II, s. 67, c. 21, s. 421998, c. 19, ss. 17, 1192000, c. 19, s. 142001, c. 17, s. 672007, c. 2, s. 47, c. 29, s. 6, c. 35, s. 232009, c. 2, s. 222011, c. 24, s. 192012, c. 19, s. 4, c. 31, s. 192013, c. 34, s. 225, c. 40, s. 412016, c. 7, s. 10, c. 12, s. 292017, c. 20, s. 7, c. 33, s. 26
90(1)In computing the income for a taxation year of a taxpayer resident in Canada, there is to be included any amount received by the taxpayer at any time in the year as, on account or in lieu of payment of, or in satisfaction of, a dividend on a share owned by the taxpayer of the capital stock of a non-resident corporation.Marginal note:Dividend from foreign affiliate(2)For the purposes of this Act, an amount is deemed to be a dividend paid or received, as the case may be, at any time on a share of a class of the capital stock of a non-resident corporation that is a foreign affiliate of a taxpayer if the amount is the share’s portion of a pro rata distribution (other than a distribution made in the course of a liquidation and dissolution of the corporation, on a redemption, acquisition or cancellation of the share by the corporation, or on a qualifying return of capital in respect of the share) made at that time by the corporation in respect of all the shares of that class.Marginal note:Qualifying return of capital(3)For the purposes of subsection (2), a distribution made at any time by a foreign affiliate of a taxpayer in respect of a share of the capital stock of the affiliate that is a reduction of the paid-up capital of the affiliate in respect of the share and that would, in the absence of this subsection, be deemed under subsection (2) to be a dividend paid or received, at that time, on the share is a qualifying return of capital, at that time, in respect of the share if an election is made under this subsection, in respect of the distribution and in accordance with prescribed rules,(a)by the taxpayer, where there is no person or partnership that meets the conditions in subparagraphs (b)(i) and (ii); or(b)jointly by the taxpayer and each person or partnership that is, at that time,(i)a connected person or partnership in respect of the taxpayer, and(ii)a person or partnership of which the affiliate would, at that time, be a foreign affiliate if paragraph (b) of the definitionequity percentagein subsection 95(4) were read as if the reference in that paragraph to “any corporation” were a reference to “any corporation other than a corporation resident in Canada”.Marginal note:Connected person or partnership(4)For the purposes of subsection (3), aconnected person or partnershipin respect of a taxpayer, at any time, is(a)a person that is, at that time, related to the taxpayer, and(b)a partnership a member of which is, at that time,(i)the taxpayer, or(ii)a person that is related to the taxpayer.Marginal note:Exclusion(5)No amount paid or received at any time is, for the purposes of this Act, a dividend paid or received on a share of the capital stock of a non-resident corporation that is a foreign affiliate of a taxpayer unless it is so deemed under this Part.Marginal note:Loan from foreign affiliate(6)Except where subsection 15(2) applies, if a person or partnership receives at any time a loan from, or becomes at that time indebted to, a creditor that is at that time a foreign affiliate (referred to in subsections (9), (11) and (15) as the “creditor affiliate”) of a taxpayer resident in Canada or that is at that time a partnership (referred to in subsections (9), (11) and (15) as the “creditor partnership”) of which such an affiliate is a member and the person or partnership is at that time a specified debtor in respect of the taxpayer, then the specified amount in respect of the loan or indebtedness is to be included in computing the income of the taxpayer for the taxpayer’s taxation year that includes that time.Marginal note:Upstream loan continuity — reorganizations(6.1)Subsection (6.11) applies at any time if(a)immediately before that time, a person or partnership (referred to in this subsection and subsection (6.11) as the “original debtor”) owes an amount in respect of a loan or indebtedness (referred to in this subsection and subsection (6.11) as the “pre-transaction loan”) to another person or partnership (referred to in this subsection and subsection (6.11) as the “original creditor”);(b)the pre-transaction loan was, at the time it was made or entered into, a loan or indebtedness that is described in subsection (6); and(c)in the course of an amalgamation, a merger, a winding-up or a liquidation and dissolution,(i)the amount owing in respect of the pre-transaction loan becomes owing at that time by another person or partnership (the amount owing after that time and the other person or partnership are referred to in subsection (6.11) as the “post-transaction loan payable” and the “new debtor”, respectively),(ii)the amount owing in respect of the pre-transaction loan becomes owing at that time to another person or partnership (the amount owing after that time and the other person or partnership are referred to in subsection (6.11) as the “post-transaction loan receivable” and the “new creditor”, respectively), or(iii)the taxpayer in respect of which the original debtor was a specified debtor at the time referred to in paragraph (b)(A)ceases to exist, or(B)merges with one or more corporations to form one corporate entity (referred to in subsection (6.11) as the “new corporation”).Marginal note:Upstream loan continuity — reorganizations(6.11)If this subsection applies at any time, for the purposes of subsections (6) and (7) to (15) and 39(2.1) and (2.2) and paragraph 95(2)(g.04),(a)if the condition in subparagraph (6.1)(c)(i) is met,(i)the post-transaction loan payable is deemed to be the same loan or indebtedness as the pre-transaction loan, and(ii)the new debtor is deemed to be same debtor as, and a continuation of, the original debtor;(b)if the condition in subparagraph (6.1)(c)(ii) is met,(i)the post-transaction loan receivable is deemed to be the same loan or indebtedness as the pre-transaction loan, and(ii)the new creditor is deemed to be same creditor as, and a continuation of, the original creditor;(c)if the condition in clause (6.1)(c)(iii)(A) is met,(i)subject to subparagraph (ii), each entity that held an equity interest in the taxpayer immediately before the winding-up (referred to in this paragraph as a “successor entity”) is deemed to be the same entity as, and a continuation of, the taxpayer, and(ii)for the purposes of applying subsection (13) and the description of A in subsection (14), an amount is deemed, in respect of a loan or indebtedness, to have been included under subsection (6) in computing the income of each successor entity equal to(A)if the taxpayer is a partnership, the amount that may reasonably be considered to be the successor entity’s share (determined in a manner consistent with the determination of the successor entity’s share of the income of the partnership under subsection 96(1) for the taxpayer’s final fiscal period) of the specified amount that was required to be included in computing the income of the taxpayer under subsection (6) in respect of the loan or indebtedness, and(B)in any other case, the proportion of the specified amount included in computing the taxpayer’s income under subsection (6), in respect of the loan or indebtedness, that the fair market value of the successor entity’s equity interest in the taxpayer, immediately before the distribution of the taxpayer’s assets on the winding-up, is of the total fair market value of all equity interests in the taxpayer at that time; and(d)if the condition in clause (6.1)(c)(iii)(B) is met, the new corporation is deemed to be the same corporation as, and a continuation of, the taxpayer.Marginal note:Back-to-back loans(7)For the purposes of this subsection and subsections (6), (8) to (15) and 39(2.1) and (2.2) and paragraph 95(2)(g.04), if at any time a person or partnership (referred to in this subsection as the “intermediate lender”) makes a loan to another person or partnership (in this subsection referred to as the “intended borrower”) because the intermediate lender received a loan from another person or partnership (in this subsection referred to as the “initial lender”)(a)the loan made by the intermediate lender to the intended borrower is deemed, at that time, to have been made by the initial lender to the intended borrower (to the extent of the lesser of the amount of the loan made by the initial lender to the intermediate lender and the amount of the loan made by the intermediate lender to the intended borrower) under the same terms and conditions and at the same time as it was made by the intermediate lender; and(b)the loan made by the initial lender to the intermediate lender and the loan made by the intermediate lender to the intended borrower are deemed not to have been made to the extent of the amount of the loan deemed to have been made under paragraph (a).Marginal note:Exceptions to subsection (6)(8)Subsection (6) does not apply to(a)a loan or indebtedness that is repaid, other than as part of a series of loans or other transactions and repayments, within two years of the day the loan was made or the indebtedness arose;(b)indebtedness that arose in the ordinary course of the business of the creditor or a loan made in the ordinary course of the creditor’s ordinary business of lending money if, at the time the indebtedness arose or the loan was made,bona fidearrangements were made for repayment of the indebtedness or loan within a reasonable time;(c)a loan that was made, or indebtedness that arose, in the ordinary course of carrying on a life insurance business outside Canada if(i)the loan or indebtedness is owed by the taxpayer or by a subsidiary wholly-owned corporation of the taxpayer,(ii)the taxpayer, or the subsidiary wholly-owned corporation, as the case may be, is a life insurance corporation resident in Canada,(iii)the loan or indebtedness directly relates to a business of the taxpayer, or of the subsidiary wholly-owned corporation, that is carried on outside Canada, and(iv)the interest on the loan or indebtedness is, or would be if it were otherwise income from property, included in the active business income of the creditor, or if the creditor is a partnership, a member of the partnership, under clause 95(2)(a)(ii)(A); and(d)subject to subsection (8.1), an upstream deposit owing to an eligible bank affiliate.Marginal note:Upstream deposit  — eligible bank affiliate(8.1)For the purposes of this section, if a taxpayer is an eligible Canadian bank and an eligible bank affiliate of the taxpayer is owed, at any time in a particular taxation year of the affiliate or the immediately preceding taxation year, an upstream deposit,(a)the affiliate is deemed to make a loan to the taxpayer immediately before the end of the particular year equal to the amount determined by the following formula, where all amounts referred to in the formula are to be determined using Canadian currency:A – B – CwhereAis 90% of the average of all amounts each of which is, in respect of a calendar month that ends in the particular year, the greatest total amount at any time in the month of the upstream deposits owing to the affiliate,Bis the lesser of(i)the amount, if any, by which the affiliate’s excess liquidity for the particular year exceeds the average of all amounts each of which is, in respect of a calendar month that ends in the particular year, the greatest total amount at any time in the month of eligible Canadian indebtedness owing to the affiliate, and(ii)the amount determined for A, andCis the amount, if any, by which the amount determined for A for the immediately preceding year exceeds the amount determined for B for the immediately preceding year; and(b)if the formula in paragraph (a) would, in the absence of section 257, result in a negative amount for the particular year,(i)the taxpayer is deemed to repay immediately before the end of the particular year — in an amount equal to the absolute value of the negative amount and in the order in which they arose — loans made by the affiliate under paragraph (a) in a prior taxation year and not previously repaid, and(ii)the repayment is deemed to not be part of a series of loans or other transactions and repayments.Marginal note:Corporations: deduction for amounts included under subsection (6) or (12)(9)There may be deducted in computing the income for a taxation year of a corporation resident in Canada a particular amount, in respect of a specified amount included under subsection (6), or an amount included under subsection (12), in computing the corporation’s income for the taxation year in respect of a