Air Canada 2007 Annual Report Download - page 97

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Consolidated Financial Statements and Notes
97
Excluded Inter-company Investments
Prior to the Air Canada IPO, Air Canada held, for tax planning purposes, certain investments in limited partnerships of which
ACE owned directly or indirectly all of the limited partner units. These investments and related income and income tax
effects have been excluded from these consolidated statements of fi nancial positions and operations of the Corporation,
as these activities did not relate to the operations of the Corporation. These investments were transferred to ACE during
2005 and 2006 in exchange for cash and a note receivable. For purposes of these consolidated fi nancial statements, these
exchanges of the investments for cash and a note receivable were recorded as related party transactions resulting in a
contribution of cash and notes receivable to the Corporation. These contributions of cash have been refl ected as fi nancing
activities in the Consolidated statement of cash fl ows. During 2006 the Corporation received cash from ACE of $673 for the
investments in ACTS and $483 for the investments in Jazz.
During 2006, Jazz settled a Note payable outstanding to a subsidiary of ACE of $200 in connection with the initial public
offering of Jazz Air Income Fund (Note 21).
Income Taxes
As part of a tax loss utilization strategy that was planned in conjunction with the Air Canada IPO and corporate restructuring,
a current tax payable of $345 was created in 2006. This tax payable arose upon a transaction to transfer tax assets from
the Corporation to ACE. This tax payable was recoverable from future income tax assets of the Corporation and was settled
during the fi rst quarter of 2007. The Corporation recorded interest expense of $6, which was due on the tax balance prior
to its recovery in current income taxes on the Consolidated statement of operations.