,CANADA ,CU/OMS
            & ,REV5UE ,AG5CY

              ,9COME ,TAX
          ,9T]PRET,N ,BULLET9
              ,,IT-#DHI;,R

             ,9 ,"O ,VOLUME
           ,PR9T ,PAGES #A-BA
         ,BRL ,PAGES ;I & #A-EC
    
































                 ,9DEX
    
                               ,BRL PAGE
,APPLIC,N """"""""""""""""""""""""""" #A
,SUMM>Y """"""""""""""""""""""""""""" #B
,4CUS.N & ,9T]PRET,N """""""""""""""" #D
  ,DEF9I;NS """"""""""""""""""""""""" #D
  ,SEC;N #HD.A """""""""""""""""""""" #D
  ,PD-,UP ,CAPITAL ,REDUC;N """""""" #AB
  ,DEEM$ ,DIVID5D """""""""""""""""" #AD
  ,>M'S ,L5G? ,ADJU/$ ,CO/ ,BASE """ #AE
  ,A4I;NAL ,-;TS ,ON ,SEC;N #HD.A "" #CE
  ,SEC;N #BAB.A """""""""""""""""""" #DA
  ,ANTI-,AVOID.E ,PROVI.NS """"""""" #DG
,EXPLAN,N ( ,*ANGES = ,9T]PRET,N
  ,BULLET9 ,,IT-#DHI;,R ,NON-,>M'S
  ,L5G? ,SALE ( ,%>ES 6A ,CORPOR,N   #DI
  ,9TRODUC;N """"""""""""""""""""""" #DI
  ,OV]VIEW """"""""""""""""""""""""" #DI
  ,LEGISLATIVE ,& ,O!R ,*ANGES """"" #EJ




                                      ;I

























,CANADA ,CU/OMS                       #A
& ,REV5UE ,AG5CY

              ,9COME ,TAX
          ,9T]PRET,N ,BULLET9
    
,SUBJECT3 ,9COME ,TAX ,ACT
  ,NON-,>M'S ,L5G? ,SALE ( ,%>ES 6A
  ,CORPOR,N
,NUMB]3 ,,IT-#DHI;,R
,DATE3 ,FEBRU>Y #BH1 #AIID
,REF];E3 ,SEC;NS #HD.A & #BAB.A 7AL
  SUBSEC;NS #HD7#C71 #HE7#A71 #AHF7#B7 &
  7#D71 #BDE7#B71 #BDH7#E7 & #BEB7#D7 &
  P>AGRAPHS #GJ7#AJ77A7 & #HI7#A77C77

               ,APPLIC,N
    
  ,? BULLET9 C.ELS & REPLACES ,9T]PRET,N
,BULLET9 ,,IT-#DHI DAT$ ,JUNE #BC1 #AIHB
& XS ,SPECIAL ,REL1SE DAT$ ,JUNE #G1
#AIHE4 ,! 4CUS.N ( SEC;N #HD.A IS
RE/RICT$ 64POSI;NS ( %>ES MADE AF ,MAY
#BB1 #AIHE4 ,": X IS NEC 6DET]M9E !
APPLIC,N ( T SEC;N = 4POSI;NS (       #A
              ,,IT-#DHI;,R           A#A
%>ES MADE 2F ,MAY #BC1 #AIHE1 PL1SE REF]
6! LAW XF4

                ,SUMM>Y
    
  ,! PROVI.NS (! ,ACT 4CUSS$ 9 ? BULLET9
APPLY ": "! HAS BE5 A 4POSI;N 9 A NON-
>M'S L5G? TRANSAC;N1 ( %>ES (A CORPOR,N
RESID5T 9 ,CANADA 6ANO!R CORPOR,N4 ,!
PROVI.NS >E 9T5D$ 6PREV5T ! REMOVAL (
TAXA# SURPLUSES Z A TAX-FREE RETURN (
CAPITAL4 ,": ! PROVI.NS APPLY EI "O OR
BO? (! FOLL[+ MAY RESULT3
    --"! MAY 2 A REDUC;N (! PD-UP
      CAPITAL (! TRANSF]EE CORPOR,N OR
    --! TRANSF]EE CORPOR,N MAY 2 DEEM$
      6H PD A DIVID5D 6! TRANSF]OR
      TAXPAY]4
  ,:ILE ! DEEM$ DIVID5D IS TAXA# IMMLY
6! TRANSF]OR TAXPAY]1 ! REDUC;N 9 ! PD-
UP CAPITAL (! %>ES (! TRANSF]EE CORPOR,N
HAS ! E6ECT ( PRES]V+ ! POT5TIAL = DEEM$
DIVID5DS ON ! REDEMP;N ( ^? %>ES T 0
9H]5T 9 ! %>ES TRANSF]R$4             #B
              ,,IT-#DHI;,R           B#A
  ,! E6ECT (! PROVI.NS ( SEC;N #HD.A W N
APPLY 6A RESID5T ( ,CANADA ": ! SUM (!
NON-%>E 3SID],N &! PD-UP CAPITAL (! %>E
3SID],N DOES N EXCE$ ! GRT] (
--------------------------------------#B
    --! PD-UP CAPITAL (! TRANSF]R$ %>ES1
      &
    --! TRANSF]OR'S 8>M'S L5G? ADJU/$
      CO/ BASE0 (! TRANSF]R$ %>ES4
  ,! E6ECT (! PROVI.NS ( SEC;N #BAB.A W
N APPLY 6A NON-RESID5T ": ! SUM (! NON-
%>E 3SID],N &! PD-UP CAPITAL (! %>E
3SID],N DOES N EXCE$ ! PD-UP CAPITAL (!
TRANSF]R$ %>ES4
  ,! PROVI.NS MAY APPLY :E!R OR N A
ROLL-OV] PROVI.N E4G41 SUBSEC;N #HE7#A71
APPLIES 6! TRANSAC;N4






                                      #C
          ,4CUS.N & ,9T]PRET,N       A#B
               ,DEF9I;NS3
    
  ,=! PURPOSES ( ? BULLET93
  .,/AT$ .CAPITAL IS ! PD-UP CAPITAL
DET]M9$ PURSUANT 6! CORPOR,NS ACT "U : !
CORPOR,N 0 9CORPORAT$2 ?US X IS DET]M9$
)\T REF];E 6ANY PROVI.NS (! ,ACT1 9CLUD+
P>AGRAPHS #HD.A7#A77A7 & #BAB.A7#A77B74
,SEE ! CURR5T V].N ( ,,IT-#DFC1 ,PD-UP
,CAPITAL1 =A 4CUS.N ( T TOPIC4
  .,NON-%>E .3SID],N M1NS ALL ! 3SID],N
RCVD 0! V5DOR O!R ?AN NEWLY ISSU$ %>ES
(! PUR*AS] CORPOR,N4
  ,P>AGRAPHS #A-AB & #BJ 4CUSS !
PROVI.NS (! ,9COME ,TAX ,ACT T APPLY ":
! V5DOR IS AN UN9CORPORAT$ TAXPAY]
RESID5T 9 ,CANADA4

