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Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Full Document:  

Act current to 2022-09-22 and last amended on 2022-09-01. Previous Versions

PART XV.1Reporting of Electronic Funds Transfer (continued)

Marginal note:Electronic funds transfer

  •  (1) Every reporting entity shall file with the Minister an information return in prescribed form in respect of

    • (a) the sending out of Canada, at the request of a client, of an electronic funds transfer of $10,000 or more in the course of a single transaction; or

    • (b) the receipt from outside Canada of an electronic funds transfer, sent at the request of a client, of $10,000 or more in the course of a single transaction.

  • Marginal note:Transfer within Canada

    (2) For greater certainty and subject to subsection (3), subsection (1) does not apply to a reporting entity in respect of an electronic funds transfer if the entity

    • (a) sends the transfer to an entity in Canada, even if the final recipient is outside Canada; or

    • (b) receives the transfer from an entity in Canada, even if the initial sender is outside Canada.

  • Marginal note:Intermediary

    (3) Subsection (1) applies to a reporting entity in respect of an electronic funds transfer if the entity

    • (a) orders another reporting entity to send, at the request of a client, the transfer out of Canada, unless it provides the other reporting entity with the name and address of the client; or

    • (b) receives the transfer for a beneficiary in Canada from another reporting entity in circumstances where the initial sender is outside Canada, unless the transfer contains the name and address of the beneficiary.

  • Marginal note:Transfer conducted by agent

    (4) If a particular reporting entity is an agent of or is authorized to act on behalf of another reporting entity in respect of an electronic funds transfer, subsection (1) applies, in respect of the transfer, to the other reporting entity and not to the particular reporting entity.

  • Marginal note:Entities outside Canada

    (5) Subsection (1) does not apply to an entity described in paragraph (b) of the definition money services business in respect of the services it provides to entities outside Canada.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2014, c. 20, s. 29

Marginal note:Casino

 An electronic funds transfer in respect of which subsection 244.2(1) applies that occurs in the course of a business, temporarily conducted for charitable purposes in the establishment of a casino by a registered charity carried on for not more than two consecutive days at a time under the supervision of the casino, shall be reported by the supervising casino.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2014, c. 20, s. 29

Marginal note:Single transaction

  •  (1) For the purposes of this Part, two or more electronic funds transfers of less than $10,000 each that are made within 24 consecutive hours and that total $10,000 or more are considered to be made in the course of a single transaction of $10,000 or more if

    • (a) an individual, other than a trust, who is a reporting entity knows that the transfers are conducted by, or on behalf of, the same entity; and

    • (b) an employee of a reporting entity, other than an entity described in paragraph (a), knows that the transfers are conducted by, or on behalf of, the same entity.

  • Marginal note:Exception

    (2) For greater certainty, subsection (1) does not apply in respect of an electronic funds transfer sent to two or more beneficiaries if the transfer is requested by

    • (a) an administrator of a pension fund that is regulated by or under an Act of Parliament or of the legislature of a province;

    • (b) a department or agent of Her Majesty in right of Canada or of a province;

    • (c) an incorporated city, town, village, metropolitan authority, township, district, county, rural municipality or other incorporated municipal body or an agent of any of them;

    • (d) an organization that operates a public hospital and that is designated by the Minister as a hospital authority under the Excise Tax Act, or an agent of such an organization; or

    • (e) a corporation that has minimum net assets of $75 million on its last audited balance sheet, whose shares are traded on a Canadian stock exchange or a designated stock exchange and that operates in a country that is a member of the Financial Action Task Force on Money Laundering established in 1989.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2014, c. 20, s. 29

Marginal note:Foreign currency

 If an electronic funds transfer is carried out by a reporting entity in a foreign currency, the amount of the transfer is to be converted into Canadian dollars using

  • (a) the official conversion rate of the Bank of Canada for the currency published in the Bank of Canada’s Daily Memorandum of Exchange Rates that is in effect at the time of the transfer; or

