Income Tax Act — I-3.3 15
and a particular ultimate funder at a particular time if (a) prior to the particular time, subsection (2.17) has applied in respect of a shareholder debt to deem one or more loans to have been received by the intended borrower from the particular ultimate funder; and (b) at the particular time, (i) an amount owing in respect of the shareholder debt is repaid in whole or in part, (ii) an amount owing in respect of a debt or other obligation owing to the particular ultimate funder by a funder (other than an ultimate funder) under a funding arrangement in respect of the shareholder debt is repaid in whole or in part, or (iii) either (A) there is a decrease in the fair market value of a property in respect of which a specified right was granted by the particular ultimate funder to a funder (other than an ultimate funder) under a funding arrangement in respect of the shareholder debt, or (B) a right described in clause (A) is extinguished. Back-to-back arrangement — deemed repayment (2.19) If this subsection applies in respect of an intended borrower and a particular ultimate funder at a particular time, (a) the intended borrower is deemed, for the purposes of this section, paragraph 20(1)(j), section 80.4 and subsection 227(6.1), to repay, in whole or in part, one or more of the deemed loans referred to in paragraph (2.18)(a) at the particular time; and (b) the total amount of the deemed repayments referred to in paragraph (a) is to be determined by the following formula: A – B – C where A is the total of all amounts, each of which is the amount of a loan deemed by subsection (2.17) to have been received, at any time before the particular time, by the intended borrower from the particular ultimate funder in respect of the shareholder debt, B is the total of all amounts deemed by this subsection to have been repaid, at any time before the particular time, by the intended borrower in respect of any loans referred to in the description of A, and C is the amount determined by the formula D × E/F where D is the lesser of (i) the amount outstanding as or on account of the shareholder debt, immediately after the particular time, and (ii) the total of all amounts, each of which is, immediately after the particular time, (A) an amount outstanding as or on account of a debt or other obligation that is owed by a funder (other than an ultimate funder) to an ultimate funder under a funding arrangement in respect of the shareholder debt, or (B) the fair market value of a particular property in respect of which an ultimate funder has granted a specified right to a funder (other than an ultimate funder) under a funding arrangement in respect of the shareholder debt, E is the total of all amounts, each of which is, immediately after the particular time (i) an amount outstanding as or on account of a debt or other obligation that is owed by a funder (other than an ultimate funder) to the particular ultimate funder under a funding arrangement in respect of the shareholder debt, or (ii) the fair market value of a particular property in respect of which the particular ultimate funder has granted a specified right to a funder (other than an ultimate funder) under a funding arrangement in respect of the shareholder debt, and F is the amount determined under subparagraph (ii) in the description of D. Negative amounts (2.191) If, in the absence of section 257, the formula in subsection (2.17) would result in a negative amount at a particular time, (a) the intended borrower is deemed, for the purposes of this section, paragraph 20(1)(j), section 80.4 and subsection 227(6.1), to repay, in whole or in part, one or more of the loans deemed by subsection (2.17) to have been received by the intended borrower from the particular ultimate funder before the particular time; and (b) the total amount of the deemed repayments referred to in paragraph (a) is equal to the absolute value of that negative amount. Back-to-back arrangement — definitions (2.192) The followi