Income Tax Regulations — 3100
oter 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 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, does not, except as otherwise provided in subparagraph (1)(b)(ii), include profits earned in respect of the interest. (3) For the purpose 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, includes an amount that is a limited-recourse amount because of subsection 143.2(1), (7) or (13) of the Act, but does not include an amount of indebtedness that is a limited-recourse amount (a) solely because it is not required to be repaid within 10 years from the time the indebtedness arose where the debtor would, if the interest were acquired by the debtor immediately after that time, be (i) a partnership (A) at least 90% of the fair market value of the property of which is attributable to the partnership’s tangible capital property located in Canada, and (B) at least 90% of the value of all interests in which are held by limited partners (within the meaning assigned by subsection 96(2.4) of the Act) of the partnership, except where it is reasonable to conclude that one of the main reasons for the acquisition of one or more properties by the partnership, or for the acquisition of one or more interests in the partnership by limited partners, is to avoid the application of this subsection, or (ii) a member of a partnership having fewer than six members, except where (A) the partnership is a member of another partnership, (B) there is a limited partner (within the meaning assigned by subsection 96(2.4) of the Act) of the partnership, (C) less than 90% of the fair market value of the partnership’s property is attributable to the partnership’s tangible capital property located in Canada, or (D) it is reasonable to conclude that one of the main reasons for the existence of one of two or more partnerships, one of which is the partnership, or the acquisition of one or more properties by the partnership, is to avoid the application of this section to the member’s indebtedness, (b) of a partnership (i) where (A) the indebtedness is secured by and used to acquire the partnership’s tangible capital property located in Canada (other than rental property, within the meaning assigned by subsection 1100(14), leasing property, within the meaning assigned by subsection 1100(17), or specified energy property, within the meaning assigned by subsection 1100(25)), and (B) the person to whom the indebtedness is repayable is a member of the Canadian Payments Association, and (ii) throughout the period during which any amount is outstanding in respect of the indebtedness, (A) at least 90% of the fair market value of the property of which is attributable to tangible capital property located in Canada of the partnership, (B) at least 90% of the value of all interests in which are held by limited partners (within the meaning assigned by subsection 96(2.4) of the Act) that are corporations, and (C) the principal business of each such limited partner is related to the principal business of the partnership, except where it is reasonable to conclude that one of the main reasons for the acquisition of one or more properties by the partnership, or for the acquisition of one or more interests in the partnership by limited partners, is to avoid the application of this subsection, (c) of a corporation where the amount is a bona fide business loan made to the corporation for the purpose of financing a business that the corporation operates and the loan is made under a loan program of the Government of Canada or of a province the purpose of which is to extend financing to small- and medium-sized Canadian businesses, or (d) where the amount is an excl