  • (b) if no official conversion rate is set out in that publication for the currency, the conversion rate that the entity would use for the currency in the normal course of business at the time of the transfer.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2014, c. 20, s. 29

Marginal note:Filing of return

 An information return in respect of an electronic funds transfer that is required to be filed by a reporting entity under this Part shall be filed

  • (a) not later than five working days after the day of the transfer; and

  • (b) using electronic media, in the manner specified by the Minister, if the entity has the technical capabilities to do so.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2014, c. 20, s. 29

Marginal note:Record keeping

  •  (1) Every reporting entity that is required to file an information return under this Part shall keep such records as will enable the Minister to determine whether the entity has complied with its duties and obligations under this Part.

  • Marginal note:Form of records

    (2) A record that is required to be kept under this Part may be kept in machine-readable or electronic form if a paper copy can be readily produced from it.

  • Marginal note:Retention of records

    (3) A reporting entity that is required to keep records under this Part in respect of an electronic funds transfer shall retain those records for a period of at least five years from the day of the transfer.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2014, c. 20, s. 29

PART XVITax Avoidance

Marginal note:Definitions

  •  (1) In this section,

    tax benefit

    tax benefit means a reduction, avoidance or deferral of tax or other amount payable under this Act or an increase in a refund of tax or other amount under this Act, and includes a reduction, avoidance or deferral of tax or other amount that would be payable under this Act but for a tax treaty or an increase in a refund of tax or other amount under this Act as a result of a tax treaty; (avantage fiscal)

    tax consequences

    tax consequences to a person means the amount of income, taxable income, or taxable income earned in Canada of, tax or other amount payable by or refundable to the person under this Act, or any other amount that is relevant for the purposes of computing that amount; (attribut fiscal)

    transaction

    transaction includes an arrangement or event. (opération)

  • Marginal note:General anti-avoidance provision

    (2) Where a transaction is an avoidance transaction, the tax consequences to a person shall be determined as is reasonable in the circumstances in order to deny a tax benefit that, but for this section, would result, directly or indirectly, from that transaction or from a series of transactions that includes that transaction.

  • Marginal note:Avoidance transaction

    (3) An avoidance transaction means any transaction

    • (a) that, but for this section, would result, directly or indirectly, in a tax benefit, unless the transaction may reasonably be considered to have been undertaken or arranged primarily for bona fide purposes other than to obtain the tax benefit; or

    • (b) that is part of a series of transactions, which series, but for this section, would result, directly or indirectly, in a tax benefit, unless the transaction may reasonably be considered to have been undertaken or arranged primarily for bona fide purposes other than to obtain the tax benefit.

  • Marginal note:Application of subsection (2)

    (4) Subsection (2) applies to a transaction only if it may reasonably be considered that the transaction

    • (a) would, if this Act were read without reference to this section, result directly or indirectly in a misuse of the provisions of any one or more of

      • (i) this Act,

      • (ii) the Income Tax Regulations,

      • (iii) the Income Tax Application Rules,

      • (iv) a tax treaty, or

      • (v) any other enactment that is relevant in computing tax or any other amount payable by or refundable to a person under this Act or in determining any amount that is relevant for the purposes of that computation; or

    • (b) would result directly or indirectly in an abuse having regard to those provisions, other than this section, read as a whole.

  • Marginal note:Determination of tax consequences

    (5) Without restricting the generality of subsection (2), and notwithstanding any other enactment,

    • (a) any deduction, exemption or exclusion in computing income, taxable income, taxable income earned in Canada or tax payable or any part thereof may be allowed or disallowed in whole or in part,

    • (b) any such deduction, exemption or exclusion, any income, loss or other amount or part thereof may be allocated to any person,

    • (c) the nature of any payment or other amount may be recharacterized, and

    • (d) the tax effects that would otherwise result from the application of other provisions of this Act may be ignored,

    in determining the tax consequences to a person as is reasonable in the circumstances in order to deny a tax benefit that would, but for this section, result, directly or indirectly, from an avoidance transaction.

