Income Tax Act — I-3.3 95
the laws of each country in which the business is carried on through a permanent establishment in that country, (II) under the laws of the country (other than Canada) in which the business is principally carried, or (III) if the affiliate is related to a corporation, under the laws of the country under the laws of which a corporation related to the non-resident corporation is governed and any of exists, was (unless that related corporation was continued in any jurisdiction) formed or organized, or was last continued, if those regulating laws are recognized under the laws of the country in which the business is principally carried on and all of those countries are members of the European Union, and (d) the terms and conditions of such agreements are substantially the same as the terms and conditions of similar agreements made by persons dealings at arm’s length; ( dette ) specified deposit , of a foreign affiliate of a taxpayer, means a deposit of the affiliate made with a permanent establishment in a country other than Canada of a prescribed financial institution resident in Canada if the income from the deposit is income of the affiliate for the year that would, in the absence of paragraph (2)(a.3), be income from an active business carried on by the affiliate in a country other than Canada, other than a business the principal purpose of which is to derive income from property (including any interest, dividends, rents, royalties or similar returns, or any substitutes for any of those) or profits from the disposition of investment property. ( dépôt déterminé ) Rule for the definition specified person or partnership (2.6) For the purposes of paragraphs (a) to (d) of the definition specified person or partnership in subsection (1), if a person or partnership (referred to in this subsection as the “taxpayer”) is not dealing at arm’s length with another person or partnership (referred to in this subsection as the “particular person”) at a particular time, the taxpayer is deemed to have existed and not to have dealt at arm’s length with the particular person, nor with each specified predecessor corporation of the particular person, throughout the period that began when the particular person or the specified predecessor corporation, as the case may be, came into existence and that ends at the particular time. Definition of services (3) For the purposes of paragraph 95(2)(b), services includes the insurance of Canadian risks but does not include (a) the transportation of persons or goods; (b) services performed in connection with the purchase or sale of goods; (c) the transmission of electronic signals or electricity along a transmission system located outside Canada; or (d) the manufacturing or processing outside Canada, in accordance with the taxpayer’s specifications and under a contract between the taxpayer and the affiliate, of tangible property, or for civil law corporeal property, that is owned by the taxpayer if the property resulting from the manufacturing or processing is used or held by the taxpayer in the ordinary course of the taxpayer’s business carried on in Canada. Application of paragraph (2)(b) — eligible Canadian bank (3.01) Paragraph (2)(b) does not apply to a controlled foreign affiliate (for the purposes of section 17) of an eligible Canadian bank (as defined in subsection (2.43)) in respect of services performed in connection with the purchase or sale of a property described in paragraph (2.31)(b) if (a) the services have been performed by the affiliate (i) under terms and conditions that are substantially the same as the terms and conditions that would have been made between persons who deal at arm’s length with each other, (ii) in the course of a business (A) that regularly includes trading or dealing in securities principally with persons with whom the affiliate deals at arm’s length, and (B) that is principally carried on through a permanent establishment in a country other than Canada, and (iii) for the pu