Income Tax Regulations — 3100
Prescribed benefits 3100 (1) For the purposes of paragraph (b) of the definition tax shelter in subsection 237.1(1) of the Act, prescribed benefit , in respect of an interest in a property, means any amount that may reasonably be expected, having regard to statements or representations made in respect of the interest, to be received or enjoyed by a person (in this subsection referred to as the purchaser ) who acquires the interest, or a person with whom the purchaser does not deal at arm’s length, which receipt or enjoyment would have the effect of reducing the impact of any loss that the purchaser may sustain in respect of the interest, and includes such an amount (a) that is, either immediately or in the future, owed to any other person by the purchaser or a person with whom the purchaser does not deal at arm’s length, to the extent that (i) liability to pay that amount is contingent, (ii) payment of that amount is or will be guaranteed by, security is or will be provided by, or an agreement to indemnify the other person to whom the amount is owed is or will be entered into by (A) a promoter in respect of the interest, (B) a person with whom the promoter does not deal at arm’s length, or (C) a person who is to receive a payment (other than a payment made by the purchaser) in respect of the guarantee, security or agreement to indemnify, (iii) the rights of that other person against the purchaser, or against a person with whom the purchaser does not deal at arm’s length, in respect of the collection of all or part of the purchase price are limited to a maximum amount, are enforceable only against certain property, or are otherwise limited by agreement, or (iv) payment of that amount is to be made in a foreign currency or is to be determined by reference to its value in a foreign currency and it may reasonably be considered, having regard to the history of the exchange rate between the foreign currency and Canadian currency, that the total of all such payments, when converted to Canadian currency at the exchange rate expected to prevail at the date on which each such payment would be required to be made, will be substantially less than that total would be if each such payment was converted to Canadian currency at the time that each such payment became owing; (b) that the purchaser or a person with whom the purchaser does not deal at arm’s length is entitled at any time to, directly or indirectly, receive or have available (i) as a form of assistance from a government, municipality or other public authority, whether as a grant, a subsidy, a forgivable loan, a deduction from tax (other than an amount described in clause (b)(i)(B) of the definition tax shelter in subsection 237.1(1) of the Act) or an investment allowance, or as any other form of assistance, other than an excluded loan as defined in subsection 12(11) of the Act, or (ii) by reason of a revenue guarantee or other agreement in respect of which revenue may be earned by the purchaser or a person with whom the purchaser does not deal at arm’s length, to the extent that the revenue guarantee or other agreement may reasonably be considered to ensure that the purchaser or person will receive a return of all or a portion of the purchaser’s outlays in respect of the interest; (c) that is the proceeds of disposition to which the purchaser may be entitled by way of an agreement or other arrangement under which the purchaser has a right, either absolutely or contingently, to dispose of the interest (otherwise than as a consequence of the purchaser’s death), including the fair market value of any property that the agreement or arrangement provides for the acquisition of in exchange for all or any part of the interest; and (d) that is owed to a promoter, or a person with whom the promoter does not deal at arm’s length, by the purchaser or a person with whom the purchaser does not deal at arm’s length in respect of the interest. (2) Notwithstanding subsection (1), for the purpose o