  • Marginal note:Request for adjustments

    (6) Where with respect to a transaction

    • (a) a notice of assessment, reassessment or additional assessment involving the application of subsection 245(2) with respect to the transaction has been sent to a person, or

    • (b) a notice of determination pursuant to subsection 152(1.11) has been sent to a person with respect to the transaction,

    any person (other than a person referred to in paragraph (a) or (b)) shall be entitled, within 180 days after the day of sending of the notice, to request in writing that the Minister make an assessment, reassessment or additional assessment applying subsection (2) or make a determination applying subsection 152(1.11) with respect to that transaction.

  • Marginal note:Exception

    (7) Notwithstanding any other provision of this Act, the tax consequences to any person, following the application of this section, shall only be determined through a notice of assessment, reassessment, additional assessment or determination pursuant to subsection 152(1.11) involving the application of this section.

  • Marginal note:Duties of Minister

    (8) On receipt of a request by a person under subsection 245(6), the Minister shall, with all due dispatch, consider the request and, notwithstanding subsection 152(4), assess, reassess or make an additional assessment or determination pursuant to subsection 152(1.11) with respect to that person, except that an assessment, reassessment, additional assessment or determination may be made under this subsection only to the extent that it may reasonably be regarded as relating to the transaction referred to in subsection 245(6).

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 245
  • 2005, c. 19, s. 52
  • 2010, c. 25, s. 68

Marginal note:Benefit conferred on a person

  •  (1) Where at any time a person confers a benefit, either directly or indirectly, by any means whatever, on a taxpayer, the amount of the benefit shall, to the extent that it is not otherwise included in the taxpayer’s income or taxable income earned in Canada under Part I and would be included in the taxpayer’s income if the amount of the benefit were a payment made directly by the person to the taxpayer and if the taxpayer were resident in Canada, be

    • (a) included in computing the taxpayer’s income or taxable income earned in Canada under Part I for the taxation year that includes that time; or

    • (b) where the taxpayer is a non-resident person, deemed for the purposes of Part XIII to be a payment made at that time to the taxpayer in respect of property, services or otherwise, depending on the nature of the benefit.

  • Marginal note:Arm’s length

    (2) Where it is established that a transaction was entered into by persons dealing at arm’s length, bona fide and not pursuant to, or as part of, any other transaction and not to effect payment, in whole or in part, of an existing or future obligation, no party thereto shall be regarded, for the purpose of this section, as having conferred a benefit on a party with whom the first-mentioned party was so dealing.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1970-71-72, c. 63, s. 1“246”
  • 1984, c. 45, s. 91
  • 1988, c. 55, s. 186

PART XVI.1Transfer Pricing

Marginal note:Definitions

  •  (1) The definitions in this subsection apply in this section.

    arm’s length allocation

    arm’s length allocation means, in respect of a transaction, an allocation of profit or loss that would have occurred between the participants in the transaction if they had been dealing at arm’s length with each other. (attribution de pleine concurrence)

    arm’s length transfer price

    arm’s length transfer price means, in respect of a transaction, an amount that would have been a transfer price in respect of the transaction if the participants in the transaction had been dealing at arm’s length with each other. (prix de transfert de pleine concurrence)

    documentation-due date

    documentation-due date for a taxation year or fiscal period of a person or partnership means

    • (a) in the case of a person, the person’s filing-due date for the year; or

    • (b) in the case of a partnership, the day on or before which a return is required by section 229 of the Income Tax Regulations to be filed in respect of the period or would be required to be so filed if that section applied to the partnership. (date limite de production)

    qualifying cost contribution arrangement

    qualifying cost contribution arrangement means an arrangement under which reasonable efforts are made by the participants in the arrangement to establish a basis for contributing to, and to contribute on that basis to, the cost of producing, developing or acquiring any property, or acquiring or performing any services, in proportion to the benefits which each participant is reasonably expected to derive from the property or services, as the case may be, as a result of the arrangement. (arrangement admissible de participation au coût)

