Income Tax Act — I-3.3 212
anted a specified right, under a relevant funding arrangement. Excess funding — deemed funding allocation (3.4) If this subsection applies in respect of a particular relevant funder, for the purposes of subsections (3.2) to (3.4) (other than for the purpose of applying subsections (3.3) and (3.4) in respect of the particular relevant funder), each amount that is owed by the particular relevant funder, or that is the fair market value of a property in respect of which the particular relevant funder has been granted a specified right, under a relevant funding arrangement, is deemed to be the amount determined by the formula C/D x E where C is the amount owing or the fair market value of the property, as the case may be; D is the amount determined for A in subsection (3.3); and E is the amount determined for B in subsection (3.3). Multiple funding arrangements (3.5) If an amount owing by a relevant funder or a specified right held by the relevant funder is a relevant funding arrangement in respect of more than one particular debt or other obligation referred to in paragraph (3.1)(a), for the purposes of applying subsections (3.2) to (3.4) in respect of each of the particular debts or other obligations, the amount owing, or the fair market value of the property in respect of which the specified right was granted, as the case may be, is deemed, in respect of each particular debt or other obligation, to be the amount determined by the formula A/B × C where A is the total of all amounts each of which is an amount owing to the relevant funder, or the fair market value of a property in respect of which the relevant funder has granted a specified right, under a relevant funding arrangement, in respect of the particular debt or other obligation; B is the total of all amounts each of which is an amount owing to the relevant funder, or the fair market value of a property in respect of which the relevant funder has granted a specified right, under a relevant funding arrangement, in respect of all of the particular debts or other obligations; and C is the amount owing by the relevant funder or the fair market value of the property in respect of which the relevant funder holds the specified right. Back-to-back loan arrangement — character substitution (3.6) Subsection (3.7) applies in respect of (a) shares (other than specified shares) of the capital stock of a particular relevant funder, in respect of a particular relevant funding arrangement, if — at any time at or after the time when the particular debt or other obligation referred to in paragraph (3.1)(a) was entered into — the particular relevant funder has an obligation to pay or credit an amount as, on account or in lieu of payment of, or in satisfaction of, a dividend on the shares, either immediately or in the future and either absolutely or contingently, to a person or partnership, and any of the following conditions is met: (i) the amount of the dividend is determined, in whole or in part, by reference to an amount of interest paid or credited, or an obligation to pay or credit interest, under a relevant funding arrangement, or (ii) it can reasonably be concluded that the particular relevant funding arrangement was entered into or was permitted to remain in effect, because (A) the shares were issued or were permitted to remain issued and outstanding, or (B) it was anticipated that the shares would be issued or would be permitted to remain issued and outstanding; or (b) a specified royalty arrangement, if — at any time at or after the time when the particular debt or other obligation referred to in paragraph (3.1)(a) was entered into — a particular relevant funder, in respect of a particular relevant funding arrangement, is a specified licensee that has an obligation to pay or credit an amount under the specified royalty arrangement, either immediately or in the future and either absolutely or contingently, to a person or partnership, and any of the following conditions is met: (i)