particular loan or indebtedness, if(a)the corporation demonstrates that the particular amount is the total of all amounts (not to exceed the amount so included) each of which would — if the specified amount in respect of the particular loan or indebtedness were, at the time (referred to in subparagraph (i) and subsection (11) as the “lending time”) the particular loan was made or the particular indebtedness was incurred, instead paid by the creditor affiliate, or the creditor partnership, as the case may be, to the corporation directly as part of one dividend, or indirectly as part of one or more dividends and, if applicable, partnership distributions — reasonably be considered to have been deductible, in respect of the payment, for the corporation’s taxation year in which the specified amount was included in its income under subsection (6), in computing(i)the taxable income of the corporation under any of(A)paragraph 113(1)(a), in respect of the exempt surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation,(B)paragraph 113(1)(a.1), in respect of the hybrid surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation, if the amount of that hybrid surplus is less than or equal to the amount determined by the formula[A × (B – 0.5)] + (C × 0.5)whereAis the affiliate’s hybrid underlying tax in respect of the corporation at the lending time,Bis the corporation’s relevant tax factor (within the meaning assigned by subsection 95(1)) for the corporation’s taxation year that includes the lending time, andCis the affiliate’s hybrid surplus in respect of the corporation at the lending time,(C)paragraph 113(1)(b), in respect of the taxable surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation, and(D)paragraph 113(1)(d), in respect of the pre-acquisition surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation to the extent of the adjusted cost base to the corporation, at the lending time, of the shares of the capital stock of the affiliate, and except if the specified debtor is(I)a non-resident person with which the corporation does not deal at arm’s length, or(II)a partnership any member of which is a person described in subclause (I), or(ii)the income of the corporation under subsection 91(5), in respect of the taxable surplus of a foreign affiliate of the corporation, unless the specified debtor is a person or partnership described in subclause (i)(D)(I) or (II);(b)that exempt surplus, hybrid surplus, taxable surplus, or adjusted cost base is not relevant in applying this subsection in respect of any other loan made or indebtedness incurred, or in respect of any deduction claimed under subsection 91(5) or 113(1) in respect of a dividend paid, during the period in which the particular loan or indebtedness is outstanding; and(c)that adjusted cost base is not relevant in determining the taxability of any other distribution made during the period in which the particular loan or indebtedness is outstanding.Marginal note:Corporate partners: application of subsection (9)(10)In applying subsection (9) to a corporation resident in Canada that is a member of a partnership at the end of a fiscal period of the partnership,(a)each amount that may reasonably be considered to be the corporation’s share (determined in a manner consistent with the determination of the corporation’s share of the income of the partnership under subsection 96(1)) of each specified amount that is required to be included in computing the income of the partnership for that fiscal period under subsection (6), in respect of a particular loan or indebtedness, is deemed to be a specified amount in respect of the particular loan or indebtedness that was included in the corporation’s income, for its taxation year that includes the last day of that fiscal period, under subsection (6);(b)subparagraph (9)(a)(i) is to be read without reference to its clause (D);(c)subparagraph (9)(a)(ii) is to be read as follows:(ii)the income of the partnership, referred to in subsection (10), under subsection 91(5), in respect of the taxable surplus of a foreign affiliate of the partnership, to the extent of the amount that may reasonably be considered to be the corporation’s share of that deduction (determined in a manner consistent with the determination of the corporation’s share of the income of the partnership under subsection 96(1));(d)paragraph (9)(b) is to be read as follows:(b)that exempt surplus, hybrid surplus, or taxable surplus is not relevant in applying this subsection in respect of any other loan made or indebtedness incurred, or in respect of any deduction claimed under subsection 91(5) or 113(1) in respect of a dividend paid, during the period in which the particular loan or indebtedness is outstanding; and(e)subsection (9) is to be read without reference to its paragraph (c).Marginal note:Downstream surplus(11)For the purposes of subparagraph (9)(a)(i), the amounts of exempt surplus or exempt deficit, hybrid surplus or hybrid deficit, hybrid underlying tax, taxable surplus or taxable deficit, and underlying foreign tax of the creditor affiliate, or of each foreign affiliate of the corporation that is a member of the creditor partnership, as the case may be, in respect of the corporation, at the lending time are deemed to be the amounts that would be determined, at the lending time, under subparagraph 5902(1)(a)(i) of theIncome Tax Regulationsif that subparagraph were applicable at the lending time and the references in that subparagraph to “the dividend time” were references to the lending time.Marginal note:Add-back for subsection (9) deduction(12)There is to be included in computing the income of a corporation resident in Canada for a particular taxation year any amount deducted by the corporation under subsection (9) in computing the corporation’s income for the taxation year that immediately precedes the particular year.Marginal note:No double deduction(13)A corporation may not claim a deduction for a taxation year under subsection (9) in respect of the same portion of the specified amount in respect of a loan or indebtedness for which a deduction is claimed for that year or a preceding year by the corporation, or by a partnership of which the corporation is a member, under subsection (14).Marginal note:Repayment of loan(14)There may be deducted in computing the income of a taxpayer for a particular taxation year the amount determined by the formulaA × B/CwhereAis the specified amount, in respect of a loan or indebtedness, that is included under subsection (6) in computing the taxpayer’s income for a preceding taxation year,Bis the portion of the loan or indebtedness that was repaid in the particular year, to the extent it is established, by subsequent events or otherwise, that the repayment was not part of a series of loans or other transactions and repayments, andCis the amount, in respect of the loan or indebtedness, that is referred to in the description of A in the definitionspecified amountin subsection (15).Marginal note:Definitions(15)The following definitions apply in this section.eligible bank affiliateeligible bank affiliatehas the same meaning as in subsection 95(2.43). (filiale bancaire admissible)eligible Canadian bankeligible Canadian bankhas the same meaning as in subsection 95(2.43). (banque canadienne admissible)eligible Canadian indebtednesseligible Canadian indebtednesshas the same meaning as in subsection 95(2.43). (dettes canadiennes admissibles)excess liquidityexcess liquidityhas the same meaning as in subsection 95(2.43). (liquidités excédentaires)specified amountspecified amount, in respect of a loan or indebtedness that is required by subsection (6) to be included in computing the income of a taxpayer for a taxation year, means the amount determined by the formulaA × (B – C)whereAis the amount of the loan or indebtedness, andBis, in the case of(a)a creditor affiliate of the taxpayer, the percentage that is or would be, if the taxpayer referred to in subsection (6) were a corporation resident in Canada, the taxpayer’s surplus entitlement percentage (in this definition determined without reference to subsection 5908(1) of theIncome Tax Regulations) in respect of the creditor affiliate at the time (referred to in this definition as the “determination time”) referred to in subsection (6), or(b)a creditor partnership of which a foreign affiliate of the taxpayer is a member, the total of each percentage determined, in respect of a member (referred to in this paragraph as a “member affiliate”) of the creditor partnership that is a foreign affiliate of the taxpayer, by the formulaD × E/FwhereDis the percentage that is or would be, if the taxpayer were a corporation resident in Canada, the taxpayer’s surplus entitlement percentage in respect of a particular member affiliate at the determination time,Eis the fair market value, at the determination time, of the particular member affiliate’s direct or indirect interest in the creditor partnership, andFis the fair market value, at the determination time, of all interests in the creditor partnership, andCis,(a)if the debtor under the loan or indebtedness is(i)another foreign affiliate of the taxpayer, the percentage that is or would be, if the taxpayer were a corporation resident in Canada, the taxpayer’s surplus entitlement percentage in respect of the other affiliate at the determination time, or(ii)a partnership (referred to in this paragraph as the “borrower partnership”) of which one or more other foreign affiliates of the taxpayer are members, the total of each percentage that is determined by the following formula in respect of each such memberG × H/IwhereGis the percentage that is or would be, if the taxpayer were a corporation resident in Canada, the taxpayer’s surplus entitlement percentage in respect of a particular member of the borrower partnership at the determination time,His the fair market value, at the determination time, of the particular member’s direct or indirect interest in the borrower partnership, andIis the fair market value, at the determination time, of all interests in the borrower partnership, and(b)in any other case, nil. (montant déterminé)specified debtorspecified debtor, in respect of a taxpayer resident in Canada, at any time, means(a)the taxpayer;(b)a person with which the taxpayer does not, at that time, deal at arm’s length, other than(i)a non-resident corporation that is at that time acontrolled foreign affiliate, within the meaning assigned by section 17, of the taxpayer, or(ii)a non-resident corporation (other than a corporation that is described in subparagraph (i)) that is, at that time, a foreign affiliate of the taxpayer, if each share of the capital stock of the affiliate is owned at that time by any of(A)the taxpayer,(B)persons resident in Canada,(C)non-resident persons that deal at arm’s length with the taxpayer,(D)persons described in subparagraph (i),(E)partnerships, each member of which is described in any of clauses (A) to (F), and(F)a corporation each shareholder of which is described in any of clauses (A) to (F);(c)a partnership a member of which is at that time a person or partnership that is a specified debtor in respect of the taxpayer because of paragraph (a) or (b); and(d)if the taxpayer is a partnership,(i)any member of the partnership that is a corporation resident in Canada if the creditor affiliate, or member of the creditor partnership, as the case may be, is, at that time, a foreign affiliate of the corporation,(ii)a person with which a corporation referred to in subparagraph (i) does not, at that time, deal at arm’s length, other than a controlled foreign affiliate, within the meaning assigned by section 17, of the partnership or of a member of the partnership that owns, directly or indirectly, an interest in the partnership representing at least 90% of the fair market value of all such interests, or(iii)a partnership a member of which is at that time a person that is a specified debtor in respect of the taxpayer because of subparagraph (i) or (ii). (débiteur déterminé)upstream depositupstream deposithas the same meaning as in subsection 95(2.43). (dépôt en amont)
(a)by the taxpayer, where there is no person or partnership that meets the conditions in subparagraphs (b)(i) and (ii); or(b)jointly by the taxpayer and each person or partnership that is, at that time,(i)a connected person or partnership in respect of the taxpayer, and(ii)a person or partnership of which the affiliate would, at that time, be a foreign affiliate if paragraph (b) of the definitionequity percentagein subsection 95(4) were read as if the reference in that paragraph to “any corporation” were a reference to “any corporation other than a corporation resident in Canada”.