    tax benefit

    tax benefit has the meaning assigned by subsection 245(1). (avantage fiscal)

    transaction

    transaction includes an arrangement or event. (opération)

    transfer price

    transfer price means, in respect of a transaction, an amount paid or payable or an amount received or receivable, as the case may be, by a participant in the transaction as a price, a rental, a royalty, a premium or other payment for, or for the use, production or reproduction of, property or as consideration for services (including services provided as an employee and the insurance or reinsurance of risks) as part of the transaction. (prix de transfert)

    transfer pricing capital adjustment

    transfer pricing capital adjustment of a taxpayer for a taxation year means the total of

    • (a) all amounts each of which is

      • (i) 1/2 of the amount, if any, by which the adjusted cost base to the taxpayer of a capital property (other than a depreciable property) is reduced in the year because of an adjustment made under subsection (2), or

      • (ii) [Repealed, 2016, c. 12, s. 62]

      • (iii) the amount, if any, by which the capital cost to the taxpayer of a depreciable property is reduced in the year because of an adjustment made under subsection (2); and

    • (b) all amounts each of which is that proportion of the total of

      • (i) 1/2 of the amount, if any, by which the adjusted cost base to a partnership of a capital property (other than a depreciable property) is reduced in a fiscal period that ends in the year because of an adjustment made under subsection (2), and

      • (ii) [Repealed, 2016, c. 12, s. 62]

      • (iii) the amount, if any, by which the capital cost to a partnership of a depreciable property is reduced in the period because of an adjustment made under subsection (2),

      that

      • (iv) the taxpayer’s share of the income or loss of the partnership for the period

      is of

      • (v) the income or loss of the partnership for the period,

      and where the income and loss of the partnership are nil for the period, the income of the partnership for the period is deemed to be $1,000,000 for the purpose of determining a taxpayer’s share of the partnership’s income for the purpose of this definition. (redressement de capital)

    transfer pricing capital setoff adjustment

    transfer pricing capital setoff adjustment of a taxpayer for a taxation year means the amount, if any, that would be the taxpayer’s transfer pricing capital adjustment for the year if the references, in the definition transfer pricing capital adjustment, to “reduced” were read as “increased”. (redressement compensatoire de capital)

    transfer pricing income adjustment

    transfer pricing income adjustment of a taxpayer for a taxation year means the total of all amounts each of which is the amount, if any, by which an adjustment made under subsection 247(2) (other than an adjustment included in determining a transfer pricing capital adjustment of the taxpayer for a taxation year) would result in an increase in the taxpayer’s income for the year or a decrease in a loss of the taxpayer for the year from a source if that adjustment were the only adjustment made under subsection 247(2). (redressement de revenu)

    transfer pricing income setoff adjustment

    transfer pricing income setoff adjustment of a taxpayer for a taxation year means the total of all amounts each of which is the amount, if any, by which an adjustment made under subsection 247(2) (other than an adjustment included in determining a transfer pricing capital setoff adjustment of the taxpayer for a taxation year) would result in a decrease in the taxpayer’s income for the year or an increase in a loss of the taxpayer for the year from a source if that adjustment were the only adjustment made under subsection 247(2). (redressement compensatoire de revenu)

  • Marginal note:Transfer pricing adjustment

    (2) Where a taxpayer or a partnership and a non-resident person with whom the taxpayer or the partnership, or a member of the partnership, does not deal at arm’s length (or a partnership of which the non-resident person is a member) are participants in a transaction or a series of transactions and

    • (a) the terms or conditions made or imposed, in respect of the transaction or series, between any of the participants in the transaction or series differ from those that would have been made between persons dealing at arm’s length, or

    • (b) the transaction or series

      • (i) would not have been entered into between persons dealing at arm’s length, and

