Income Tax Act — I-3.3 95
oreign affiliate or a partnership of which the foreign affiliate is a member (which foreign affiliate or partnership is referred to in this clause as the “debtor”), each amount of income or loss of the debtor — from a property, from a business other than an active business or from a non-qualifying business — in respect of the debt obligation were from such a property that was held, or such a business that was carried on, as the case may be, by the debtor throughout the period during which the debt obligation was owed by the debtor and at the time at which the debt obligation was settled or extinguished, (D) if the foreign affiliate is a controlled foreign affiliate of the taxpayer at the end of the taxation year, and the taxpayer is not an excluded entity (as defined in subsection 18.2(1)) for its taxation year (referred to in this clause as the “taxpayer year”) in which the taxation year ends, (I) notwithstanding any other provision of this Act, no deduction shall be made in respect of any amount that is included in the affiliate’s relevant affiliate interest and financing expenses (as defined in subsection 18.2(1)) for the taxation year, to the extent of the proportion of that amount that is determined by the first formula in subsection 18.2(2) in respect of the taxpayer for the taxpayer year, and (II) an amount is to be included, in determining the amount described in subparagraph (f)(ii) for the taxation year, that is equal to the amount that would be included under paragraph 12(1)(l.2) in determining the amount described in subparagraph (f)(ii) for the taxation year if 1 clause (A) were read without regard to its reference to subsection 18.2(2), and 2 the proportion that applied for the purposes of subparagraph (ii) of the description of B in paragraph 12(1)(l.2) were the proportion that is determined by the first formula in subsection 18.2(2) in respect of the taxpayer for the taxpayer year, (E) notwithstanding any other provision of this Act, no deduction shall be made in respect of one or more amounts (each referred to in this clause as an “elected amount”) if (I) the elected amount would, in the absence of this clause, clause (D) and subsection 18.2(19), 1 be included in the foreign affiliate’s relevant affiliate interest and financing expenses (as defined in subsection 18.2(1)) for the taxation year, and 2 be deductible in determining the amount described in subparagraph (f)(ii), (II) the total of the elected amounts is equal to the lesser of the following amounts (determined without regard to this clause, clause (D) and subsection 18.2(19)): 1 the foreign affiliate’s foreign accrual property loss (as defined in subsection 5903(3) of the Income Tax Regulations ) for the taxation year, and 2 the foreign affiliate’s relevant affiliate interest and financing expenses (as defined in subsection 18.2(1)) for the taxation year, (III) the taxpayer files with the Minister, in respect of the elected amounts, an election in writing in prescribed manner under this clause, (IV) the election specifies 1 each of the elected amounts, 2 the foreign affiliate’s relevant affiliate interest and financing expenses (as defined in subsection 18.2(1)) (determined without regard to this clause and subsection 18.2(19)) for the taxation year, 3 the foreign affiliate’s relevant affiliate interest and financing expenses (as defined in subsection 18.2(1)) for the taxation year, 4 the foreign affiliate’s foreign accrual property loss (as defined in subsection 5903(3) of the Income Tax Regulations ) (determined without regard to this clause, clause (D) and subsection 18.2(19)) for the taxation year, and 5 the foreign affiliate’s foreign accrual property loss (as defined in subsection 5903(3) of the Income Tax Regulations ) or foreign accrual property income, as the case may be, for the taxation year, and (V) the election is filed on or before the filing-due date of the taxpayer for its taxation year in which the taxation year ends, and (F) the foll