Excise Tax Act — E-15 217.1
the specified year or a preceding specified year of the qualifying taxpayer, other than a permitted deduction of the qualifying taxpayer that is included under paragraph (a) of the description of B in the definition external charge in section 217 in calculating an external charge of the qualifying taxpayer for the specified year or a preceding specified year of the qualifying taxpayer, (iii) an amount that represents a cost to the other qualifying establishment, or a share of a profit of the qualifying taxpayer that is redistributed from the particular qualifying establishment to the other qualifying establishment, that is solely attributable to the issuance, renewal, variance or transfer of ownership by the qualifying taxpayer of a financial instrument that is a derivative, provided that all or substantially all of the amount is (A) an error or profit margin, or employee compensation or benefits, that is reasonably attributable to the issuance, renewal, variance or transfer of ownership, or (B) the estimate of the default risk premium that is directly associated with the derivative, or (iv) a prescribed amount. Separate entities (5) For the purposes of applying paragraph (4)(a) in respect of a particular qualifying establishment of a qualifying taxpayer in a country other than Canada and another qualifying establishment of the qualifying taxpayer in Canada, the following rules apply: (a) the particular qualifying establishment is deemed to be a distinct and separate enterprise from the qualifying taxpayer, engaged in the same or similar activities under the same or similar conditions as the particular qualifying establishment and dealing wholly independently with the other qualifying establishment and with the part (in this subsection referred to as the “remainder of the qualifying taxpayer”) of the qualifying taxpayer, if any, that is neither the particular qualifying establishment nor the other qualifying establishment; (b) the other qualifying establishment is deemed to be a distinct and separate enterprise from the qualifying taxpayer, engaged in the same or similar activities under the same or similar conditions as the other qualifying establishment and dealing wholly independently with the particular qualifying establishment and with the remainder of the qualifying taxpayer; and (c) any transactions or dealings between any of the particular qualifying establishment, the other qualifying establishment and the remainder of the qualifying taxpayer are deemed to be supplies made on such terms as would have been agreed upon between parties dealing at arm’s length. Qualifying rule for credits and rebates (6) If an amount (in this subsection referred to as a “qualifying expenditure”) of qualifying consideration, or of an external charge, of a qualifying taxpayer in respect of an outlay made, or expense incurred, outside Canada is greater than zero and, during a reporting period of the qualifying taxpayer during which the qualifying taxpayer is a registrant, tax under section 218.01 or subsection 218.1(1.2) in respect of the qualifying expenditure becomes payable by the qualifying taxpayer or is paid by the qualifying taxpayer without having become payable, the following rules apply for the purpose of determining an input tax credit or an eligible amount , as defined in subsection 261.01(1), of the qualifying taxpayer: (a) the whole or part of property (in this subsection and subsection (8) referred to as “attributable property”) or of a qualifying service (in this subsection and subsection (8) referred to as an “attributable service”) to which the qualifying expenditure is attributable is deemed to have been acquired by the qualifying taxpayer at the time at which the outlay was made or the expense was incurred; (b) the tax is deemed to be tax in respect of a supply of the attributable property or attributable service; and (c) the extent to which the qualifying taxpayer acquired the attributable property or attributable servic