      • (ii) can reasonably be considered not to have been entered into primarily for bona fide purposes other than to obtain a tax benefit,

    any amounts (in subsection (2.1) referred to as the “initial amounts”) that would be determined for the purposes of applying the provisions of this Act (if this Act were read without reference to this section and section 245) in respect of the taxpayer or the partnership for a taxation year or fiscal period shall be adjusted (in this section referred to as an “adjustment”) to the quantum or nature of the amounts (in subsection (2.1) referred to as the “adjusted amounts”) that would have been determined if,

    • (c) where only paragraph 247(2)(a) applies, the terms and conditions made or imposed, in respect of the transaction or series, between the participants in the transaction or series had been those that would have been made between persons dealing at arm’s length, or

    • (d) where paragraph 247(2)(b) applies, the transaction or series entered into between the participants had been the transaction or series that would have been entered into between persons dealing at arm’s length, under terms and conditions that would have been made between persons dealing at arm’s length.

  • Marginal note:Ordering

    (2.1) For the purpose of applying subsection (2) in the context of the other provisions of this Act, the following order is to be applied:

    • (a) first determine each of the initial amounts;

    • (b) then make the adjustments, if any, to each of the initial amounts; and

    • (c) then apply each of the provisions of this Act (other than subsection (2) and, for greater certainty, including section 245) using the adjusted amounts.

  • Marginal note:Penalty

    (3) A taxpayer (other than a taxpayer all of whose taxable income for the year is exempt from tax under Part I) is liable to a penalty for a taxation year equal to 10% of the amount determined under paragraph 247(3)(a) in respect of the taxpayer for the year, where

    • (a) the amount, if any, by which

      • (i) the total of

        • (A) the taxpayer’s transfer pricing capital adjustment for the year, and

        • (B) the taxpayer’s transfer pricing income adjustment for the year

        exceeds the total of

      • (ii) the total of all amounts each of which is the portion of the taxpayer’s transfer pricing capital adjustment or transfer pricing income adjustment for the year that can reasonably be considered to relate to a particular transaction, where

        • (A) the transaction is a qualifying cost contribution arrangement in which the taxpayer or a partnership of which the taxpayer is a member is a participant, or

        • (B) in any other case, the taxpayer or a partnership of which the taxpayer is a member made reasonable efforts to determine arm’s length transfer prices or arm’s length allocations in respect of the transaction, and to use those prices or allocations for the purposes of this Act, and

      • (iii) the total of all amounts, each of which is the portion of the taxpayer’s transfer pricing capital setoff adjustment or transfer pricing income setoff adjustment for the year that can reasonably be considered to relate to a particular transaction, where

        • (A) the transaction is a qualifying cost contribution arrangement in which the taxpayer or a partnership of which the taxpayer is a member is a participant, or

        • (B) in any other case, the taxpayer or a partnership of which the taxpayer is a member made reasonable efforts to determine arm’s length transfer prices or arm’s length allocations in respect of the transaction, and to use those prices or allocations for the purposes of this Act,

    is greater than

    • (b) the lesser of

      • (i) 10% of the amount that would be the taxpayer’s gross revenue for the year if this Act were read without reference to subsection 247(2), subsections 69(1) and 69(1.2) and section 245, and

      • (ii) $5,000,000.

  • Marginal note:Contemporaneous documentation

    (4) For the purposes of subsection 247(3) and the definition qualifying cost contribution arrangement in subsection 247(1), a taxpayer or a partnership is deemed not to have made reasonable efforts to determine and use arm’s length transfer prices or arm’s length allocations in respect of a transaction or not to have participated in a transaction that is a qualifying cost contribution arrangement, unless the taxpayer or the partnership, as the case may be,

    • (a) makes or obtains, on or before the taxpayer’s or partnership’s documentation-due date for the taxation year or fiscal period, as the case may be, in which the transaction is entered into, records or documents that provide a description that is complete and accurate in all material respects of

      • (i) the property or services to which the transaction relates,

      • (ii) the terms and conditions of the transaction and their relationship, if any, to the terms and conditions of each other transaction entered into between the participants in the transaction,