              ,SEC;N #HD.A
    
#A4 ,SEC;N #HD.A 3TA9S RULES 3C]N+ A
  NON->M'S L5G? 4POSI;N ( %>ES 6A
  CORPOR,N = 3SID],N : G5],Y 9CLUDES
  %>ES (! CORPOR,N4 ,=! SEC;N 6BE     #D
              ,,IT-#DHI;,R           B#B
  APPLICA#1 ! FOLL[+ 3DI;NS M/ 2
  SATISFI$3
  7A7 A TAXPAY] RESID5T 9 ,CANADA 7O!R
    ?AN A CORPOR,N7 4POSES ( %>ES 7!
    8SUBJECT %>ES072
  7B7 ! SUBJECT %>ES >E ( ANY CLASS (!
    CAPITAL /OCK (A CORPOR,N RESID5T 9
    ,CANADA 7! 8SUBJECT CORPOR,N072
  7C7 ! SUBJECT %>ES >E CAPITAL PROP]TY
    (! TAXPAY]2
  7D7 ! 4POSI;N IS 6A CORPOR,N 7!
    8PUR*AS] CORPOR,N07 ) : ! TAXPAY]
    DOES N D1L AT >M'S L5G? 7)9 ! M1N+ (
    SEC;N #BEA Z EXP&$ ^U 0P>AGRAPHS
    #HD.A7#B77B7 & 7D7--SEE #B 2L72 &
--------------------------------------#C
  7E7 IMMLY AF ! 4POSI;N1 ! SUBJECT
    CORPOR,N IS 3NECT$ 7)9 ! M1N+ (
    SUBSEC;N #AHF7#D7 ON ! ASSUMP;N T !
    REF];ES TO 8PAY] CORPOR,N0 &
    8"PICUL> CORPOR,N0 9 T SUBSEC;N 7
    R1D Z 8SUBJECT CORPOR,N0 & 8PUR*AS]
    CORPOR,N0 RESPECTIVELY--SEE #C 2L7
    )! PUR*AS] CORPOR,N4              #E
              ,,IT-#DHI;,R           A#C
#B4 ,P>AGRAPH #HD.A7#B77B7 DEEMS A
  TAXPAY] N 6D1L AT >M'S L5G? )! PUR*AS]
  CORPOR,N IF
  7A7 ! TAXPAY] WAS1 IMMLY 2F ! 4POSI;N1
    "O (A GR\P ( LESS ?AN #F P]SONS :O
    3TROLL$ ! SUBJECT CORPOR,N1 &
  7B7 ! TAXPAY] WAS1 IMMLY AF ! 4POSI;N1
    "O (A GR\P ( LESS ?AN #F P]SONS :O
    3TROLL$ ! PUR*AS] CORPOR,N1 & ALL
    MEMB]S (! GR\P T 3TROLL$ ! SUBJECT
    CORPOR,N IMMLY 2F ! 4POSI;N >E
    MEMB]S (! GR\P T 3TROLL$ ! PUR*AS]
    CORPOR,N AF ! ACQUISI;N4
  
  ,9 APPLY+ ? PROVI.N = 4POSI;NS O3URR+
  AF ,JULY #AC1 #AIIJ ! %>ES (! CAPITAL
  /OCK (! CORPOR,N [N$ BY

  7C7 ! TAXPAY]'S * 7)9 ! M1N+ ASSIGN$
    0P>AGRAPH #GJ7#AJ77A771 :O IS "U #AH
    YE>S ( AGE1
  7D7 ! TAXPAY]'S SP\SE1
  7E7 A TRU/ ( : ! TAXPAY]1 A P]SON
    DESCRIB$ 9 7C7 OR 7D7 ABV OR A    #F
              ,,IT-#DHI;,R           B#C
    CORPOR,N DESCRIB$ 9 7F7 2L IS A
    B5EFICI>Y1 OR
  7F7 A CORPOR,N 3TROLL$ 0! TAXPAY]1 A
    P]SON DESCRIB$ 9 7C7 OR 7D7 ABV1 A
    TRU/ DESCRIB$ 9 7E7 ABV OR ANY -B9,N
    ( S* TAXPAY]1 P]SONS & TRU/S
  
  >E DEEM$ 0P>AGRAPH #HD.A7#B77C7 6BE
  [N$ 0! TAXPAY] & N [N$ 0! P]SON :O
  ACTU,Y [N$ ! %>ES AT T "T4

  7,P>AGRAPH #GJ7#AJ77A7 DEF9ES 8*0
  69CLUDE A GR&*ILD & GRT-GR&*ILD Z WELL
  Z A P]SON :O IS "U #AI YE>S ( AGE & :O
  IS :OLLY DEP5D5T ON ! TAXPAY] =
  SUPPORT & IS 9 ! CU/ODY & 3TROL (!
  TAXPAY]4 ,SUBSEC;N #BEB7#A7 FUR!R
  EXT5DS ! M1N+ ( * =! PURPOSES (! ,ACT4
  ,SEE ! CURR5T V].N ( ,,IT-#EAC1
  ,P]SONAL ,TAX ,CR$ITS1 =A 4CUS.N ( T
  SUBSEC;N47

  7,SUBSEC;N #BEB7#D71 : APPLIES AF
  #AIIB1 EXP&S ! M1N+ ( SP\SE         #G
              ,,IT-#DHI;,R           C#C
  69CLUDE A P]SON (! OPPOSITE SEX :O AT
  A "PICUL> "T LIVES )! TAXPAY] 9 A
  3JUGAL REL,N%IP & EI HAS S LIV$ )!
  TAXPAY] "?\T A #AB-MON? P]IOD 5D+ 2F T
  "T1 OR ! TWO 9DIVIDUALS >E ! P>5TS (!
  SAME *47
--------------------------------------#D
,NOTE3
  ,ON ,AUGU/ #CJ1 #AIIC ! ,M9I/] ( ,F9.E
  ISSU$ ,AM5D;TS 6! ,9COME ,TAX ,ACT &
  ,RELAT$ ,/ATUTES4 ,EXPLANATORY NOTES 7
  ISSU$ : ELABORATE ON ! PROPOS$ *ANGES4
  ,! ,EXPLANATORY NOTES DESCRIBE T
  SUBSEC;N #BEB7#D7 W 2 AM5D$ 65SURE T
  ": ! TWO 9DIVIDUALS >E 3SID]$ 6BE
  SP\SES 2C !Y >E ! P>5TS (! SAME *1 !Y
  W 2 S 3SID]$ ONLY IF !Y >E ! NATURAL
  OR ADOPTIVE P>5TS ( T *4 ,IF 5ACT$ Z
  PROPOS$ ! AM5D;T W APPLY AF #AIIB4

  ,9 APPLY+ P>AGRAPH #HD.A7#B77B7 =
  4POSI;NS O3URR+ AF ,DECEMB] #BJ1
  #AIIA1 P>AGRAPH #HD.A7#B77E7 PROVIDES
  T                                   #H
              ,,IT-#DHI;,R           A#D
  7G7 9 DET]M9+ :E!R A CORPOR,N IS
    3TROLL$ 0A GR\P ( P]SONS1 A GR\P = T
    CORPOR,N M1NS ANY TWO OR M P]SONS
    EA* ( :OM [NS %>ES (! CORPOR,N1
  7H7 A CORPOR,N C 2 3SID]$ 6BE 3TROLL$
    0A P]SON OR "PICUL> GR\P ( P]SONS
    NOT)/&+ T ! CORPOR,N IS AL 3TROLL$
    0ANO!R P]SON OR GR\P ( P]SONS1 &
  7I7 A GR\P 3TROLS A CORPOR,N NOT)/&+ T
    "O MEMB] ( T GR\P HAS 3TROL (!
    CORPOR,N4
  
