Income Tax Act — I-3.3 127
added because of section 21, and (ii) the capital cost to the taxpayer is determined without reference to subsections 13(7.1) and (7.4). Non-arm’s length costs (11.6) For the purpose of subsection 127(11.5), where (a) a taxpayer would, if this Act were read without reference to subsection 127(26), incur at any time an expenditure as consideration for a person or partnership (referred to in this subsection as the “supplier”) rendering a service (other than a service rendered by a person as an employee of the taxpayer) or providing a property to the taxpayer, and (b) at that time the taxpayer does not deal at arm’s length with the supplier, the amount of the expenditure incurred by the taxpayer for the service or property and the capital cost to the taxpayer of the property are deemed to be (c) in the case of a service rendered to the taxpayer, the lesser of (i) the amount of the expenditure otherwise incurred by the taxpayer for the service, and (ii) the adjusted service cost to the supplier of rendering the service, and (d) in the case of a property sold to the taxpayer, the lesser of (i) the capital cost to the taxpayer of the property otherwise determined, and (ii) the adjusted selling cost to the supplier of the property. Definitions (11.7) The definitions in this subsection apply in this subsection and subsection 127(11.6). adjusted service cost to a person or partnership (referred to in this definition as the “supplier”) of rendering a particular service is the amount determined by the formula: A - B - C - D - E where A is the cost to the supplier of rendering the particular service, B is the total of all amounts each of which is the amount, if any, by which (a) the cost to the supplier for a service (other than a service rendered by a person as an employee of the supplier) rendered by a person or partnership that does not deal at arm’s length with the supplier to the extent that the cost is incurred for the purpose of rendering the particular service exceeds (b) the adjusted service cost to the person or partnership referred to in paragraph (a) of rendering the service referred to in that paragraph to the supplier, C is the total of all amounts each of which is the amount, if any, by which (a) the cost to the supplier of a property acquired by the supplier from a person or partnership that does not deal at arm’s length with the supplier exceeds (b) the adjusted selling cost to the person or partnership referred to in paragraph (a) of the property, to the extent that the excess relates to the cost of rendering the particular service, D is the total of all amounts each of which is remuneration based on profits or a bonus paid or payable to an employee of the supplier to the extent that it is included in the cost to the supplier of rendering the particular service, and E is the total of all amounts each of which is government assistance or non-government assistance that can reasonably be considered to be in respect of rendering the particular service and that the supplier has received, is entitled to receive or can reasonably be expected to receive. ( coût de service rajusté ) adjusted selling cost to a person or partnership (referred to in this definition as the “supplier”) of a property is the amount determined by the formula A - B where A is (a) where the property is purchased from another person or partnership with which the supplier does not deal at arm’s length, the lesser of (i) the cost to the supplier of the property, and (ii) the adjusted selling cost to the other person or partnership of the property, and (b) in any other case, the cost to the supplier of the property, and for the purpose of paragraph (b), (c) where part of the cost to a supplier of a particular property is attributable to another property acquired by the supplier from a person or partnership with which the supplier does not deal at arm’s length, that part of the cost is deemed to be the lesser of (i) the amount of that part of the cost otherwise