Income Tax Act — I-3.3 212
mmediate licensor in respect of the particular amount, referred to in paragraph (3.9)(a), paid or credited to the immediate licensor. Back-to-back arrangement — character substitution (3.92) Subsection (3.93) applies in respect of (a) shares of the capital stock of a particular relevant licensor, in respect of a particular relevant royalty arrangement, if — at any time at or after the time when a particular lease, license or similar agreement referred to in paragraph (3.9)(a) was entered into — the particular relevant licensor has an obligation to pay or credit an amount as, on account or in lieu of payment of, or in satisfaction of, a dividend on the shares, either immediately or in the future and either absolutely or contingently, to a person or partnership, and (i) either of the following conditions is met: (A) the amount of the dividend is determined, in whole or in part, by reference to (I) an amount of rent, royalty or similar payment paid or credited, or an obligation to pay or credit rent, royalty or similar payment, under a relevant royalty arrangement, or (II) one or more of the fair market value of, any revenue profits, income or cash flow from, or any other similar criteria in respect of a particular property, if a right in respect of the property is granted under the particular lease, licence or similar agreement, or (B) it can reasonably be concluded that the particular relevant royalty arrangement was entered into or was permitted to remain in effect, because (I) the shares were issued or were permitted to remain issued and outstanding, or (II) it was anticipated that the shares would be issued or would be permitted to remain issued and outstanding, and (ii) either the person or partnership (A) does not deal at arm’s length with the taxpayer referred to in paragraph (3.9)(a), or (B) deals at arm’s length with that taxpayer, if it can reasonably be concluded that one of the main purposes of the issuance of the shares was (I) to reduce or avoid the tax payable under this Part in respect of the particular amount referred to in paragraph (3.9)(a), or (II) to avoid the application of subsection (3.91); and (b) an amount outstanding as or on account of a debt or other obligation to pay an amount, if — at any time at or after the time when a particular lease, license or similar agreement referred to in paragraph (3.9)(a) was entered into — a particular relevant licensor, in respect of a particular relevant royalty arrangement, has an obligation to pay or credit an amount as, on account or in lieu of payment of, or in satisfaction of, interest under the debt or other obligation, either immediately or in the future and either absolutely or contingently, to a person or partnership, and (i) either of the following conditions is met: (A) the amount of the interest is determined, in whole or in part, by reference to (I) an amount of rent, royalty or similar payment paid or credited, or an obligation to pay or credit rent, royalty or similar payment, under a relevant royalty arrangement, or (II) one or more of the fair market value of, any revenue profits, income or cash flow from, or any other similar criteria in respect of a particular property, if a right in respect of the property is granted under the particular lease, licence or similar agreement, or (B) it can reasonably be concluded that the particular relevant royalty arrangement was entered into or was permitted to remain in effect, because (I) the debt or other obligation was entered into or was permitted to remain in effect, or (II) it was anticipated that the debt or other obligation would be entered into or remain in effect, and (ii) either the person or partnership (A) does not deal at arm’s length with the taxpayer referred to in paragraph (3.9)(a), or (B) deals at arm’s length with that taxpayer, if it can reasonably be concluded that one of the main purposes of entering into the debt or other obligation was (I) to reduce or avoid the tax payable under this Pa