  ,Z A 3SEQU;E ( 7H7 A CORPOR,N C 2
  3SID]$ 6BE 3TROLL$ AT ! SAME "T 0S"EAL
  P]SONS OR GR\PS ( P]SONS4

  ,9 APPLY+ P>AGRAPH #HD.A7#B77B7 =
  4POSI;NS O3URR+ 2F ,JULY #AD1 #AIIJ !
  %>ES (! CAPITAL /OCK (! CORPOR,N [N$
  BY

  7J7 ! TAXPAY]'S SP\SE1
  7K7 AN 9T] VIVOS TRU/ ( : "O OR M (!
    TAXPAY]1 ! TAXPAY]'S SP\SE OR A   #I
              ,,IT-#DHI;,R           B#D
    CORPOR,N DESCRIB$ 9 7L7 2L IS A
    B5EFICI>Y1 OR
  7L7 A CORPOR,N 3TROLL$ 0"O OR M (!
    TAXPAY]1 ! TAXPAY]'S SP\SE OR A TRU/
    DESCRIB$ 9 7K7 ABV >E DEEM$
    0P>AGRAPH #HD.A7#B77C7 6BE [N$ 0!
    TAXPAY] & N [N$ 0! P]SON :O ACTU,Y
    [N$ ! %>ES AT T "T4
  
  ,P>AGRAPH #HD.A7#B77D7 PROVIDES T =
  4POSI;NS O3URR+ AF ,JULY #AC1 #AIIJ A
  TRU/ &A B5EFICI>Y (! TRU/ OR A P]SON
  RELAT$ 6A B5EFICI>Y (! TRU/ >E DEEM$ N
  6D1L ) EA* O!R AT >M'S L5G?4 ,?US ": A
  TRU/ 4POSES ( CAPITAL PROP]TY 2+ !
  %>ES (A SUBJECT CORPOR,N 6A PUR*AS]
  CORPOR,N T IS 3TROLL$ 0B5EFICI>IES (!
  TRU/1 ! TRU/ &! PUR*AS] CORPOR,N W N
  D1L AT >M'S L5G?4
--------------------------------------#E
#C4 ,PURSUANT 6SUBSEC;N #AHF7#D71 Z
  MODIFI$ 0SUBSEC;N #HD.A7#A71 A SUBJECT
  CORPOR,N IS 83NECT$0 )! PUR*AS]
  CORPOR,N IF                        #AJ
              ,,IT-#DHI;,R           A#E
  7A7 Z DESCRIB$ 9 #D 2L1 ! PUR*AS]
    CORPOR,N 3TROLS 7O!RWISE ?AN 0VIRTUE
    (A "R DESCRIB$ 9 P>AGRAPH
    #BEA7#E77B77 ! SUBJECT CORPOR,N OR
  7B7 ! PUR*AS] CORPOR,N [NS M ?AN #AJ
    P] C5T (! ISSU$ %>E CAPITAL 7HAV+
    FULL VOT+ "RS "U ALL CIRCUM/.ES7 (!
    SUBJECT CORPOR,N : %>ES1 TGR ) ANY
    O!R (! SUBJECT CORPOR,N'S %>ES [N$
    0! PUR*AS] CORPOR,N1 H A FAIR M>KET
    VALUE GRT] ?AN #AJ P] C5T (! FAIR
    M>KET VALUE ( ALL ! ISSU$ %>ES (!
    SUBJECT CORPOR,N4
#D4 ,PURSUANT 6SUBSEC;N #AHF7#B71 A
  SUBJECT CORPOR,N IS 3SID]$ 6BE 3TROLL$
  0A PUR*AS] CORPOR,N IF M ?AN #EJ P]
  C5T (! ISSU$ %>E CAPITAL HAV+ FULL
  VOT+ "RS 2L;GS TO
  7A7 ! PUR*AS] CORPOR,N1
  7B7 P]SONS N D1L+ AT >M'S L5G? )!
    PUR*AS] CORPOR,N1 OR
  7C7 ! PUR*AS] CORPOR,N & P]SONS N D1L+
    AT >M'S L5G? )! PUR*AS] CORPOR,N4
                                     #AA
              ,,IT-#DHI;,R           B#E
  ,! PROVI.NS REF]R$ 6IN #B ABV REG>D+
  8N D1L+ AT >M'S L5G?0 D N APPLY =!
  PURPOSES ( SUBSEC;N #AHF7#B74
#E4 ,! E6ECT (! PROVI.NS ( SEC;N #HD.A W
  N APPLY Z L;G Z ! SUM (! NON-%>E
  3SID],N &! PD-UP CAPITAL (! %>E
  3SID],N DOES N EXCE$ ! GRT] (
  7A7 ! PD-UP CAPITAL (! SUBJECT %>ES &
  7B7 ! TRANSF]OR'S 8>M'S L5G? ADJU/$
    CO/ BASE0 7SEE #H 2L7 (! SUBJECT
    %>ES4
  
       ,PD-,UP ,CAPITAL ,REDUC;N
    
#F4 ,P>AGRAPH #HD.A7#A77A7 PROVIDES =A
  PD-UP CAPITAL REDUC;N = EA* CLASS (
  %>ES (! PUR*AS] CORPOR,N F : %>ES 7
  ISSU$ Z 3SID],N =! ACQUISI;N ( SUBJECT
  %>ES4 ,! PD-UP CAPITAL REDUC;N IS !
  RESULT+ 9CR1SE 9 ! /AT$ CAPITAL ( ALL
  ! %>ES (! PUR*AS] CORPOR,N ISSU$ Z
  3SID],N LESS ! EXCESS1 IF ANY1 (

                                     #AB
              ,,IT-#DHI;,R           C#E
  7A7 ! GRT] (
    7;I7 ! PD-UP CAPITAL (! SUBJECT %>ES
      &
    7;II7 ! TRANSF]OR'S >M'S L5G? ADJU/$
      CO/ BASE 7SEE #H 2L7 (! SUBJECT
      %>ES
--------------------------------------#F
      9 EI CASE DET]M9$ IMMLY 2F !
      4POSI;N OV]
  7B7 ! FAIR M>KET VALUE1 IMMLY AF !
    4POSI;N1 ( ANY NON-%>E 3SID],N PD 0!
    PUR*AS] CORPOR,N =! SUBJECT %>ES4
  
  ,": M ?AN "O CLASS ( %>ES IS ISSU$ 9 A
  TRANSAC;N 6: SEC;N #HD.A APPLIES1 !
  PD-UP CAPITAL REDUC;N IS PRORAT$ OV] !
  CLASSES ( %>ES T 7 ISSU$ ON ! TRANSF]
  ON ! BASIS (! 9CR1SE 9 ! /AT$ CAPITAL
  ( EA* CLASS ( %>ES ISSU$4

  ,SEE #I 2L = EXAMPLES (! OP],N (
  P>AGRAPH #HD.A7#A77A74

                                     #AC
            ,DEEM$ ,DIVID5D          A#F
    
#G4 ,P>AGRAPH #HD.A7#A77B7 DEEMS !
  PUR*AS] CORPOR,N 6H PD A DIVID5D 6!
  TRANSF]OR &! TRANSF]OR 6H RCVD T
  DIVID5D ": ! A7REGATE (! AM.T (! TOTAL
  9CR1SE 9 ! /AT$ CAPITAL ( ALL !
  PUR*AS]'S %>ES >IS+ Z A RESULT (!
  ISSUE ( ^? %>ES ON ! TRANSF] &! FAIR
  M>KET VALUE1 DET]M9$ IMMLY AF !
  4POSI;N1 (! NON-%>E 3SID],N GIV5 0!
  PUR*AS] =! SUBJECT %>ES EXCE$S ! TOTAL
  (
  7A7 ! GRT] (
    7;I7 ! TRANSF]OR'S 8>M'S L5G? ADJU/$
      CO/ BASE0 7SEE #H 2L7 (! SUBJECT
      %>ES &
    7;II7 ! PD-UP CAPITAL (! SUBJECT
      %>ES 9 EI CASE DET]M9$ IMMLY 2F !
      4POSI;N1 &
  7B7 ! TOTAL PD-UP CAPITAL REDUC;NS
    REQUIR$ 6BE MADE 0! PUR*AS] CORPOR,N
    7Z DESCRIB$ 9 #F ABV74
  
