Visteon Corporation Spin-off Tax Information for Canadian Taxpayers
On June 28, 2000, Ford Motor Company distributed all of the common shares of Visteon Corporation owned by Ford to Ford Common and Class B shareholders of record as of the close of business on June 12, 2000. Unless you sold your right to receive Visteon shares before the distribution date, you received 0.130933 shares of Visteon for each Ford share you owned as of the Record Date.
On June 14, 2001 the Canadian Income Tax Act was amended so that foreign spin-off dividends can now be received by Canadian shareholders on a tax-free basis at the election of shareholder. Ford has received confirmation from the Canada Customs and Revenue Agency that the receipt of Visteon shares will be tax-free for Canadian income tax purposes, provided that the Ford shareholder files (i.e. mails through the Canadian postal system) a written election to the CCRA on or before September 11, 2001. If you make the election, you may be entitled to a refund of Canadian income taxes previously paid in respect of the Visteon spin-off.
If you elect tax-free treatment, you are required to allocate the adjusted cost base ("ACB") of your Ford shares as of June 28, 2000, immediately prior to the distribution, between your Ford shares and your Visteon shares received based on their relative fair market values on June 28, 2000. Based upon the average high and low composite prices of Ford and Visteon on the New York Stock Exchange on June 28, 2000, 96.07% of your ACB in your Ford shares should be allocated to your Ford shares, and the remaining 3.93% should be allocated to your Visteon shares (including any fractional share interest). If you received cash in lieu of fractional shares, you will be treated as having sold the fraction for the amount of cash received and you would report the capital gain or loss on that sale equal to the difference between your ACB in the fractional share of Visteon (determined using the above methodology) and the amount of cash received.
You should consult your tax advisor regarding the decision to make the election and the application of this new tax law to your particular circumstances.
Download the pdf version of full instructions, calculation examples, and a sample election letter to be completed by you and sent to your District Tax Office.
