, in and of itself, would not alter the rulings and opinions given in the Ruling.

Yours truly,

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