Income Tax Act — I-3.3 212
 amount under the specified royalty arrangement, either immediately or in the future and either absolutely or contingently, to a person or partnership, and any of the following conditions is met: (i) the amount is determined, in whole or in part, by reference to an amount of interest paid or credited, or an obligation to pay or credit interest, under a relevant funding arrangement, or (ii) it can reasonably be concluded that the particular relevant funding arrangement was entered into or was permitted to remain in effect, because (A) the specified royalty arrangement was entered into or was permitted to remain in effect, or (B) it was anticipated that the specified royalty arrangement would be entered into or remain in effect. Back-to-back loan arrangement — character substitution (3.7) If this subsection applies in respect of a specified royalty arrangement (under which a particular relevant funder is a specified licensee) or shares of the capital stock of a particular relevant funder, then, for the purposes of subsections (3.1) to (3.8), (a) the specified royalty arrangement or the holding of the shares, as the case may be, is deemed to be a relevant funding arrangement; (b) the specified licensor or shareholder, as the case may be, in respect of the relevant funding arrangement, is deemed to be a relevant funder, in respect of the relevant funding arrangement; (c) the conditions in paragraph (3.1)(c) are deemed to be met in respect of the relevant funding arrangement; and (d) the relevant funder is deemed to be owed, under the relevant funding arrangement and by the particular relevant funder, an amount as or on account of a debt, the outstanding amount of which is determined by the formula (A – B) × C/D where A is 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 to the particular relevant funder under a relevant funding arrangement, (ii) the fair market value of a particular property referred to in subparagraph (3.1)(c)(ii) in respect of which the particular relevant funder has granted a specified right under a relevant funding arrangement, or (iii) if neither subparagraph (i) nor (ii) applies at that particular time, nil, B is the total of all amounts each of which is, at the particular time, in respect of a relevant funding arrangement (other than a relevant funding arrangement deemed under paragraph (a)) and is (i) an amount outstanding as or on account of a debt or other obligation that is owed by the particular relevant funder under the relevant funding arrangement, (ii) the fair market value of a particular property referred to in subparagraph (3.1)(c)(ii) in respect of which the particular relevant funder has been granted a specified right under a relevant funding arrangement, or (iii) if neither subparagraph (i) nor (ii) applies at that particular time, nil, C is the fair market value, at the particular time, of (i) if the relevant funding arrangement is described in paragraph (3.6)(a), the shares, or (ii) if the relevant funding arrangement is described in paragraph (3.6)(b), the specified royalty arrangement, and D is the total of all amounts each of which is, in respect of a relevant funding arrangement referred to in the description of C, the amount determined for C at the particular time. Back-to-back loan arrangement — definitions (3.8) The following definitions apply in this subsection and subsections (3.1) to (3.7) and (3.81). relevant funder , in respect of a relevant funding arrangement, means (a) if the relevant funding arrangement is described in paragraph (a) of the definition relevant funding arrangement , the immediate funder referred to in paragraph (3.1)(a); (b) if the relevant funding arrangement is described in paragraph (b) of the definition relevant funding arrangement , the creditor in respect of the debt or other obligation or the grantor of the specified right, as the case may be; or (c) a