                                     #AD
              ,,IT-#DHI;,R           B#F
  ,SEE #I 2L = EXAMPLES (! OP],N (
  P>AGRAPH #HD.A7#A77B74

     ,>M'S ,L5G? ,ADJU/$ ,CO/ ,BASE
    
#H4 ,! 8>M'S L5G? ADJU/$ CO/ BASE0
  REF]R$ 6ABV IS DET]M9$ PURSUANT 6!
  RULES SET \ 9 P>AGRAPHS #HD.A7#B77A7 &
  7A4#A74 ,P>AGRAPH #HD.A7#B77A7 APPLIES
  6SUBJECT %>ES ACQUIR$ 0! TRANSF]OR 2F
  #AIGB & DEEMS ! ADJU/$ CO/ BASE 6BE !
  A7REGATE (
  7A7 ! AM.TS T WD 2 ! ADJU/$ CO/ BASE
    IF ! ,9COME ,TAX ,APPLIC,N ,RULES1
    #AIGA 7! ,,ITAR7 7 R1D )\T REF];E
    6SUBSEC;NS #BF7#C7 & 7#G7 (! ,,ITAR
    7T IS1 ! 8M$IAN0 RULE &! FAIR M>KET
    VALUE ELEC;N7 &
--------------------------------------#G
  7B7 DIVID5DS RCVD ON ! %>ES 0!
    TRANSF]OR AF #AIGA ON : AN ELEC;N 0
    MADE "U SUBSEC;N #HC7#A7 0! CORPOR,N
    : PD ! DIVID5D4
                                     #AE
              ,,IT-#DHI;,R           A#G
  ,ACLY1 ": ! SUBJECT %>ES 7 ACQUIR$ 0!
  TRANSF]OR 2F #AIGB1 ANY A3RU$ GA9
  6,VALU,N ,"D IS IGNOR$ & DIVID5DS PD \
  ( TAX-PD UNDISTRIBUT$ SURPLUS OR #AIGA
  CAPITAL SURPLUS >E A4$ BACK 9 DET]M9+
  ! TRANSF]OR'S ADJU/$ CO/ BASE (!
  SUBJECT %>ES =! PURPOSES ( DET]M9+ ANY
  PD-UP CAPITAL REDUC;N OR IMM DEEM$
  DIVID5D "U SUBSEC;N #HD.A7#A74

  ,P>AGRAPH #HD.A7#B77A4#A7 APPLIES 6A
  SUBJECT %>E ACQUIR$ 0! TRANSF]OR AF
  #AIGA F A P]SON ) :OM ! TRANSF]OR 0 N
  D1L+ AT >M'S L5G?1 OR 6A %>E SUB/ITUT$
  = S* A %>E1 OR 6A %>E SUB/ITUT$ =A %>E
  [N$ 0! TRANSF]OR AT ! 5D ( #AIGA4 ,!
  ADJU/$ CO/ BASE ( ANY S* SUBJECT %>E
  IS ! AM.T1 IF ANY1 0: ! ADJU/$ CO/
  BASE1 O!RWISE DET]M9$1 EXCE$S !
  A7REGATE (

  7C7 ": ! %>E OR A %>E = : ! %>E 0
    SUB/ITUT$ 7! SUB/ITUT$ %>E7 0 [N$ AT
    ! 5D ( #AIGA 0! TRANSF]OR OR A   #AF
              ,,IT-#DHI;,R           B#G
    P]SON ) :OM ! TRANSF]OR DID N D1L AT
    >M'S L5G?1 ! EXCESS (! FAIR M>KET
    VALUE (! %>E OR ! SUB/ITUT$ %>E1 Z !
    CASE MAY BE1 ON ,VALU,N ,"D OV] !
    A7REGATE (
    7;I7 ! ACTUAL CO/ ON ,JANU>Y #A1
      #AIGB (! %>E OR ! SUB/ITUT$ %>E 6!
      TRANSF]OR OR ! P]SON ) :OM !
      TRANSF]OR DID N D1L AT >M'S L5G? &
    7;II7 DIVID5DS RCVD ON ! %>E OR !
      SUB/ITUT$ %>E 0! TRANSF]OR OR !
      NON->M'S L5G? P]SON AF #AIGA ON :
      AN ELEC;N 0 MADE "U SUBSEC;N
      #HC7#A7 0! CORPOR,N : PD ! DIVID5D
  &
  7D7 ! A7REGATE ( ALL AM.TS DET]M9$ AF
    #AIHD "U SUBP>AGRAPH #DJ7#A77A77I7
    6BE CAPITAL GA9S 7OR S* LESS] AM.T Z
    IS E/ABLI%$ 0! TRANSF]OR 6BE ! AM.T
    9 RESPECT ( : A DEDUC;N 0 CLAIM$ "U
    SEC;N #AAJ.F7 = PREVI\S 4POSI;NS (!
    %>E OR ! SUB/ITUT$ %>E 0! TRANSF]OR
    OR AN 9DIVIDUAL ) :OM ! TRANSF]OR
    DID N D1L AT >M'S L5G?4          #AG
              ,,IT-#DHI;,R           C#G
  ,P>AGRAPH #HD.A7#B77A4#B7 DEEMS T1 =
  PURPOSES ( P>AGRAPH #HD.A7#B77A4#A71 A
  TRANSF]OR &A CORPOR,N D N D1L AT >M'S
  L5G? :5 A CORPOR,N ISSUES 6! TRANSF]OR
  PREVI\SLY UNISSU$ %>ES (! CORPOR,N4
  ,AL1 9 ,E/ATE ( ,K>NA ,MAY ;V ,,MNR
  7#HH ,,DTC #AAHI1 7#AIHH7 #A ,,CTC
  #BCJC7 ! ,TAX ,C\RT ( ,CANADA F.D T !
  TRANSF] ( %>ES F A DEC1S$ 6! E/ATE (
--------------------------------------#H
  ! DEC1S$ 0 N AN >M'S L5G? TRANSAC;N4
  ,= FUR!R -;TS ON >M'S L5G?1 SEE !
  CURR5T V].N ( ,,IT-#DAI1 ,M1N+ ( ,>M'S
  ,L5G?4

  ,0VIRTUE ( SUBSEC;N #BDH7#E7 ! PHRASE
  8''' A %>E SUB/ITUT$ =A %>E [N$ 0!
  TAXPAY] '''0 F.D 9 P>AGRAPH
  #HD.A7#B77A4#A7 IS N LIMIT$ 6"O
  SUB/ITU;N B W APPLY 6ANY SUB/ITU;N &
  6%>ES RCVD Z /OCK DIVID5DS ON ANO!R
  %>E4