      • (iii) the identity of the participants in the transaction and their relationship to each other at the time the transaction was entered into,

      • (iv) the functions performed, the property used or contributed and the risks assumed, in respect of the transaction, by the participants in the transaction,

      • (v) the data and methods considered and the analysis performed to determine the transfer prices or the allocations of profits or losses or contributions to costs, as the case may be, in respect of the transaction, and

      • (vi) the assumptions, strategies and policies, if any, that influenced the determination of the transfer prices or the allocations of profits or losses or contributions to costs, as the case may be, in respect of the transaction;

    • (b) for each subsequent taxation year or fiscal period, if any, in which the transaction continues, makes or obtains, on or before the taxpayer’s or partnership’s documentation-due date for that year or period, as the case may be, records or documents that completely and accurately describe each material change in the year or period to the matters referred to in any of subparagraphs 247(4)(a)(i) to 247(4)(a)(vi) in respect of the transaction; and

    • (c) provides the records or documents described in paragraphs 247(4)(a) and 247(4)(b) to the Minister within 3 months after service, made personally or by registered or certified mail, of a written request therefor.

  • Marginal note:Partner’s gross revenue

    (5) For the purpose of subparagraph 247(3)(b)(i), where a taxpayer is a member of a partnership in a taxation year, the taxpayer’s gross revenue for the year as a member of the partnership from any activities carried on by means of the partnership is deemed to be that proportion of the amount that would be the partnership’s gross revenue from the activities if it were a taxpayer (to the extent that amount does not include amounts received or receivable from other partnerships of which the taxpayer is a member in the year), for a fiscal period of the partnership that ends in the year, that

    • (a) the taxpayer’s share of the income or loss of the partnership from its activities for the period

    is of

    • (b) the income or loss of the partnership from its activities for the period,

    and where the income and loss of the partnership from its activities are nil for the period, the income of the partnership from its activities for the period is deemed to be $1,000,000 for the purpose of determining a taxpayer’s share of the partnership’s income from its activities for the purpose of this subsection.

  • Marginal note:Deemed member of partnership

    (6) For the purposes of this section, where a person is a member of a partnership that is a member of another partnership,

    • (a) the person is deemed to be a member of the other partnership; and

    • (b) the person’s share of the income or loss of the other partnership is deemed to be equal to the amount of that income or loss to which the person is directly or indirectly entitled.

  • Marginal note:Exclusion for loans to certain controlled foreign affiliates

    (7) Where, in a taxation year of a corporation resident in Canada, a non-resident person owes an amount to the corporation, the non-resident person is a controlled foreign affiliate of the corporation for the purpose of section 17 throughout the period in the year during which the amount is owing and it is established that the amount owing is an amount owing described in paragraph 17(8)(a) or (b), subsection (2) does not apply to adjust the amount of interest paid, payable or accruing in the year on the amount owing.

  • Marginal note:Exclusion — certain guarantees

    (7.1) Subsection (2) does not apply to adjust an amount of consideration paid, payable or accruing to a corporation resident in Canada (in this subsection referred to as the “parent”) in a taxation year of the parent for the provision of a guarantee to a person or partnership (in this subsection referred to as the “lender”) for the repayment, in whole or in part, of a particular amount owing to the lender by a non-resident person, if

    • (a) the non-resident person is a controlled foreign affiliate of the parent for the purposes of section 17 throughout the period in the year during which the particular amount is owing; and

    • (b) it is established that the particular amount would be an amount owing described in paragraph 17(8)(a) or (b) if it were owed to the parent.

  • (8) [Repealed, 2021, c. 23, s. 60]

  • Marginal note:Anti-avoidance

    (9) For the purposes of determining a taxpayer’s gross revenue under subparagraph 247(3)(b)(i) and subsection 247(5), a transaction or series of transactions is deemed not to have occurred, if one of the purposes of the transaction or series was to increase the taxpayer’s gross revenue for the purpose of subsection 247(3).