(i)a connected person or partnership in respect of the taxpayer, and(ii)a person or partnership of which the affiliate would, at that time, be a foreign affiliate if paragraph (b) of the definitionequity percentagein subsection 95(4) were read as if the reference in that paragraph to “any corporation” were a reference to “any corporation other than a corporation resident in Canada”.
(a)a person that is, at that time, related to the taxpayer, and(b)a partnership a member of which is, at that time,(i)the taxpayer, or(ii)a person that is related to the taxpayer.
(i)the taxpayer, or(ii)a person that is related to the taxpayer.
(a)immediately before that time, a person or partnership (referred to in this subsection and subsection (6.11) as the “original debtor”) owes an amount in respect of a loan or indebtedness (referred to in this subsection and subsection (6.11) as the “pre-transaction loan”) to another person or partnership (referred to in this subsection and subsection (6.11) as the “original creditor”);(b)the pre-transaction loan was, at the time it was made or entered into, a loan or indebtedness that is described in subsection (6); and(c)in the course of an amalgamation, a merger, a winding-up or a liquidation and dissolution,(i)the amount owing in respect of the pre-transaction loan becomes owing at that time by another person or partnership (the amount owing after that time and the other person or partnership are referred to in subsection (6.11) as the “post-transaction loan payable” and the “new debtor”, respectively),(ii)the amount owing in respect of the pre-transaction loan becomes owing at that time to another person or partnership (the amount owing after that time and the other person or partnership are referred to in subsection (6.11) as the “post-transaction loan receivable” and the “new creditor”, respectively), or(iii)the taxpayer in respect of which the original debtor was a specified debtor at the time referred to in paragraph (b)(A)ceases to exist, or(B)merges with one or more corporations to form one corporate entity (referred to in subsection (6.11) as the “new corporation”).
(i)the amount owing in respect of the pre-transaction loan becomes owing at that time by another person or partnership (the amount owing after that time and the other person or partnership are referred to in subsection (6.11) as the “post-transaction loan payable” and the “new debtor”, respectively),(ii)the amount owing in respect of the pre-transaction loan becomes owing at that time to another person or partnership (the amount owing after that time and the other person or partnership are referred to in subsection (6.11) as the “post-transaction loan receivable” and the “new creditor”, respectively), or(iii)the taxpayer in respect of which the original debtor was a specified debtor at the time referred to in paragraph (b)(A)ceases to exist, or(B)merges with one or more corporations to form one corporate entity (referred to in subsection (6.11) as the “new corporation”).
(A)ceases to exist, or(B)merges with one or more corporations to form one corporate entity (referred to in subsection (6.11) as the “new corporation”).
(a)if the condition in subparagraph (6.1)(c)(i) is met,(i)the post-transaction loan payable is deemed to be the same loan or indebtedness as the pre-transaction loan, and(ii)the new debtor is deemed to be same debtor as, and a continuation of, the original debtor;(b)if the condition in subparagraph (6.1)(c)(ii) is met,(i)the post-transaction loan receivable is deemed to be the same loan or indebtedness as the pre-transaction loan, and(ii)the new creditor is deemed to be same creditor as, and a continuation of, the original creditor;(c)if the condition in clause (6.1)(c)(iii)(A) is met,(i)subject to subparagraph (ii), each entity that held an equity interest in the taxpayer immediately before the winding-up (referred to in this paragraph as a “successor entity”) is deemed to be the same entity as, and a continuation of, the taxpayer, and(ii)for the purposes of applying subsection (13) and the description of A in subsection (14), an amount is deemed, in respect of a loan or indebtedness, to have been included under subsection (6) in computing the income of each successor entity equal to(A)if the taxpayer is a partnership, the amount that may reasonably be considered to be the successor entity’s share (determined in a manner consistent with the determination of the successor entity’s share of the income of the partnership under subsection 96(1) for the taxpayer’s final fiscal period) of the specified amount that was required to be included in computing the income of the taxpayer under subsection (6) in respect of the loan or indebtedness, and(B)in any other case, the proportion of the specified amount included in computing the taxpayer’s income under subsection (6), in respect of the loan or indebtedness, that the fair market value of the successor entity’s equity interest in the taxpayer, immediately before the distribution of the taxpayer’s assets on the winding-up, is of the total fair market value of all equity interests in the taxpayer at that time; and(d)if the condition in clause (6.1)(c)(iii)(B) is met, the new corporation is deemed to be the same corporation as, and a continuation of, the taxpayer.
(i)the post-transaction loan payable is deemed to be the same loan or indebtedness as the pre-transaction loan, and(ii)the new debtor is deemed to be same debtor as, and a continuation of, the original debtor;
(i)the post-transaction loan receivable is deemed to be the same loan or indebtedness as the pre-transaction loan, and(ii)the new creditor is deemed to be same creditor as, and a continuation of, the original creditor;
(i)subject to subparagraph (ii), each entity that held an equity interest in the taxpayer immediately before the winding-up (referred to in this paragraph as a “successor entity”) is deemed to be the same entity as, and a continuation of, the taxpayer, and(ii)for the purposes of applying subsection (13) and the description of A in subsection (14), an amount is deemed, in respect of a loan or indebtedness, to have been included under subsection (6) in computing the income of each successor entity equal to(A)if the taxpayer is a partnership, the amount that may reasonably be considered to be the successor entity’s share (determined in a manner consistent with the determination of the successor entity’s share of the income of the partnership under subsection 96(1) for the taxpayer’s final fiscal period) of the specified amount that was required to be included in computing the income of the taxpayer under subsection (6) in respect of the loan or indebtedness, and(B)in any other case, the proportion of the specified amount included in computing the taxpayer’s income under subsection (6), in respect of the loan or indebtedness, that the fair market value of the successor entity’s equity interest in the taxpayer, immediately before the distribution of the taxpayer’s assets on the winding-up, is of the total fair market value of all equity interests in the taxpayer at that time; and
(A)if the taxpayer is a partnership, the amount that may reasonably be considered to be the successor entity’s share (determined in a manner consistent with the determination of the successor entity’s share of the income of the partnership under subsection 96(1) for the taxpayer’s final fiscal period) of the specified amount that was required to be included in computing the income of the taxpayer under subsection (6) in respect of the loan or indebtedness, and(B)in any other case, the proportion of the specified amount included in computing the taxpayer’s income under subsection (6), in respect of the loan or indebtedness, that the fair market value of the successor entity’s equity interest in the taxpayer, immediately before the distribution of the taxpayer’s assets on the winding-up, is of the total fair market value of all equity interests in the taxpayer at that time; and
(a)the loan made by the intermediate lender to the intended borrower is deemed, at that time, to have been made by the initial lender to the intended borrower (to the extent of the lesser of the amount of the loan made by the initial lender to the intermediate lender and the amount of the loan made by the intermediate lender to the intended borrower) under the same terms and conditions and at the same time as it was made by the intermediate lender; and(b)the loan made by the initial lender to the intermediate lender and the loan made by the intermediate lender to the intended borrower are deemed not to have been made to the extent of the amount of the loan deemed to have been made under paragraph (a).
(a)a loan or indebtedness that is repaid, other than as part of a series of loans or other transactions and repayments, within two years of the day the loan was made or the indebtedness arose;(b)indebtedness that arose in the ordinary course of the business of the creditor or a loan made in the ordinary course of the creditor’s ordinary business of lending money if, at the time the indebtedness arose or the loan was made,bona fidearrangements were made for repayment of the indebtedness or loan within a reasonable time;(c)a loan that was made, or indebtedness that arose, in the ordinary course of carrying on a life insurance business outside Canada if(i)the loan or indebtedness is owed by the taxpayer or by a subsidiary wholly-owned corporation of the taxpayer,(ii)the taxpayer, or the subsidiary wholly-owned corporation, as the case may be, is a life insurance corporation resident in Canada,(iii)the loan or indebtedness directly relates to a business of the taxpayer, or of the subsidiary wholly-owned corporation, that is carried on outside Canada, and(iv)the interest on the loan or indebtedness is, or would be if it were otherwise income from property, included in the active business income of the creditor, or if the creditor is a partnership, a member of the partnership, under clause 95(2)(a)(ii)(A); and(d)subject to subsection (8.1), an upstream deposit owing to an eligible bank affiliate.
