Income Tax Act — I-3.3 15
ing arrangement, (i) has an amount outstanding as or on account of a debt or other obligation to pay an amount (other than a debt or other obligation to pay an amount to which subsection (2) applies or would apply if it were not a pertinent loan or indebtedness , as defined in subsection (2.11)) to a person or partnership that meets either of the following conditions: (A) recourse in respect of the debt or other obligation is limited in whole or in part, either immediately or in the future and either absolutely or contingently, to a funding arrangement, or (B) it can reasonably be concluded that all or a portion of the particular funding arrangement was entered into or was permitted to remain outstanding because (I) all or a portion of the debt or other obligation was entered into or was permitted to remain outstanding, or (II) the funder anticipated that all or a portion of the debt or other obligation would become owing or remain outstanding, or (ii) has a specified right in respect of a particular property that was granted directly or indirectly by a person or partnership and (A) the existence of the specified right is required under the terms and conditions of the particular funding arrangement, or (B) it can reasonably be concluded that all or a portion of the particular funding arrangement was entered into, or was permitted to remain in effect, because (I) the specified right was granted, or (II) the funder anticipated that the specified right would be granted; and (d) at that time, one or more funders is an ultimate funder. Back-to-back arrangement — consequences (2.17) If this subsection applies at a particular time, then for the purposes of this section and section 80.4, the intended borrower is deemed to receive a loan from each particular ultimate funder at the particular time, the amount of which is equal to the amount determined by the formula A × B/C – (D – E) where A is the lesser of (a) the amount outstanding as or on account of the shareholder debt at the particular time, and (b) the total of all amounts, each of which is, at the particular time, (i) an amount outstanding as or on account of a debt or other obligation that is owed by a funder (other than an ultimate funder) to an ultimate funder under a funding arrangement in respect of the shareholder debt, or (ii) the fair market value of a particular property in respect of which an ultimate funder has granted a specified right to a funder (other than an ultimate funder) under a funding arrangement in respect of the shareholder debt; B is the total of all amounts, each of which is, at the particular time, (a) an amount outstanding as or on account of a debt or other obligation that is owed by a funder (other than an ultimate funder) to the particular ultimate funder under a funding arrangement in respect of the shareholder debt, or (b) the fair market value of a particular property in respect of which the particular ultimate funder has granted a specified right to a funder (other than an ultimate funder) under a funding arrangement in respect of the shareholder debt; C is the total amount determined under paragraph (b) of the description of A; D is the total of all amounts, each of which is, in respect of the shareholder debt, an amount that the intended borrower has been deemed by this subsection to have received from the particular ultimate funder as a loan at any time before the particular time; and E is the total amount of any repayments deemed by subsections (2.19) and (2.191) to have occurred before the particular time, in respect of any deemed loans from the particular ultimate funder that are referred to in the description of D. Back-to-back arrangement — conditions for deemed repayment (2.18) Subsection (2.19) applies in respect of an intended borrower and a particular ultimate funder at a particular time if (a) prior to the particular time, subsection (2.17) has applied in respect of a shareholder debt to deem one or more loans to have been receive