  • Marginal note:No adjustment unless appropriate

    (10) An adjustment (other than an adjustment that results in or increases a transfer pricing capital adjustment or a transfer pricing income adjustment of a taxpayer for a taxation year) shall not be made under subsection 247(2) unless, in the opinion of the Minister, the circumstances are such that it would be appropriate that the adjustment be made.

  • Marginal note:Provisions applicable to Part

    (11) Sections 152, 158, 159, 162 to 167 and Division J of Part I apply to this Part, with such modifications as the circumstances require.

  • Marginal note:Deemed dividends to non-residents

    (12) For the purposes of Part XIII, if a particular corporation that is a resident of Canada for the purposes of Part XIII would have a transfer pricing capital adjustment or a transfer pricing income adjustment for a taxation year, if the particular corporation, or a partnership of which the particular corporation is a member, had undertaken no transactions or series of transactions other than those in which a particular non-resident person, or a partnership of which the particular non-resident person is a member, that does not deal at arm’s length with the particular corporation (other than a corporation that was for the purposes of section 17 a controlled foreign affiliate of the particular corporation throughout the period during which the transaction or series of transactions occurred) was a participant,

    • (a) a dividend is deemed to have been paid by the particular corporation and received by the particular non-resident person immediately before the end of the taxation year; and

    • (b) the amount of the dividend is the amount, if any, by which

      • (i) the amount that would be the portion of the total of the particular corporation’s transfer pricing capital adjustment and transfer pricing income adjustment for the taxation year that could reasonably be considered to relate to the particular non-resident person if

        • (A) the only transactions or series of transactions undertaken by the particular corporation were those in which the particular non-resident person was a participant, and

        • (B) the definition transfer pricing capital adjustment in subsection (1) were read without reference to the references therein to “1/2 of” and “3/4 of”

      exceeds

      • (ii) the amount that would be the portion of the total of the particular corporation’s transfer pricing capital setoff adjustment, and transfer pricing income setoff adjustment, for the taxation year that could reasonably be considered to relate to the particular non-resident person if

        • (A) the only transactions or series of transactions undertaken by the particular corporation were those in which the particular non-resident person was a participant, and

        • (B) the definition transfer pricing capital adjustment in subsection (1) were read without reference to the references therein to “1/2 of” and “3/4 of”.

  • Marginal note:Repatriation

    (13) If a dividend is deemed by subsection (12) to have been paid by a corporation and received by a non-resident person, and a particular amount has been paid with the concurrence of the Minister by the non-resident person to the corporation,

    • (a) the amount of the dividend may be reduced by the amount (in this subsection referred to as the “reduction”) that the Minister considers appropriate, having regard to all the circumstances, and

    • (b) subsections 227(8.1) and (8.3) apply as if

      • (i) the amount of the dividend were not reduced, and

      • (ii) on the day on which the particular amount was paid, the corporation paid to the Receiver General an amount equal to the amount that would be required to be withheld and remitted under Part XIII in respect of the reduction.

  • Marginal note:Repatriation — interest

    (14) If the amount of a dividend is reduced under paragraph (13)(a), the amount of interest payable by a taxpayer because of paragraph (13)(b) may be reduced to the amount that the Minister considers appropriate, having regard to all the circumstances, including the provision of reciprocal treatment by the country in which the non-resident person referred to in subsection (13) is resident.

  • Marginal note:Non-application of provisions

    (15) Section 15, subsections 56(2) and 212.3(2) and section 246 do not apply in respect of an amount to the extent that a dividend is deemed by subsection (12) (determined without reference to subsection (13)) to have been paid in respect of the amount.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1998, c. 19, s. 238
  • 1999, c. 22, s. 79
  • 2001, c. 17, s. 187
  • 2005, c. 19, s. 53
  • 2012, c. 31, s. 54
  • 2013, c. 40, s. 88
  • 2016, c. 12, s. 62
  • 2021, c. 23, s. 60
 
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