                                     #AH
              ,,IT-#DHI;,R           A#H
  ,! ABV DESCRIB$ ADJU/;TS 5SURE T A
  TRANSF]OR W 2 A# 6OBTA9 F A CORPOR,N1
  )\T TAX 3SEQU;ES1 ASSETS EQUAL 6!
  TRANSF]OR'S >M'S L5G? CO/ (! %>E PLUS
  OR M9US ANY ADJU/;TS 6! ADJU/$ CO/
  BASE (! %>E T >E PROVID$ = 9 ! ,ACT4

,EXAMPLE
  ,! ONLY \T/&+ %>ES ( ,OPCO1 A SMALL
  BUSI;S CORPOR,N1 >E -MON %>ES4 ,! %>ES
  >E [N$ Z FOLL[S3

  ,MR4 ;,A ,JR #DJ
  ,MRS4 ;,A ,JR #BJ
  ,MR4 ;,X #DJ

  ,MR4 & ,MRS4 ;,A ,JR >E HUSB& & WIFE4
  ,9 #AIFG1 ,MR4 ;,A ,JR PUR*AS$ #DJ (!
  -MON %>ES AT >M'S L5G? = 4#FJ1JJJ4 ,9
  #AIHH1 ,MRS4 ;,A ,JR PUR*AS$ #BJ -MON
  %>ES AT _! FAIR M>KET VALUE 7,,FMV7 (
  4#EJJ1JJJ F ,MR4 ;,A ,SR1 H] "F-IN-
  LAW4 7,MR4 ;,A ,SR DEDUCT$ 4#FF1FFG "U
  SUBSEC;N #AAJ.F7#C7 9 RESPECT (    #AI
              ,,IT-#DHI;,R           B#H
  4#AJJ1JJJ ( GA9 ON ? SALE47 ,MR4 ;,A
  ,SR _H ACQUIR$ ! #BJ -MON %>ES 9 #AIFG
  AT >M'S L5G? = 4#CJ1JJJ4 ,AT ,DECEMB]
  #CA1 #AIGA 7;,V-,"D7 ! FAIR M>KET
  VALUE ( ,MR4 ;,A ,JR'S #DJ %>ES 9
  ,OPCO 0 4#AEJ1JJJ :ILE 8 "F'S #BJ %>ES
  _H A FAIR M>KET VALUE ( 4#GE1JJJ4 ,9
  #AIGE1 ,OPCO PD DIVID5DS ( 4#EJ1JJJ &
  ELECT$ ON !M "U SUBSEC;N #HC7#A74
--------------------------------------#I
  ,=! PURPOSES ( SEC;N #HD.A1 ! ADJU/$
  CO/ BASE 7,,ACB7 (! %>ES ( ,MR4 &
  ,MRS4 ;,A ,JR >E Z FOLL[S3

,MR4 ;,A ,JR3
  ,,ACB )\T REF];E 6,,ITAR
    #BF7#C7 & 7#G7 """"""""" 99 4#DJ1JJJ
  ,PLUS3 ,SUBSEC;N #HC7#A7
    DIVID5DS """""""""""""""""" 4#BJ1JJJ
  ,,ACB PURSUANT 6P>AGRAPH
    #HD.A7#B77A7 """""""""""""" 4#FJ1JJJ
  

                                     #BJ
              ,,IT-#DHI;,R           A#I
,MRS4 ;,A ,JR3
  ,,ACB O!RWISE
    DET]M9$ """""""""""""""""" 4#EJJ1JJJ
  ,EXCE$S ! A7REGATE
    (
  7;I7 ,! ,,FMV ON
    ;,V-,"D """""""""""" 4#GE1JJJ
  ,EXCE$S ! A7REGATE
    (
  ,ACTUAL ,CO/ ON
    ,JANU>Y #A1
    #AIGB """" 4#CJ1JJJ
  ,SUBSEC;N #HC7#A7
    DIVID5DS   4#AJ1JJJ  4#DJ1JJJ
  74#GE1JJJ M9US
    4#DJ1JJJ7 """""""""" 4#CE1JJJ
  &
  7;II7 ,! DEDUC;N 9
    RESPECT (
  SEC;N #AAJ.F """"""""" 4#AJJ1JJJ
   """"""""""""""""""""""""""" 4#ACE1JJJ
  ,,ACB PURSUANT 6P>AGRAPH
    #HD.A7#B77A4#A7 """""""""" 4#CFE1JJJ
                                     #BA
              ,,IT-#DHI;,R           B#I
99 ,PURSUANT 6SUBP>AGRAPH
  #EC7#B77A77;I71 ! ,,ACB ( 4#DJ1JJJ
  RESULTS F ! REDUC;N (! CO/ 74#FJ1JJJ7
  0! AM.T (! SUBSEC;N #HC7#A7 DIVID5DS
  74#BJ1JJJ74

  ,SUBSEC;N #HD.A7#B.A71 APPLICA#
  64POSI;NS AF ,JULY #AC1 #AIIJ1
  PROVIDES A SPECIAL RULE =! PURPOSES (
  SUBP>AGRAPH #HD.A7#B77A4#A77;II7 7Z
  DESCRIB$ 9 7D7 ABV74 ,SUBSEC;N
  #HD.A7#B.A7 APPLIES ": ! TRANSF]OR OR
  AN 9DIVIDUAL :O DOES N D1L AT >M'S
  L5G? )! TRANSF]OR 4POSES (A %>E 9 A
  TAX,N YE> & CLAIMS A CAPITAL GA9S
  RES]VE "U SUBP>AGRAPH #DJ7#A77A77;III7
  ON T 4POSI;N4 ,! SUBSEC;N TR1TS !
  TRANSF]OR Z HAV+ CLAIM$1 =! YE> 9 : !
  4POSI;N TOOK PLACE1 A CAPITAL GA9S
  DEDUC;N ON ! 4POSI;N4 ,! E6ECT ( ?
  RULE IS 6ALL[ ! ADJU/$ CO/ BASE (A %>E
  6BE 9CR1S$ ON A NON->M'S L5G? TRANSF]
  ONLY 6! EXT5T T ANY CAPITAL GA9 >IS+
  ON T TRANSF] 0 TAX$4               #BB
              ,,IT-#DHI;,R           #AJ
#I4 ,EXAMPLES (! OP],N ( #F & #G ABV3
  ,MR4 ;,X1 AN 9DIVIDUAL RESID5T 9
  ,CANADA1 SOLD ALL (! %>ES ( ,XCO
  6,HOLDCO ;,X 7A CORPOR,N 9 : HE [N$
  ALL (! %>ES74 ,XCO IS A CORPOR,N
  RESID5T 9 ,CANADA4 ,! %>ES ( ,XCO H A
  PD-UP CAPITAL ( 4#AJ1JJJ & ,MR4 ;,X'S
  ADJU/$ CO/ BASE (! %>ES IS 4#I1JJJ4 ,9
  EX*ANGE =! %>ES ( ,XCO1 ,MR4 ;,X RCVD3

,EXAMPLE ;,I3
  ,%>ES (A NEW CLASS ( ,HOLDCO ;,X )A
  PD-UP CAPITAL ( 4#AJ1JJJ4 7,? EXAMPLE
  ILLU/RATES T ! PROVI.NS ( P>AGRAPHS
  #HD.A7#A77A7 & 7B7 D N APPLY ": !
  V5DOR RCVS ONLY %>E 3SID],N HAV+ A PD-
  UP CAPITAL EQUAL 6! PD-UP CAPITAL (!
  %>ES TRANSF]R$47