(i)the loan or indebtedness is owed by the taxpayer or by a subsidiary wholly-owned corporation of the taxpayer,(ii)the taxpayer, or the subsidiary wholly-owned corporation, as the case may be, is a life insurance corporation resident in Canada,(iii)the loan or indebtedness directly relates to a business of the taxpayer, or of the subsidiary wholly-owned corporation, that is carried on outside Canada, and(iv)the interest on the loan or indebtedness is, or would be if it were otherwise income from property, included in the active business income of the creditor, or if the creditor is a partnership, a member of the partnership, under clause 95(2)(a)(ii)(A); and
(a)the affiliate is deemed to make a loan to the taxpayer immediately before the end of the particular year equal to the amount determined by the following formula, where all amounts referred to in the formula are to be determined using Canadian currency:A – B – CwhereAis 90% of the average of all amounts each of which is, in respect of a calendar month that ends in the particular year, the greatest total amount at any time in the month of the upstream deposits owing to the affiliate,Bis the lesser of(i)the amount, if any, by which the affiliate’s excess liquidity for the particular year exceeds the average of all amounts each of which is, in respect of a calendar month that ends in the particular year, the greatest total amount at any time in the month of eligible Canadian indebtedness owing to the affiliate, and(ii)the amount determined for A, andCis the amount, if any, by which the amount determined for A for the immediately preceding year exceeds the amount determined for B for the immediately preceding year; and(b)if the formula in paragraph (a) would, in the absence of section 257, result in a negative amount for the particular year,(i)the taxpayer is deemed to repay immediately before the end of the particular year — in an amount equal to the absolute value of the negative amount and in the order in which they arose — loans made by the affiliate under paragraph (a) in a prior taxation year and not previously repaid, and(ii)the repayment is deemed to not be part of a series of loans or other transactions and repayments.
(i)the amount, if any, by which the affiliate’s excess liquidity for the particular year exceeds the average of all amounts each of which is, in respect of a calendar month that ends in the particular year, the greatest total amount at any time in the month of eligible Canadian indebtedness owing to the affiliate, and(ii)the amount determined for A, and
(i)the taxpayer is deemed to repay immediately before the end of the particular year — in an amount equal to the absolute value of the negative amount and in the order in which they arose — loans made by the affiliate under paragraph (a) in a prior taxation year and not previously repaid, and(ii)the repayment is deemed to not be part of a series of loans or other transactions and repayments.
(a)the corporation demonstrates that the particular amount is the total of all amounts (not to exceed the amount so included) each of which would — if the specified amount in respect of the particular loan or indebtedness were, at the time (referred to in subparagraph (i) and subsection (11) as the “lending time”) the particular loan was made or the particular indebtedness was incurred, instead paid by the creditor affiliate, or the creditor partnership, as the case may be, to the corporation directly as part of one dividend, or indirectly as part of one or more dividends and, if applicable, partnership distributions — reasonably be considered to have been deductible, in respect of the payment, for the corporation’s taxation year in which the specified amount was included in its income under subsection (6), in computing(i)the taxable income of the corporation under any of(A)paragraph 113(1)(a), in respect of the exempt surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation,(B)paragraph 113(1)(a.1), in respect of the hybrid surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation, if the amount of that hybrid surplus is less than or equal to the amount determined by the formula[A × (B – 0.5)] + (C × 0.5)whereAis the affiliate’s hybrid underlying tax in respect of the corporation at the lending time,Bis the corporation’s relevant tax factor (within the meaning assigned by subsection 95(1)) for the corporation’s taxation year that includes the lending time, andCis the affiliate’s hybrid surplus in respect of the corporation at the lending time,(C)paragraph 113(1)(b), in respect of the taxable surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation, and(D)paragraph 113(1)(d), in respect of the pre-acquisition surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation to the extent of the adjusted cost base to the corporation, at the lending time, of the shares of the capital stock of the affiliate, and except if the specified debtor is(I)a non-resident person with which the corporation does not deal at arm’s length, or(II)a partnership any member of which is a person described in subclause (I), or(ii)the income of the corporation under subsection 91(5), in respect of the taxable surplus of a foreign affiliate of the corporation, unless the specified debtor is a person or partnership described in subclause (i)(D)(I) or (II);(b)that exempt surplus, hybrid surplus, taxable surplus, or adjusted cost base is not relevant in applying this subsection in respect of any other loan made or indebtedness incurred, or in respect of any deduction claimed under subsection 91(5) or 113(1) in respect of a dividend paid, during the period in which the particular loan or indebtedness is outstanding; and(c)that adjusted cost base is not relevant in determining the taxability of any other distribution made during the period in which the particular loan or indebtedness is outstanding.
(i)the taxable income of the corporation under any of(A)paragraph 113(1)(a), in respect of the exempt surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation,(B)paragraph 113(1)(a.1), in respect of the hybrid surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation, if the amount of that hybrid surplus is less than or equal to the amount determined by the formula[A × (B – 0.5)] + (C × 0.5)whereAis the affiliate’s hybrid underlying tax in respect of the corporation at the lending time,Bis the corporation’s relevant tax factor (within the meaning assigned by subsection 95(1)) for the corporation’s taxation year that includes the lending time, andCis the affiliate’s hybrid surplus in respect of the corporation at the lending time,(C)paragraph 113(1)(b), in respect of the taxable surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation, and(D)paragraph 113(1)(d), in respect of the pre-acquisition surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation to the extent of the adjusted cost base to the corporation, at the lending time, of the shares of the capital stock of the affiliate, and except if the specified debtor is(I)a non-resident person with which the corporation does not deal at arm’s length, or(II)a partnership any member of which is a person described in subclause (I), or(ii)the income of the corporation under subsection 91(5), in respect of the taxable surplus of a foreign affiliate of the corporation, unless the specified debtor is a person or partnership described in subclause (i)(D)(I) or (II);
(A)paragraph 113(1)(a), in respect of the exempt surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation,(B)paragraph 113(1)(a.1), in respect of the hybrid surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation, if the amount of that hybrid surplus is less than or equal to the amount determined by the formula[A × (B – 0.5)] + (C × 0.5)whereAis the affiliate’s hybrid underlying tax in respect of the corporation at the lending time,Bis the corporation’s relevant tax factor (within the meaning assigned by subsection 95(1)) for the corporation’s taxation year that includes the lending time, andCis the affiliate’s hybrid surplus in respect of the corporation at the lending time,(C)paragraph 113(1)(b), in respect of the taxable surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation, and(D)paragraph 113(1)(d), in respect of the pre-acquisition surplus — at the lending time, in respect of the corporation — of a foreign affiliate of the corporation to the extent of the adjusted cost base to the corporation, at the lending time, of the shares of the capital stock of the affiliate, and except if the specified debtor is(I)a non-resident person with which the corporation does not deal at arm’s length, or(II)a partnership any member of which is a person described in subclause (I), or
(I)a non-resident person with which the corporation does not deal at arm’s length, or(II)a partnership any member of which is a person described in subclause (I), or
(a)each amount that may reasonably be considered to be the corporation’s share (determined in a manner consistent with the determination of the corporation’s share of the income of the partnership under subsection 96(1)) of each specified amount that is required to be included in computing the income of the partnership for that fiscal period under subsection (6), in respect of a particular loan or indebtedness, is deemed to be a specified amount in respect of the particular loan or indebtedness that was included in the corporation’s income, for its taxation year that includes the last day of that fiscal period, under subsection (6);(b)subparagraph (9)(a)(i) is to be read without reference to its clause (D);(c)subparagraph (9)(a)(ii) is to be read as follows:(ii)the income of the partnership, referred to in subsection (10), under subsection 91(5), in respect of the taxable surplus of a foreign affiliate of the partnership, to the extent of the amount that may reasonably be considered to be the corporation’s share of that deduction (determined in a manner consistent with the determination of the corporation’s share of the income of the partnership under subsection 96(1));(d)paragraph (9)(b) is to be read as follows:(b)that exempt surplus, hybrid surplus, or taxable surplus is not relevant in applying this subsection in respect of any other loan made or indebtedness incurred, or in respect of any deduction claimed under subsection 91(5) or 113(1) in respect of a dividend paid, during the period in which the particular loan or indebtedness is outstanding; and(e)subsection (9) is to be read without reference to its paragraph (c).
