Income Tax Act — I-3.3 91
ships, a member of the partnership; or (b) if paragraph (a) does not apply, (i) the foreign affiliate is a foreign affiliate of the partnership at the particular time, and (ii) the aggregate participating percentage of the partnership in respect of the foreign affiliate for the affiliate’s ordinary taxation year may reasonably be considered to have increased as a result of the triggering event that gave rise to the application of subsection (1.2). ( société de personnes rattachée ) excluded acquisition or disposition , in respect of a taxation year of a foreign affiliate of a taxpayer, means an acquisition or disposition of an equity interest in a corporation, partnership or trust that can reasonably be considered to result in a change in the aggregate participating percentage of the taxpayer in respect of the affiliate for the taxation year of the affiliate, if (a) the change is less than 1%; and (b) it cannot reasonably be considered that one of the main reasons the acquisition or disposition occurs as a separate acquisition or disposition from one or more other acquisitions or dispositions is to avoid the application of subsection (1.2). ( acquisition ou disposition exclue ) triggering event means (a) an acquisition or disposition of an equity interest in a corporation, partnership or trust; (b) a change in the terms or conditions of a share of the capital stock of a corporation or the rights as a member of a partnership or as a beneficiary under a trust; and (c) a disposition or change of a right referred to in paragraph 95(6)(a). ( événement déclencheur ) Election for application of subsection (1.2) (1.4) If the conditions in subsection (1.1) are not met at a particular time in respect of a particular foreign affiliate of a taxpayer resident in Canada, subsection (1.2) applies in respect of the particular affiliate at that time if (a) the conditions in paragraph (1.1)(a) are met in respect of the particular affiliate at the particular time; (b) immediately after the particular time there is a disposition of shares of the capital stock of the particular affiliate or another foreign affiliate of the taxpayer that had an equity percentage (as defined in subsection 95(4)) in the particular affiliate by (i) the taxpayer, or (ii) a controlled foreign affiliate of the taxpayer; and (c) the taxpayer and all specified corporations jointly elect in writing to apply subsection (1.2) in respect of the disposition and file the election with the Minister on or before the day that is the earliest filing-due date for all taxpayers making the election in respect of the taxation year in which the transaction to which the election relates occurred, and for this purpose, a specified corporation means a corporation that at or immediately after the particular time meets the following conditions: (i) the corporation is resident in Canada, (ii) the corporation does not deal at arm’s length with the taxpayer, and (iii) the particular affiliate is a foreign affiliate of the corporation, or of a partnership of which the corporation is, directly or indirectly through one or more partnerships, a member. (1.5) [Repealed, 2017, c. 33, s. 28] Reserve where foreign exchange restriction (2) Where an amount in respect of a share has been included in computing the income of a taxpayer for a taxation year by virtue of subsection 91(1) or 91(3) and the Minister is satisfied that, by reason of the operation of monetary or exchange restrictions of a country other than Canada, the inclusion of the whole amount with no deduction for a reserve in respect thereof would impose undue hardship on the taxpayer, there may be deducted in computing the taxpayer’s income for the year such amount as a reserve in respect of the amount so included as the Minister deems reasonable in the circumstances. Reserve for preceding year to be included (3) In computing the income of a taxpayer for a taxation year, there shall be included each amount in respect of a share that was deduc