;,A ,PD-UP CAPITAL ( ,HOLDCO
  ;,X %>ES ISSU$ = ,XCO %>ES "" 4#AJ1JJJ
;,B ,PD-UP CAPITAL ( ,XCO %>ES  4#AJ1JJJ

                                     #BC
              ,,IT-#DHI;,R          A#AJ
;,C ,ADJU/$ ,CO/ ,BASE ( ,XCO
  %>ES """"""""""""""""""""""""" 4#I1JJJ
;,D ,NON-%>E 3SID],N ISSU$ =
  ,XCO %>ES """""""""""""""""""""""" NIL
,PD-UP ,CAPITAL ,REDUC;N
,AM.T ;,A """"""""""""""""""""" 4#AJ1JJJ
,EXCE$S3 ,AM.T 0: GRT] ( ;,B &
  ;,C EXCE$S ;,D """""""""""""" 4#AJ1JJJ
;,E ,PD-UP CAPITAL REDUC;N """"""""" NIL
,PD-UP ,CAPITAL AF ,REDUC;N
,AM.T ;,A M9US ,AM.T ;,E """""" 4#AJ1JJJ
,IMM ,DEEM$ ,DIVID5D
,A7REGATE ( ;,A & ;,D """"""""" 4#AJ1JJJ
,EXCE$S3 ,A7REGATE ( ;,E &!
  GRT] ( ;,B & ;,C """""""""""" 4#AJ1JJJ
,IMM ,DEEM$ ,DIVID5D """"""""""""""" NIL

,EXAMPLE ,,II3
  ,%>ES (A NEW CLASS ( ,HOLDCO ;,X )A
  PD-UP CAPITAL ( 4#AE1JJJ4 7,? EXAMPLE
  ILLU/RATES ! APPLIC,N ( P>AGRAPH
  #HD.A7#A77A7--! PD-UP CAPITAL (! %>E

                                     #BD
              ,,IT-#DHI;,R          B#AJ
  3SID],N ISSU$ 6! V5DOR IS REDUC$ 6!
  PD-UP CAPITAL (! %>ES T 7 TRANSF]R$47

;,A ,PD-UP CAPITAL ( ,HOLDCO
  ;,X %>ES ISSU$ = ,XCO %>ES "" 4#AE1JJJ
;,B ,PD-UP CAPITAL ( ,XCO %>ES  4#AJ1JJJ
;,C ,ADJU/$ ,CO/ ,BASE ( ,XCO
  %>ES """"""""""""""""""""""""" 4#I1JJJ
;,D ,NON-%>E 3SID],N ISSU$ =
  ,XCO %>ES """""""""""""""""""""""" NIL
,PD-UP ,CAPITAL ,REDUC;N
,AM.T ;,A """"""""""""""""""""" 4#AE1JJJ
,EXCE$S3 ,AM.T 0: GRT] ( ;,B &
  ;,C EXCE$S ;,D """""""""""""" 4#AJ1JJJ
;,E ,PD-UP CAPITAL REDUC;N """"" 4#E1JJJ
,PD-UP ,CAPITAL AF ,REDUC;N
,AM.T ;,A M9US ,AM.T ;,E """""" 4#AJ1JJJ
,IMM ,DEEM$ ,DIVID5D
,A7REGATE ( ;,A & ;,D """"""""" 4#AE1JJJ
,EXCE$S3 ,A7REGATE ( ;,E &!
  GRT] ( ;,B & ;,C """""""""""" 4#AE1JJJ
,IMM ,DEEM$ ,DIVID5D """"""""""""""" NIL

                                     #BE
              ,,IT-#DHI;,R          C#AJ
,EXAMPLE ,,III3
  ,%>ES (A NEW CLASS ( ,HOLDCO ;,X )A
  PD-UP CAPITAL ( 4#A & NON-%>E 3SID],N
  ( 4#I1III4 7,? EXAMPLE ILLU/RATES T "!
  >E NO TAX 3SEQU;ES "U SEC;N #HD.A ": !
  TAXPAY] RCVS NON-%>E 3SID],N & %>ES &!
  SUM (! NON-%>E 3SID],N &! 9CR1SE 9 PD-
  UP CAPITAL (! PUR*AS] CORPOR,N Z A
  RESULT (! ISSUE (! %>E 3SID],N DOES N
  EXCE$ ! PD-UP CAPITAL (! %>ES
  TRANSF]R$47

;,A ,PD-UP CAPITAL ( ,HOLDCO
  ;,X %>ES ISSU$ = ,XCO %>ES """"""" 4#A
;,B ,PD-UP CAPITAL ( ,XCO %>ES  4#AJ1JJJ
;,C ,ADJU/$ ,CO/ ,BASE ( ,XCO
  %>ES """"""""""""""""""""""""" 4#I1JJJ
;,D ,NON-%>E 3SID],N ISSU$ =
  ,XCO %>ES """""""""""""""""""" 4#I1III
,PD-UP ,CAPITAL ,REDUC;N
,AM.T ;,A """""""""""""""""""""""""" 4#A
,EXCE$S3 ,AM.T 0: GRT] ( ;,B &
  ;,C EXCE$S ;,D """"""""""""""""""" 4#A
                                     #BF
              ,,IT-#DHI;,R          D#AJ
;,E ,PD-UP CAPITAL REDUC;N """"""""" NIL
,PD-UP ,CAPITAL AF ,REDUC;N
,AM.T ;,A M9US ,AM.T ;,E """"""""""" 4#A
,IMM ,DEEM$ ,DIVID5D
,A7REGATE ( ;,A & ;,D """"""""" 4#AJ1JJJ
,EXCE$S3 ,A7REGATE ( ;,E &!
  GRT] ( ;,B & ;,C """""""""""" 4#AJ1JJJ
,IMM ,DEEM$ ,DIVID5D """"""""""""""" NIL

,EXAMPLE ,,IV3
  ,%>ES (A NEW CLASS ( ,HOLDCO ;,X )A
  PD-UP CAPITAL ( 4#A & NON-%>E 3SID],N
  ( 4#AD1III4 7,? EXAMPLE ILLU/RATES !
  APPLIC,N ( P>AGRAPHS #HD.A7#A77A7 &
  7B7 ": ! 3SID],N RCVD 3SI/S ( %>ES
  HAV+ A NOM9AL PD-UP CAPITAL & NON-%>E
  3SID],N 9 EXCESS ( BO? ! PD-UP CAPITAL
  & ADJU/$ CO/ BASE (! SUBJECT %>ES47