(ii)the income of the partnership, referred to in subsection (10), under subsection 91(5), in respect of the taxable surplus of a foreign affiliate of the partnership, to the extent of the amount that may reasonably be considered to be the corporation’s share of that deduction (determined in a manner consistent with the determination of the corporation’s share of the income of the partnership under subsection 96(1));
(b)that exempt surplus, hybrid surplus, or taxable surplus is not relevant in applying this subsection in respect of any other loan made or indebtedness incurred, or in respect of any deduction claimed under subsection 91(5) or 113(1) in respect of a dividend paid, during the period in which the particular loan or indebtedness is outstanding; and
(a)a creditor affiliate of the taxpayer, the percentage that is or would be, if the taxpayer referred to in subsection (6) were a corporation resident in Canada, the taxpayer’s surplus entitlement percentage (in this definition determined without reference to subsection 5908(1) of theIncome Tax Regulations) in respect of the creditor affiliate at the time (referred to in this definition as the “determination time”) referred to in subsection (6), or(b)a creditor partnership of which a foreign affiliate of the taxpayer is a member, the total of each percentage determined, in respect of a member (referred to in this paragraph as a “member affiliate”) of the creditor partnership that is a foreign affiliate of the taxpayer, by the formulaD × E/FwhereDis the percentage that is or would be, if the taxpayer were a corporation resident in Canada, the taxpayer’s surplus entitlement percentage in respect of a particular member affiliate at the determination time,Eis the fair market value, at the determination time, of the particular member affiliate’s direct or indirect interest in the creditor partnership, andFis the fair market value, at the determination time, of all interests in the creditor partnership, and
(a)if the debtor under the loan or indebtedness is(i)another foreign affiliate of the taxpayer, the percentage that is or would be, if the taxpayer were a corporation resident in Canada, the taxpayer’s surplus entitlement percentage in respect of the other affiliate at the determination time, or(ii)a partnership (referred to in this paragraph as the “borrower partnership”) of which one or more other foreign affiliates of the taxpayer are members, the total of each percentage that is determined by the following formula in respect of each such memberG × H/IwhereGis the percentage that is or would be, if the taxpayer were a corporation resident in Canada, the taxpayer’s surplus entitlement percentage in respect of a particular member of the borrower partnership at the determination time,His the fair market value, at the determination time, of the particular member’s direct or indirect interest in the borrower partnership, andIis the fair market value, at the determination time, of all interests in the borrower partnership, and(b)in any other case, nil. (montant déterminé)
(i)another foreign affiliate of the taxpayer, the percentage that is or would be, if the taxpayer were a corporation resident in Canada, the taxpayer’s surplus entitlement percentage in respect of the other affiliate at the determination time, or(ii)a partnership (referred to in this paragraph as the “borrower partnership”) of which one or more other foreign affiliates of the taxpayer are members, the total of each percentage that is determined by the following formula in respect of each such memberG × H/IwhereGis the percentage that is or would be, if the taxpayer were a corporation resident in Canada, the taxpayer’s surplus entitlement percentage in respect of a particular member of the borrower partnership at the determination time,His the fair market value, at the determination time, of the particular member’s direct or indirect interest in the borrower partnership, andIis the fair market value, at the determination time, of all interests in the borrower partnership, and
(a)the taxpayer;(b)a person with which the taxpayer does not, at that time, deal at arm’s length, other than(i)a non-resident corporation that is at that time acontrolled foreign affiliate, within the meaning assigned by section 17, of the taxpayer, or(ii)a non-resident corporation (other than a corporation that is described in subparagraph (i)) that is, at that time, a foreign affiliate of the taxpayer, if each share of the capital stock of the affiliate is owned at that time by any of(A)the taxpayer,(B)persons resident in Canada,(C)non-resident persons that deal at arm’s length with the taxpayer,(D)persons described in subparagraph (i),(E)partnerships, each member of which is described in any of clauses (A) to (F), and(F)a corporation each shareholder of which is described in any of clauses (A) to (F);(c)a partnership a member of which is at that time a person or partnership that is a specified debtor in respect of the taxpayer because of paragraph (a) or (b); and(d)if the taxpayer is a partnership,(i)any member of the partnership that is a corporation resident in Canada if the creditor affiliate, or member of the creditor partnership, as the case may be, is, at that time, a foreign affiliate of the corporation,(ii)a person with which a corporation referred to in subparagraph (i) does not, at that time, deal at arm’s length, other than a controlled foreign affiliate, within the meaning assigned by section 17, of the partnership or of a member of the partnership that owns, directly or indirectly, an interest in the partnership representing at least 90% of the fair market value of all such interests, or(iii)a partnership a member of which is at that time a person that is a specified debtor in respect of the taxpayer because of subparagraph (i) or (ii). (débiteur déterminé)
(i)a non-resident corporation that is at that time acontrolled foreign affiliate, within the meaning assigned by section 17, of the taxpayer, or(ii)a non-resident corporation (other than a corporation that is described in subparagraph (i)) that is, at that time, a foreign affiliate of the taxpayer, if each share of the capital stock of the affiliate is owned at that time by any of(A)the taxpayer,(B)persons resident in Canada,(C)non-resident persons that deal at arm’s length with the taxpayer,(D)persons described in subparagraph (i),(E)partnerships, each member of which is described in any of clauses (A) to (F), and(F)a corporation each shareholder of which is described in any of clauses (A) to (F);
(A)the taxpayer,(B)persons resident in Canada,(C)non-resident persons that deal at arm’s length with the taxpayer,(D)persons described in subparagraph (i),(E)partnerships, each member of which is described in any of clauses (A) to (F), and(F)a corporation each shareholder of which is described in any of clauses (A) to (F);
(i)any member of the partnership that is a corporation resident in Canada if the creditor affiliate, or member of the creditor partnership, as the case may be, is, at that time, a foreign affiliate of the corporation,(ii)a person with which a corporation referred to in subparagraph (i) does not, at that time, deal at arm’s length, other than a controlled foreign affiliate, within the meaning assigned by section 17, of the partnership or of a member of the partnership that owns, directly or indirectly, an interest in the partnership representing at least 90% of the fair market value of all such interests, or(iii)a partnership a member of which is at that time a person that is a specified debtor in respect of the taxpayer because of subparagraph (i) or (ii). (débiteur déterminé)
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]R.S., 1985, c. 1 (5th Supp.), s. 902013, c. 34, s. 662014, c. 39, s. 202017, c. 33, s. 27
91(1)In computing the income for a taxation year of a taxpayer resident in Canada, there shall be included, in respect of each share owned by the taxpayer of the capital stock of a controlled foreign affiliate of the taxpayer, as income from the share, the percentage of the foreign accrual property income of any controlled foreign affiliate of the taxpayer, for each taxation year of the affiliate ending in the taxation year of the taxpayer, equal to that share’s participating percentage in respect of the affiliate, determined at the end of each such taxation year of the affiliate.Marginal note:Conditions for application of subsection (1.2)(1.1)Subsection (1.2) applies at a particular time in respect of a particular foreign affiliate of a taxpayer resident in Canada if(a)an amount would be included under subsection (1) in computing the income of the taxpayer, in respect of a share of the particular affiliate or another foreign affiliate of the taxpayer that has anequity percentage(as defined in subsection 95(4)) in the particular affiliate, for the taxation year of the particular affiliate (determined without reference to subsection (1.2)) that includes the particular time (referred to in this subsection and subsection (1.3) as the “ordinary taxation year” of the particular affiliate), if the ordinary taxation year of the particular affiliate ended at the particular time;(b)immediately after the particular time, there is(i)an acquisition of control of the taxpayer, or(ii)a triggering event that can reasonably be considered to result in a change in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate;(c)if subparagraph (b)(i) applies, all or a portion of an amount described in paragraph 95(2)(f) that accrued to the particular affiliate during the portion of the ordinary taxation year of the particular affiliate before the particular time is excluded in computing the income of another taxpayer because paragraph 95(2)(f.1) applies as a result of the taxpayer being, at a time before the acquisition of control, a designated acquired corporation of the other taxpayer; and(d)if subparagraph (b)(ii) applies, none of the following is the case:(i)the change referred to in that subparagraph(A)is a decrease, and(B)is equal to the total of all amounts each of which is the increase — that can reasonably be considered to result from the triggering event — in the aggregate participating percentage of another taxpayer, in respect of the particular affiliate for the ordinary taxation year of the particular affiliate, if the other taxpayer(I)is a person resident in Canada, other than a person that is — or a trust, any of the beneficiaries under which is — by reason of a statutory provision, exempt from tax under this Part, and(II)is related to the taxpayer,1if the triggering event results from a winding-up of the taxpayer to which subsection 88(1) applies, at the particular time, and2in any other case, immediately after the particular time,(ii)the triggering event is on anamalgamationas defined in subsection 87(1),(iii)the triggering event is an excluded acquisition or disposition, in respect of the ordinary taxation year of the particular affiliate, and(iv)if one or more triggering events — all of which are described in subparagraph (b)(ii) and in respect of which none of the conditions in subparagraphs (i) to (iii) are satisfied — occur in the ordinary taxation year of the particular affiliate, the percentage determined by the following formula is not greater than 5%:A — BwhereAis the total of all amounts each of which is the decrease — which can reasonably be considered to result from a triggering event described in subparagraph (b)(ii) (other than a triggering event that satisfies the conditions in subparagraph (i) or (ii)) — in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate, andBis the total of all amounts each of which is the increase — which can reasonably be considered to result from a triggering event described in subparagraph (b)(ii) (other than a triggering event that satisfies the conditions in subparagraph (i) or (ii)) — in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate.Marginal note:Deemed year-end(1.2)If this subsection applies at a particular time in respect of a foreign affiliate of a particular taxpayer resident in Canada, then for the purposes of this section and section 92,(a)in respect of the particular taxpayer and each connected person, or connected partnership, in respect of the particular taxpayer, the affiliate’s taxation year that would, in the absence of this subsection, have included the particular time is deemed to have ended at the time (referred to in this section as the “stub-period end time”) that is immediately before the particular time;(b)if the affiliate is, immediately after the particular time, a foreign affiliate of the particular taxpayer or a connected person, or connected partnership, in respect of the particular taxpayer, the affiliate’s next taxation year after the stub-period end time is deemed, in respect of the particular taxpayer or the connected person or connected