;,A ,PD-UP CAPITAL ( ,HOLDCO
  ;,X %>ES ISSU$ = ,XCO %>ES """"""" 4#A
;,B ,PD-UP CAPITAL ( ,XCO %>ES  4#AJ1JJJ

                                     #BG
              ,,IT-#DHI;,R          E#AJ
;,C ,ADJU/$ ,CO/ ,BASE ( ,XCO
  %>ES """"""""""""""""""""""""" 4#I1JJJ
;,D ,NON-%>E 3SID],N ISSU$ =
  ,XCO %>ES """""""""""""""""""" 4#I1III
,PD-UP ,CAPITAL ,REDUC;N
,AM.T ;,A """""""""""""""""""""""""" 4#A
,EXCE$S3 ,AM.T 0: GRT] ( ;,B &
  ;,C EXCE$S ;,D """"""""""""""""""" NIL
;,E ,PD-UP CAPITAL REDUC;N """"""""" 4#A
,PD-UP ,CAPITAL AF ,REDUC;N
,AM.T ;,A M9US ,AM.T ;,E """"""""""" NIL
,IMM ,DEEM$ ,DIVID5D
,A7REGATE ( ;,A & ;,D """"""""" 4#AE1JJJ
,EXCE$S3 ,A7REGATE ( ;,E &!
  GRT] ( ;,B & ;,C """""""""""" 4#AJ1JJA
,IMM ,DEEM$ ,DIVID5D """"""""""" 4#D1III
-------------------------------------#AA
,TRANSCRIB]'S NOTE3
  7,FR5* V].N ( PAGE #AJ7
-------------------------------------#AB
  ,MR4 ;,Y1 AN 9DIVIDUAL RESID5T 9
  ,CANADA1 SOLD ALL (! %>ES ( ,YCO
  6,HOLDCO ;,Y1 7A CORPOR,N 9 : HE [N$
  ALL (! %>ES74 ,YCO IS A CORPOR,N   #BH
              ,,IT-#DHI;,R          A#AB
  RESID5T 9 ,CANADA4 ,! %>ES ( ,YCO H A
  PD-UP CAPITAL ( 4#AJ1JJJ & ,MR4 ;,Y'S
  ADJU/$ CO/ BASE (! %>ES IS 4#AE1JJJ4
  ,9 EX*ANGE =! %>ES ( ,YCO1 ,MR4 ;,Y
  RCVD3

,EXAMPLE ;,I
  %>ES (A NEW CLASS ( ,HOLDCO ;,Y )A PD-
  UP CAPITAL ( 4#AE1JJJ4 7,? EXAMPLE
  ILLU/RATES T ! PROVI.NS ( P>AGRAPHS
  #HD.A7#A77A7 & 7B7 D N APPLY ": !
  V5DOR RCVS %>E 3SID],N HAV+ A PD-UP
  CAPITAL EQUAL 6! V5DOR'S ADJU/$ CO/
  BASE (! %>ES TRANSF]R$ EV5 ?\< T AM.T
  IS 9 EXCESS (! PD-UP CAPITAL (!
  TRANSF]R$ %>ES47

;,A ,PD-UP CAPITAL ( ,HOLDCO
  ;,Y %>ES ISSU$ = ,YCO %>ES "" 4#AE1JJJ
;,B ,PD-UP CAPITAL ( ,YCO %>ES  4#AJ1JJJ
;,C ,ADJU/$ ,CO/ ,BASE ( ,YCO
  %>ES """""""""""""""""""""""" 4#AE1JJJ

                                     #BI
              ,,IT-#DHI;,R          B#AB
;,D ,NON-%>E 3SID],N ISSU$ =
  ,YCO %>ES """""""""""""""""""""""" NIL
,PD-UP ,CAPITAL ,REDUC;N
,AM.T ;,A """""""""""""""""""""" #AE1JJJ
,EXCE$S3 ,AM.T 0: GRT] ( ;,B &
  ;,C EXCE$S ;,D """""""""""""" 4#AE1JJJ
;,E ,PD-UP CAPITAL REDUC;N """"""""" NIL
,PD-UP ,CAPITAL AF ,REDUC;N
,AM.T ;,A M9US ,AM.T ;,E """""" 4#AE1JJJ
,IMM ,DEEM$ ,DIVID5D
,A7REGATE ( ;,A & ;,D """"""""" 4#AE1JJJ
,EXCE$S3 ,A7REGATE ( ;,E &!
  GRT] ( ;,B & ;,C """""""""""" 4#AE1JJJ
,IMM ,DEEM$ ,DIVID5D """"""""""""""" NIL

,EXAMPLE ,,II
  %>ES (A NEW CLASS ( ,HOLDCO ;,Y )A PD-
  UP CAPITAL ( 4#AJ1JJJ & NON-%>E
  3SID],N ( 4#E1JJJ4 7,? EXAMPLE
  ILLU/RATES ! RECEIPT ( "S NON-%>E
  3SID],N )\T CAUS+ A REDUC;N 9 ! PD-UP
  CAPITAL "U P>AGRAPH #HD.A7#A77A747

                                     #CJ
              ,,IT-#DHI;,R          C#AB
;,A ,PD-UP CAPITAL ( ,HOLDCO
  ;,Y %>ES ISSU$ = ,YCO %>ES "" 4#AJ1JJJ
;,B ,PD-UP CAPITAL ( ,YCO %>ES  4#AJ1JJJ
;,C ,ADJU/$ ,CO/ ,BASE ( ,YCO
  %>ES """""""""""""""""""""""" 4#AE1JJJ
;,D ,NON-%>E 3SID],N ISSU$ =
  ,YCO %>ES """""""""""""""""""" 4#E1JJJ
,PD-UP ,CAPITAL ,REDUC;N
,AM.T ;,A """""""""""""""""""""" #AJ1JJJ
,EXCE$S3 ,AM.T 0: GRT] ( ;,B &
  ;,C EXCE$S ;,D """""""""""""" 4#AJ1JJJ
;,E ,PD-UP CAPITAL REDUC;N """"""""" NIL
,PD-UP ,CAPITAL AF ,REDUC;N
,AM.T ;,A M9US ,AM.T ;,E """""" 4#AJ1JJJ
,IMM ,DEEM$ ,DIVID5D
,A7REGATE ( ;,A & ;,D """"""""" 4#AE1JJJ
,EXCE$S3 ,A7REGATE ( ;,E &!
  GRT] ( ;,B & ;,C """""""""""" 4#AE1JJJ
,IMM ,DEEM$ ,DIVID5D """"""""""""""" NIL

,EXAMPLE ,,III
  %>ES (A NEW CLASS ( ,HOLDCO ;,Y )A PD-
  UP CAPITAL ( 4#AJ1JJJ & NON-%>E
  3SID],N ( 4#I1III4 7,? EXAMPLE     #CA
              ,,IT-#DHI;,R          D#AB
  ILLU/RATES ! RECEIPT (A GRT] AM.T (
  NON-%>E 3SID],N ?AN 9 ,EXAMPLE ,,II
  ABV RESULT+ 9 ! APPLIC,N ( P>AGRAPH
  #HD.A7#A77A747

;,A ,PD-UP CAPITAL ( ,HOLDCO
  ;,Y %>ES ISSU$ = ,YCO %>ES "" 4#AJ1JJJ
;,B ,PD-UP CAPITAL ( ,YCO %>ES  4#AJ1JJJ
;,C ,ADJU/$ ,CO/ ,BASE ( ,YCO
  %>ES """""""""""""""""""""""" 4#AE1JJJ
;,D ,NON-%>E 3SID],N ISSU$ =
  ,YCO %>ES """""""""""""""""""" 4#I1III
,PD-UP ,CAPITAL ,REDUC;N
,AM.T ;,A """""""""""""""""""""" #AJ1JJJ
,EXCE$S3 ,AM.T 0: GRT] ( ;,B &
  ;,C EXCE$S ;,D """"""""""""""" 4#E1JJA
;,E ,PD-UP CAPITAL REDUC;N """"" 4#D1III
,PD-UP ,CAPITAL AF ,REDUC;N
,AM.T ;,A M9US ,AM.T ;,E """"""" 4#E1JJA
,IMM ,DEEM$ ,DIVID5D ,A7REGATE
  ( ;,A & ;,D """"""""""""""""" 4#AI1III
,EXCE$S3 ,A7REGATE ( ;,E &!
  GRT] ( ;,B & ;,C """""""""""" 4#AI1III
                                     #CB
              ,,IT-#DHI;,R          E#AB
,IMM ,DEEM$ ,DIVID5D """"""""""""""" NIL

,EXAMPLE ,,IV
  %>ES (A NEW CLASS ( ,HOLDCO ;,Y )A PD-
  UP CAPITAL ( 4#AE1JJJ & NON-%>E
  3SID],N ( 4#AI1III4 7,? EXAMPLE
  ILLU/RATES ! APPLIC,N ( BO? P>AGRAPHS
  #HD.A7#A77A7 & 7B7 Z A 3SEQU;E (!
  RECEIPT ( %>ES )A HI< PD-UP CAPITAL &
  NON-%>E 3SID],N47

;,A ,PD-UP CAPITAL ( ,HOLDCO
  ;,Y %>ES ISSU$ = ,YCO %>ES "" 4#AE1JJJ
;,B ,PD-UP CAPITAL ( ,YCO %>ES  4#AJ1JJJ
;,C ,ADJU/$ ,CO/ ,BASE ( ,YCO
  %>ES """""""""""""""""""""""" 4#AE1JJJ
;,D ,NON-%>E 3SID],N ISSU$ =
  ,YCO %>ES """"""""""""""""""" 4#AI1III
,PD-UP ,CAPITAL ,REDUC;N
,AM.T ;,A """""""""""""""""""""" #AE1JJJ
,EXCE$S3 ,AM.T 0: GRT] ( ;,B &
  ;,C EXCE$S ;,D """"""""""""""""""" NIL
;,E ,PD-UP CAPITAL REDUC;N """" 4#AE1JJJ
                                     #CC
              ,,IT-#DHI;,R          F#AB
,PD-UP ,CAPITAL AF ,REDUC;N
,AM.T ;,A M9US ,AM.T ;,E """"""""""" NIL
,IMM ,DEEM$ ,DIVID5D ,A7REGATE
  ( ;,A & ;,D """"""""""""""""" 4#CD1III
,EXCE$S3 ,A7REGATE ( ;,E &!
  GRT] ( ;,B & ;,C """""""""""" 4#CJ1JJJ
,IMM ,DEEM$ ,DIVID5D """"""""""" 4#D1III
-------------------------------------#AC
,TRANSCRIB]'S NOTE3
  7,FR5* V].N ( PAGE #AB7
-------------------------------------#AD
  ,! ABV EXAMPLES ILLU/RATE ! APPLIC,N (
  SUBSEC;N #HD.A7#A7 9 ISOL,N F O!R
  PROVI.NS 9 ! ,ACT4 ,IF ! TOTAL 3SID],N
  PD IS N EQUAL 6! FAIR M>KET VALUE (!
  %>ES 4POS$ (1 P>AGRAPHS #FI7#A77A7 &
  7B7 M/ 2 3SID]$4 ,": ! PUR*AS]
  CORPOR,N IS A TAXA# ,CANADIAN
  CORPOR,N1 P>AGRAPH #FI7#A77B7 W N
  APPLY IF AN ELEC;N "U SUBSEC;N #HE7#A7
  IS FIL$ =! 4POSI;N4 ,9 ,EXAMPLES ,,III
  & ,,IV ABV1 ,MR4 ;,X _C ELECT "U
  SUBSEC;N #HE7#A7 AT ! ADJU/$ CO/ BASE
  ( 8 %>ES 9 ,XCO 2C ! ELEC;N _C 2   #CD
              ,,IT-#DHI;,R          A#AD
  MADE AT AN AM.T LESS ?AN ! NON-%>E
  3SID],N PD 6HM4 ,=! SAME R1SON1 ,MR4
  ;,Y 9 ,EXAMPLE ,,IV _C ELECT "U
  SUBSEC;N #HE7#A7 AT AN AM.T EQUAL 6!
  ADJU/$ CO/ BASE ( 8 ,YCO %>ES4 ,": AN
  ELEC;N "U SUBSEC;N #HE7#A7 HAS BE5
  MADE & O!R %>EHOLD]S ( ,HOLDCO >E
  RELAT$ 6! TAXPAY] :O TRANSF]S PROP]TY
  6,HOLDCO1 P>AGRAPH #HE7#A77E4#B7 M/ AL
  2 3SID]$4 ,=A FUR!R 4CUS.N ( SUBSEC;N
  #HE7#A71 SEE ! CURR5T V].N (
  ,,IT-#BIA1 ,TRANSF] ( ,PROP]TY 6A
  ,CORPOR,N "U ,SUBSEC;N #HE7#A74 ,":
  PROCE$S ( 4POSI;N EXCE$ ! ADJU/$ CO/
  BASE (! PROP]TY 4POS$ (1 A CAPITAL GA9
  >ISES--H["E1 SEE #AB 2L4

    ,A4I;NAL ,-;TS ,ON ,SEC;N #HD.A
    
#AJ4 ,! AM.T ( ANY DEDUC;N F ! PD-UP
  CAPITAL (A CLASS ( %>ES Z A RESULT (!
  APPLIC,N ( P>AGRAPH #HD.A7#A77A7 IS
  RELEVANT1 PURSUANT 6CLAUSE
  #HI7#A77C77II77,C71 9 DET]M9+      #CE
              ,,IT-#DHI;,R          B#AD
  PD-UP CAPITAL IMMLY AF ! 4POSI;N (!
  SUBJECT %>ES & REPRES5TS A P]MAN5T
  DEDUC;N F PD-UP CAPITAL4 ,X IS N
  POSSI# 6ELIM9ATE S* A DEDUC;N 0REDUC+
  ! /AT$ CAPITAL (! %>ES (! PUR*AS]
  CORPOR,N SUBSEQU5T 6! 4POSI;N4 ,FUR!R1
  ! DEDUC;N F PD-UP CAPITAL 2COMES AN
  ATTRIBUTE1 = TAX PURPOSES1 ( T CLASS (
  %>ES : 3T9UES 6EXI/ EV5 AF A 4POSI;N
  (! %>ES 0! TRANSF]OR (! SUBJECT %>ES4
  ,?US A PUR*AS] ( S* %>ES W F9D T ! PD-
  UP CAPITAL = TAX PURPOSES IS L[] ?AN !
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              ,,IT-#DHI;,R          A#AE
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                                     #CH
              ,,IT-#DHI;,R          B#AE
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             ,SEC;N #BAB.A          A#AF
    
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              ,,IT-#DHI;,R          B#AF
    #BEA Z CL>IFI$ 0SUBSEC;N #BAB.A7#C7
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    R1D Z 8SUBJECT CORPOR,N0 & 8PUR*AS]
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  >E Q SIMIL> 6^? ( P>AGRAPHS
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-------------------------------------#AG
  & 7E72 ACLY ! -;TS 9 #B;ABOVE %D 2 R1D
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              ,,IT-#DHI;,R          A#AG
  SEC;N #BAB.A4,SIMIL>LY1 ! -;TS 9 #AA &
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              ,,IT-#DHI;,R          B#AG
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                                     #DD
              ,,IT-#DHI;,R          C#AG
    EXCE$ ! PD-UP CAPITAL (! SUBJECT
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-------------------------------------#AH
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  ,": AN ELEC;N "U SUBSEC;N #HE7#A7 IS
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              ,,IT-#DHI;,R          A#AH
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              ,,IT-#DHI;,R          B#AH
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                                     #EA
              ,,IT-#DHI;,R          A#BA
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              ,,IT-#DHI;,R          B#BA
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