partnership, as the case may be, to begin immediately after the particular time; and(c)in determining the foreign accrual property income of the affiliate for the taxation year referred to in paragraph (a) in respect of the particular taxpayer or a connected person or connected partnership, in respect of the particular taxpayer, all transactions or events that occur at the particular time are deemed to occur at the stub-period end time.Marginal note:Definitions(1.3)The following definitions apply in this subsection and subsections (1.1) and (1.2).aggregate participating percentageaggregate participating percentage, of a taxpayer in respect of a foreign affiliate of the taxpayer for a taxation year of the affiliate, means the total of all amounts, each of which is the participating percentage, in respect of the affiliate, of a share of the capital stock of a corporation that is owned by the taxpayer at the end of the taxation year. (pourcentage de participation total)connected personconnected person, in respect of a particular taxpayer, means a person that — at or immediately after the particular time at which subsection (1.2) applies in respect of a foreign affiliate of the particular taxpayer — is resident in Canada and(a)does not deal at arm’s length with the particular taxpayer; or(b)deals at arm’s length with the particular taxpayer, if(i)the foreign affiliate is a foreign affiliate of the person at the particular time, and(ii)the aggregate participating percentage of the person in respect of the foreign affiliate for the affiliate’s ordinary taxation year may reasonably be considered to have increased as a result of the triggering event that gave rise to the application of subsection (1.2). (personne rattachée)connected partnershipconnected partnership, in respect of a particular taxpayer, means a partnership if, at or immediately after the particular time at which subsection (1.2) applies in respect of a foreign affiliate of the particular taxpayer,(a)the particular taxpayer or a connected person in respect of the particular taxpayer is, directly or indirectly through one or more partnerships, a member of the partnership; or(b)if paragraph (a) does not apply,(i)the foreign affiliate is a foreign affiliate of the partnership at the particular time, and(ii)the aggregate participating percentage of the partnership in respect of the foreign affiliate for the affiliate’s ordinary taxation year may reasonably be considered to have increased as a result of the triggering event that gave rise to the application of subsection (1.2). (société de personnes rattachée)excluded acquisition or dispositionexcluded acquisition or disposition, in respect of a taxation year of a foreign affiliate of a taxpayer, means an acquisition or disposition of an equity interest in a corporation, partnership or trust that can reasonably be considered to result in a change in the aggregate participating percentage of the taxpayer in respect of the affiliate for the taxation year of the affiliate, if(a)the change is less than 1%; and(b)it cannot reasonably be considered that one of the main reasons the acquisition or disposition occurs as a separate acquisition or disposition from one or more other acquisitions or dispositions is to avoid the application of subsection (1.2). (acquisition ou disposition exclue)triggering eventtriggering eventmeans(a)an acquisition or disposition of an equity interest in a corporation, partnership or trust;(b)a change in the terms or conditions of a share of the capital stock of a corporation or the rights as a member of a partnership or as a beneficiary under a trust; and(c)a disposition or change of a right referred to in paragraph 95(6)(a). (événement déclencheur)Marginal note:Election for application of subsection (1.2)(1.4)If the conditions in subsection (1.1) are not met at a particular time in respect of a particular foreign affiliate of a taxpayer resident in Canada, subsection (1.2) applies in respect of the particular affiliate at that time if(a)the conditions in paragraph (1.1)(a) are met in respect of the particular affiliate at the particular time;(b)immediately after the particular time there is a disposition of shares of the capital stock of the particular affiliate or another foreign affiliate of the taxpayer that had anequity percentage(as defined in subsection 95(4)) in the particular affiliate by(i)the taxpayer, or(ii)a controlled foreign affiliate of the taxpayer; and(c)the taxpayer and all specified corporations jointly elect in writing to apply subsection (1.2) in respect of the disposition and file the election with the Minister on or before the day that is the earliest filing-due date for all taxpayers making the election in respect of the taxation year in which the transaction to which the election relates occurred, and for this purpose, aspecified corporationmeans a corporation that at or immediately after the particular time meets the following conditions:(i)the corporation is resident in Canada,(ii)the corporation does not deal at arm’s length with the taxpayer, and(iii)the particular affiliate is a foreign affiliate of the corporation, or of a partnership of which the corporation is, directly or indirectly through one or more partnerships, a member.(1.5)[Repealed, 2017, c. 33, s. 28]Marginal note:Reserve where foreign exchange restriction(2)Where an amount in respect of a share has been included in computing the income of a taxpayer for a taxation year by virtue of subsection 91(1) or 91(3) and the Minister is satisfied that, by reason of the operation of monetary or exchange restrictions of a country other than Canada, the inclusion of the whole amount with no deduction for a reserve in respect thereof would impose undue hardship on the taxpayer, there may be deducted in computing the taxpayer’s income for the year such amount as a reserve in respect of the amount so included as the Minister deems reasonable in the circumstances.Marginal note:Reserve for preceding year to be included(3)In computing the income of a taxpayer for a taxation year, there shall be included each amount in respect of a share that was deducted by virtue of subsection 91(2) in computing the taxpayer’s income for the immediately preceding year.Marginal note:Amounts deductible in respect of foreign taxes(4)Where, by virtue of subsection 91(1), an amount in respect of a share has been included in computing the income of a taxpayer for a taxation year or for any of the 5 immediately preceding taxation years (in this subsection referred to as the “income amount”), there may be deducted in computing the taxpayer’s income for the year the lesser of(a)the product obtained when(i)the portion of the foreign accrual tax applicable to the income amount that was not deductible under this subsection in any previous yearis multiplied by(ii)the taxpayer’s relevant tax factor for the year, and(b)the amount, if any, by which the income amount exceeds the total of the amounts in respect of that share deductible under this subsection in any of the 5 immediately preceding taxation years in respect of the income amount.Marginal note:Denial of foreign accrual tax(4.1)For the purposes of the definitionforeign accrual taxin subsection 95(1), foreign accrual tax applicable to a particular amount included in computing a taxpayer’s income under subsection (1) for a taxation year of the taxpayer in respect of a particular foreign affiliate of the taxpayer is not to include the amount that would, in the absence of this subsection, be foreign accrual tax applicable to the particular amount if, at any time in the taxation year (referred to in this subsection as the “affiliate year”) of the particular affiliate that ends in the taxation year of the taxpayer,(a)a specified owner in respect of the taxpayer is considered,(i)under the income tax laws (referred to in subsections (4.5) and (4.6) as the “relevant foreign tax law”) of any country other than Canada under the laws of which any income of a particular corporation — that is, at any time in the affiliate year, a pertinent person or partnership in respect of the particular affiliate — is subject to income taxation, to own less than all of the shares of the capital stock of the particular corporation that are considered to be owned by the specified owner for the purposes of this Act, or(ii)under the income tax laws (referred to in subsections (4.5) and (4.6) as the “relevant foreign tax law”) of any country other than Canada under the laws of which any income of a particular partnership — that is, at any time in the affiliate year, a pertinent person or partnership in respect of the particular affiliate — is subject to income taxation, to have a lesser direct or indirect share of the income of the particular partnership than the specified owner is considered to have for the purposes of this Act; or(b)where the taxpayer is a partnership, the direct or indirect share of the income of the partnership of any member of the partnership that is, at any time in the affiliate year, a person resident in Canada or a foreign affiliate of such a person is, under the income tax laws (referred to in subsection (4.6) as the “relevant foreign tax law”) of any country other than Canada under the laws of which any income of the partnership is subject to income taxation, less than the member’s direct or indirect share of that income for the purposes of this Act.Marginal note:Specified owner(4.2)For the purposes of subsections (4.1) and (4.5), aspecified owner, at any time, in respect of a taxpayer means the taxpayer or a person or partnership that is, at that time,(a)a partnership of which the taxpayer is a member;(b)a foreign affiliate of the taxpayer;(c)a partnership a member of which is a foreign affiliate of the taxpayer; or(d)a person or partnership referred to in any of subparagraphs (4.4)(a)(i) to (iii).Marginal note:Pertinent person or partnership(4.3)For the purposes of this subsection and subsection (4.1), apertinent person or partnership, at any time, in respect of a particular foreign affiliate of a taxpayer means the particular affiliate or a person or partnership that is, at that time,(a)another foreign affiliate of the taxpayer(i)in which the particular affiliate has an equity percentage, or(ii)that has an equity percentage in the particular affiliate;(b)a partnership a member of which is at that time a pertinent person or partnership in respect of the particular affiliate under this subsection; or(c)a person or partnership referred to in any of subparagraphs (4.4)(b)(i) to (iii).Marginal note:Series of transactions(4.4)For the purposes of subsections (4.2) and (4.3), if, as part of a series of transactions or events that includes the earning of the foreign accrual property income that gave rise to the particular amount referred to in subsection (4.1), a foreign affiliate (referred to in this subsection as the “funding affiliate”) of the taxpayer or of a person (referred to in this subsection as the “related person”) resident in Canada that is related to the taxpayer, or a partnership (referred to in this subsection as the “funding partnership”) of which such an affiliate is a member, directly or indirectly provided funding to the particular affiliate, or a partnership of which the particular affiliate is a member, otherwise than by way of loans or other indebtedness that are subject to terms or conditions made or imposed, in respect of the loans or other indebtedness, that do not differ from those that would be made or imposed between persons dealing at arm’s length or by way of an acquisition of shares of the capital stock of any corporation, then(a)if the funding affiliate is, or the funding partnership has a member that is, a foreign affiliate of the related person, the following persons and partnerships are deemed, at all times during which the foreign accrual property income is earned by the particular affiliate, to be specified owners in respect of the taxpayer:(i)the related person,(ii)each foreign affiliate of the related person, and(iii)each partnership a member of which is a person referred to in subparagraph (i) or (ii); and(b)the following persons and partnerships are deemed, at all times during which the foreign accrual property income is earned by the particular affiliate, to be pertinent persons or partnerships in respect of the particular affiliate:(i)the funding affiliate or the funding partnership,(ii)a non-resident corporation(A)in which the funding affiliate has an equity percentage, or(B)that has an equity percentage in the funding affiliate, and(iii)a partnership a member of which is a person or partnership referred to in subparagraph (i) or (ii).Marginal note:Exception — hybrid entities(4.5)For the purposes of subparagraph (4.1)(a)(i), a specified owner in respect of the taxpayer is not to be considered, under the relevant foreign tax law, to own less than all of the shares of the capital stock of a corporation that are considered to be owned for the purposes of this Act solely because the specified owner or the corporation is not treated as a corporation under the relevant foreign tax law.Marginal note:Exceptions — partnerships(4.6)For the purposes of subparagraph (4.1)(a)(ii) and paragraph (4.1)(b), a member of a partnership is not to be considered to have a lesser direct or indirect share of the income of the partnership under the relevant foreign tax law than for the purposes of this Act solely because of one or more of the following:(a)a difference between the relevant foreign tax law and this Act in the manner of(i)computing the income of the partnership, or(ii)allocating the income of the partnership because of the admission to, or withdrawal from, the partnership of any of its members;(b)the treatment of the partnership as a corporation under the relevant foreign tax law; or(c)the fact that the member is not treated as a corporation under the relevant foreign tax law.Marginal note:Deemed ownership(4.7)For the purposes of subsection (4.1), if a specified owner owns, for the purposes of this Act, shares of the capital stock of a corporation and the dividends, or similar amounts, in respect of those shares are treated under the income tax laws of any country other than Canada under the laws of which any income of the corporation is subject to income taxation as interest or another form of deductible payment, the specified owner is deemed to be considered, under those tax laws, to own less than all of the shares of the capital stock of the corporation that are considered to be owned by the specified owner for the purposes of this Act.Marginal note:Amounts deductible in respect of dividends received(5)Where in a taxation year a taxpayer resident in Canada has received a dividend on a share of the capital stock of a corporation that was at any time a controlled foreign affiliate of the taxpayer, there may be deducted, in respect of such portion of the dividend as is prescribed to have been paid out of the taxable surplus of the affiliate, in computing the taxpayer’s income for the year, the lesser of(a)the amount by which that portion of the dividend exceeds the amount, if any, deductible in respect thereof under paragraph 113(1)(b), and(b)the amount, if any, by which(i)the total of all amounts required by paragraph 92(1)(a) to be added in computing the adjusted cost base to the taxpayer of the share before the dividend was so received by the taxpayerexceeds(ii)the total of all amounts required by paragraph 92(1)(b) to be deducted in computing the adjusted cost base to the taxpayer of the share before the dividend was so received by the taxpayer.(5.1) to (5.3)[Repealed, 2009, c. 2, s. 23]Marginal note:Idem(6)Where a share of the capital stock of a foreign affiliate of a taxpayer that is a taxable Canadian corporation is acquired by the taxpayer from another corporation resident in Canada with which the taxpayer is not dealing at arm’s length, for the purpose of subsection 91(5), any amount required by section 92 to be added or deducted, as the case may be, in computing the adjusted cost base to the other corporation of the share shall be deemed to have been so required to be added or deducted, as the case may be, in computing the adjusted cost base to the taxpayer of the share.Marginal note:Shares acquired from a partnership(7)For the purpose of subsection (5), where a taxpayer resident in Canada acquires a share of the capital stock of a corporation that is immediately after the acquisition a foreign affiliate of the taxpayer from a partnership of which the taxpayer, or a corporation resident in Canada with which the taxpayer was not dealing at arm’s length at the time the share was acquired, was a member (each such person referred to in this subsection as the “member”) at any time during any fiscal period of the partnership that began before the acquisition,(a)that portion of any amount required by subsection 92(1) to be added to the adjusted cost base to the partnership of the share of the capital stock of the foreign affiliate equal to the amount included in the income of the member because of subsection 96(1) in respect of the amount that was included in the income of the partnership because of subsection (1) or (3) in respect of the foreign affiliate and added to that adjusted cost base, and(b)that portion of any amount required by subsection 92(1) to be deducted from the adjusted cost base to the partnership of the share of the capital stock of the foreign affiliate equal to the amount by which the income of the member from the partnership under subsection 96(1) was reduced because of the amount deducted in computing the income of the partnership under subsection (2), (4) or (5) and deducted from that adjusted cost baseis deemed to be an amount required by subsection 92(1) to be added or deducted, as the case may be, in computing the adjusted cost base to the taxpayer of the share.
(a)an amount would be included under subsection (1) in computing the income of the taxpayer, in respect of a share of the particular affiliate or another foreign affiliate of the taxpayer that has anequity percentage(as defined in subsection 95(4)) in the particular affiliate, for the taxation year of the particular affiliate (determined without reference to subsection (1.2)) that includes the particular time (referred to in this subsection and subsection (1.3) as the “ordinary taxation year” of the particular affiliate), if the ordinary taxation year of the particular affiliate ended at the particular time;(b)immediately after the particular time, there is(i)an acquisition of control of the taxpayer, or(ii)a triggering event that can reasonably be considered to result in a change in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate;(c)if subparagraph (b)(i) applies, all or a portion of an amount described in paragraph 95(2)(f) that accrued to the particular affiliate during the portion of the ordinary taxation year of the particular affiliate before the particular time is excluded in computing the income of another taxpayer because paragraph 95(2)(f.1) applies as a result of the taxpayer being, at a time before the acquisition of control, a designated acquired corporation of the other taxpayer; and(d)if subparagraph (b)(ii) applies, none of the following is the case:(i)the change referred to in that subparagraph(A)is a decrease, and(B)is equal to the total of all amounts each of which is the increase — that can reasonably be considered to result from the triggering event — in the aggregate participating percentage of another taxpayer, in respect of the particular affiliate for the ordinary taxation year of the particular affiliate, if the other taxpayer(I)is a person resident in Canada, other than a person that is — or a trust, any of the beneficiaries under which is — by reason of a statutory provision, exempt from tax under this Part, and(II)is related to the taxpayer,1if the triggering event results from a winding-up of the taxpayer to which subsection 88(1) applies, at the particular time, and2in any other case, immediately after the particular time,(ii)the triggering event is on anamalgamationas defined in subsection 87(1),(iii)the triggering event is an excluded acquisition or disposition, in respect of the ordinary taxation year of the particular affiliate, and(iv)if one or more triggering events — all of which are described in subparagraph (b)(ii) and in respect of which none of the conditions in subparagraphs (i) to (iii) are satisfied — occur in the ordinary taxation year of the particular affiliate, the percentage determined by the following formula is not greater than 5%:A — BwhereAis the total of all amounts each of which is the decrease — which can reasonably be considered to result from a triggering event described in subparagraph (b)(ii) (other than a triggering event that satisfies the conditions in subparagraph (i) or (ii)) — in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate, andBis the total of all amounts each of which is the increase — which can reasonably be considered to result from a triggering event described in subparagraph (b)(ii) (other than a triggering event that satisfies the conditions in subparagraph (i) or (ii)) — in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate.
(i)an acquisition of control of the taxpayer, or(ii)a triggering event that can reasonably be considered to result in a change in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate;
(i)the change referred to in that subparagraph(A)is a decrease, and(B)is equal to the total of all amounts each of which is the increase — that can reasonably be considered to result from the triggering event — in the aggregate participating percentage of another taxpayer, in respect of the particular affiliate for the ordinary taxation year of the particular affiliate, if the other taxpayer(I)is a person resident in Canada, other than a person that is — or a trust, any of the beneficiaries under which is — by reason of a statutory provision, exempt from tax under this Part, and(II)is related to the taxpayer,1if the triggering event results from a winding-up of the taxpayer to which subsection 88(1) applies, at the particular time, and2in any other case, immediately after the particular time,(ii)the triggering event is on anamalgamationas defined in subsection 87(1),(iii)the triggering event is an excluded acquisition or disposition, in respect of the ordinary taxation year of the particular affiliate, and(iv)if one or more triggering events — all of which are described in subparagraph (b)(ii) and in respect of which none of the conditions in subparagraphs (i) to (iii) are satisfied — occur in the ordinary taxation year of the particular affiliate, the percentage determined by the following formula is not greater than 5%:A — BwhereAis the total of all amounts each of which is the decrease — which can reasonably be considered to result from a triggering event described in subparagraph (b)(ii) (other than a triggering event that satisfies the conditions in subparagraph (i) or (ii)) — in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate, andBis the total of all amounts each of which is the increase — which can reasonably be considered to result from a triggering event described in subparagraph (b)(ii) (other than a triggering event that satisfies the conditions in subparagraph (i) or (ii)) — in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate.
(A)is a decrease, and(B)is equal to the total of all amounts each of which is the increase — that can reasonably be considered to result from the triggering event — in the aggregate participating percentage of another taxpayer, in respect of the particular affiliate for the ordinary taxation year of the particular affiliate, if the other taxpayer(I)is a person resident in Canada, other than a person that is — or a trust, any of the beneficiaries under which is — by reason of a statutory provision, exempt from tax under this Part, and(II)is related to the taxpayer,1if the triggering event results from a winding-up of the taxpayer to which subsection 88(1) applies, at the particular time, and2in any other case, immediately after the particular time,
(I)is a person resident in Canada, other than a person that is — or a trust, any of the beneficiaries under which is — by reason of a statutory provision, exempt from tax under this Part, and(II)is related to the taxpayer,1if the triggering event results from a winding-up of the taxpayer to which subsection 88(1) applies, at the particular time, and2in any other case, immediately after the particular time,
(a)in respect of the particular taxpayer and each connected person, or connected partnership, in respect of the particular taxpayer, the affiliate’s taxation year that would, in the absence of this subsection, have included the particular time is deemed to have ended at the time (referred to in this section as the “stub-period end time”) that is immediately before the particular time;(b)if the affiliate is, immediately after the particular time, a foreign affiliate of the particular taxpayer or a connected person, or connected partnership, in respect of the particular taxpayer, the affiliate’s next taxation year after the stub-period end time is deemed, in respect of the particular taxpayer or the connected person or connected partnership, as the case may be, to begin immediately after the particular time; and(c)in determining the foreign accrual property income of the affiliate for the taxation year referred to in paragraph (a) in respect of the particular taxpayer or a connected person or connected partnership, in respect of the particular taxpayer, all transactions or events that occur at the particular time are deemed to occur at the stub-period end time.
(a)does not deal at arm’s length with the particular taxpayer; or(b)deals at arm’s length with the particular taxpayer, if(i)the foreign affiliate is a foreign affiliate of the person at the particular time, and(ii)the aggregate participating percentage of the person in respect of the foreign affiliate for the affiliate’s ordinary taxation year may reasonably be considered to have increased as a result of the triggering event that gave rise to the application of subsection (1.2). (personne rattachée)
(i)the foreign affiliate is a foreign affiliate of the person at the particular time, and(ii)the aggregate participating percentage of the person in respect of the foreign affiliate for the affiliate’s ordinary taxation year may reasonably be considered to have increased as a result of the triggering event that gave rise to the application of subsection (1.2). (personne rattachée)
(a)the particular taxpayer or a connected person in respect of the particular taxpayer is, directly or indirectly through one or more partnerships, a member of the partnership; or(b)if paragraph (a) does not apply,(i)the foreign affiliate is a foreign affiliate of the partnership at the particular time, and(ii)the aggregate participating percentage of the partnership in respect of the foreign affiliate for the affiliate’s ordinary taxation year may reasonably be considered to have increased as a result of the triggering event that gave rise to the application of subsection (1.2). (société de personnes rattachée)
(i)the foreign affiliate is a foreign affiliate of the partnership at the particular time, and(ii)the aggregate participating percentage of the partnership in respect of the foreign affiliate for the affiliate’s ordinary taxation year may reasonably be considered to have increased as a result of the triggering event that gave rise to the application of subsection (1.2). (société de personnes rattachée)
(a)the change is less than 1%; and(b)it cannot reasonably be considered that one of the main reasons the acquisition or disposition occurs as a separate acquisition or disposition from one or more other acquisitions or dispositions is to avoid the application of subsection (1.2). (acquisition ou disposition exclue)
(a)an acquisition or disposition of an equity interest in a corporation, partnership or trust;(b)a change in the terms or conditions of a share of the capital stock of a corporation or the rights as a member of a partnership or as a beneficiary under a trust; and(c)a disposition or change of a right referred to in paragraph 95(6)(a). (événement déclencheur)
(a)the conditions in paragraph (1.1)(a) are met in respect of the particular affiliate at the particular time;(b)immediately after the particular time there is a disposition of shares of the capital stock of the particular affiliate or another foreign affiliate of the taxpayer that had anequity percentage(as defined in subsection 95(4)) in the particular affiliate by(i)the taxpayer, or(ii)a controlled foreign affiliate of the taxpayer; and(c)the taxpayer and all specified corporations jointly elect in writing to apply subsection (1.2) in respect of the disposition and file the election with the Minister on or before the day that is the earliest filing-due date for all taxpayers making the election in respect of the taxation year in which the transaction to which the election relates occurred, and for this purpose, aspecified corporationmeans a corporation that at or immediately after the particular time meets the following conditions:(i)the corporation is resident in Canada,(ii)the corporation does not deal at arm’s length with the taxpayer, and(iii)the particular affiliate is a foreign affiliate of the corporation, or of a partnership of which the corporation is, directly or indirectly through one or more partnerships, a member.
(i)the taxpayer, or(ii)a controlled foreign affiliate of the taxpayer; and
(i)the corporation is resident in Canada,(ii)the corporation does not deal at arm’s length with the taxpayer, and(iii)the particular affiliate is a foreign affiliate of the corporation, or of a partnership of which the corporation is, directly or indirectly through one or more partnerships, a member.
(a)the product obtained when(i)the portion of the foreign accrual tax applicable to the income amount that was not deductible under this subsection in any previous yearis multiplied by(ii)the taxpayer’s relevant tax factor for the year, and(b)the amount, if any, by which the income amount exceeds the total of the amounts in respect of that share deductible under this subsection in any of the 5 immediately preceding taxation years in respect of the income amount.
(i)the portion of the foreign accrual tax applicable to the income amount that was not deductible under this subsection in any previous year
(ii)the taxpayer’s relevant tax factor for the year, and
(a)a specified owner in respect of the taxpayer is considered,(i)under the income tax laws (referred to in subsections (4.5) and (4.6) as the “relevant foreign tax law”) of any country other than Canada under the laws of which any income of a particular corporation — that is, at any time in the affiliate year, a pertinent person or partnership in respect of the particular affiliate — is subject to income taxation, to own less than all of the shares of the capital stock of the particular corporation that are considered to be owned by the specified owner for the purposes of this Act, or(ii)under the income tax laws (referred to in subsections (4.5) and (4.6) as the “relevant foreign tax law”) of any country other than Canada under the laws of which any income of a particular partnership — that is, at any time in the affiliate year, a pertinent person or partnership in respect of the particular affiliate — is subject to income taxation, to have a lesser direct or indirect share of the income of the particular partnership than the specified owner is considered to have for the purposes of this Act; or(b)where the taxpayer is a partnership, the direct or indirect share of the income of the partnership of any member of the partnership that is, at any time in the affiliate year, a person resident in Canada or a foreign affiliate of such a person is, under the income tax laws (referred to in subsection (4.6) as the “relevant foreign tax law”) of any country other than Canada under the laws of which any income of the partnership is subject to income taxation, less than the member’s direct or indirect share of that income for the purposes of this Act.
(i)under the income tax laws (referred to in subsections (4.5) and (4.6) as the “relevant foreign tax law”) of any country other than Canada under the laws of which any income of a particular corporation — that is, at any time in the affiliate year, a pertinent person or partnership in respect of the particular affiliate — is subject to income taxation, to own less than all of the shares of the capital stock of the particular corporation that are considered to be owned by the specified owner for the purposes of this Act, or(ii)under the income tax laws (referred to in subsections (4.5) and (4.6) as the “relevant foreign tax law”) of any country other than Canada under the laws of which any income of a particular partnership — that is, at any time in the affiliate year, a pertinent person or partnership in respect of the particular affiliate — is subject to income taxation, to have a lesser direct or indirect share of the income of the particular partnership than the specified owner is considered to have for the purposes of this Act; or
(a)a partnership of which the taxpayer is a member;(b)a foreign affiliate of the taxpayer;(c)a partnership a member of which is a foreign affiliate of the taxpayer; or(d)a person or partnership referred to in any of subparagraphs (4.4)(a)(i) to (iii).
(a)another foreign affiliate of the taxpayer(i)in which the particular affiliate has an equity percentage, or(ii)that has an equity percentage in the particular affiliate;(b)a partnership a member of which is at that time a pertinent person or partnership in respect of the particular affiliate under this subsection; or(c)a person or partnership referred to in any of subparagraphs (4.4)(b)(i) to (iii).
(i)in which the particular affiliate has an equity percentage, or(ii)that has an equity percentage in the particular affiliate;
(a)if the funding affiliate is, or the funding partnership has a member that is, a foreign affiliate of the related person, the following persons and partnerships are deemed, at all times during which the foreign accrual property income is earned by the particular affiliate, to be specified owners in respect of the taxpayer:(i)the related person,(ii)each foreign affiliate of the related person, and(iii)each partnership a member of which is a person referred to in subparagraph (i) or (ii); and(b)the following persons and partnerships are deemed, at all times during which the foreign accrual property income is earned by the particular affiliate, to be pertinent persons or partnerships in respect of the particular affiliate:(i)the funding affiliate or the funding partnership,(ii)a non-resident corporation(A)in which the funding affiliate has an equity percentage, or(B)that has an equity percentage in the funding affiliate, and(iii)a partnership a member of which is a person or partnership referred to in subparagraph (i) or (ii).
(i)the related person,(ii)each foreign affiliate of the related person, and(iii)each partnership a member of which is a person referred to in subparagraph (i) or (ii); and
(i)the funding affiliate or the funding partnership,(ii)a non-resident corporation(A)in which the funding affiliate has an equity percentage, or(B)that has an equity percentage in the funding affiliate, and(iii)a partnership a member of which is a person or partnership referred to in subparagraph (i) or (ii).
(A)in which the funding affiliate has an equity percentage, or(B)that has an equity percentage in the funding affiliate, and
(a)a difference between the relevant foreign tax law and this Act in the manner of(i)computing the income of the partnership, or(ii)allocating the income of the partnership because of the admission to, or withdrawal from, the partnership of any of its members;(b)the treatment of the partnership as a corporation under the relevant foreign tax law; or(c)the fact that the member is not treated as a corporation under the relevant foreign tax law.
(i)computing the income of the partnership, or(ii)allocating the income of the partnership because of the admission to, or withdrawal from, the partnership of any of its members;
(a)the amount by which that portion of the dividend exceeds the amount, if any, deductible in respect thereof under paragraph 113(1)(b), and(b)the amount, if any, by which(i)the total of all amounts required by paragraph 92(1)(a) to be added in computing the adjusted cost base to the taxpayer of the share before the dividend was so received by the taxpayerexceeds(ii)the total of all amounts required by paragraph 92(1)(b) to be deducted in computing the adjusted cost base to the taxpayer of the share before the dividend was so received by the taxpayer.
(i)the total of all amounts required by paragraph 92(1)(a) to be added in computing the adjusted cost base to the taxpayer of the share before the dividend was so received by the taxpayer
(ii)the total of all amounts required by paragraph 92(1)(b) to be deducted in computing the adjusted cost base to the taxpayer of the share before the dividend was so received by the taxpayer.
(a)that portion of any amount required by subsection 92(1) to be added to the adjusted cost base to the partnership of the share of the capital stock of the foreign affiliate equal to the amount included in the income of the member because of subsection 96(1) in respect of the amount that was included in the income of the partnership because of subsection (1) or (3) in respect of the foreign affiliate and added to that adjusted cost base, and(b)that portion of any amount required by subsection 92(1) to be deducted from the adjusted cost base to the partnership of the share of the capital stock of the foreign affiliate equal to the amount by which the income of the member from the partnership under subsection 96(1) was reduced because of the amount deducted in computing the income of the partnership under subsection (2), (4) or (5) and deducted from that adjusted cost base
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]R.S., 1985, c. 1 (5th Supp.), s. 911994, c. 7, Sch