Income Tax Act — I-3.3 18.2
d information for the purpose of determining the deductibility of its interest and financing expenses and determining its exempt interest and financing expenses. Relevant inter-affiliate interest (19) If an amount is paid or payable by a controlled foreign affiliate (referred to in this subsection as the “payer affiliate”) of a taxpayer and received or receivable by a controlled foreign affiliate (referred to in this subsection as the “recipient affiliate”) of the taxpayer, or a taxpayer that is an eligible group entity in respect of the taxpayer, and the amount is relevant inter-affiliate interest of the payer affiliate for an affiliate taxation year (referred to in this subsection as the “payer affiliate year”) and of the recipient affiliate for an affiliate taxation year (referred to in this subsection as the “recipient affiliate year”), (a) the amount included, in respect of the relevant inter-affiliate interest, in the payer affiliate’s relevant affiliate interest and financing expenses for the payer affiliate year is the lesser of (i) the relevant inter-affiliate interest, and (ii) the amount determined by the formula A + B where A is the amount determined by the formula (C − D) × E ÷ C where C is the total of all amounts, each of which would — if the relevant inter-affiliate interest were not paid or payable — be, in respect of the payer affiliate for the payer affiliate year, the specified participating percentage of (A) the taxpayer, or (B) another taxpayer that is an eligible group entity in respect of the taxpayer, and D is the total of all amounts, each of which is, in respect of the recipient affiliate for the recipient affiliate year, the specified participating percentage of (A) the taxpayer, or (B) another taxpayer that is an eligible group entity in respect of the taxpayer, and E is the relevant inter-affiliate interest, and B is the lesser of (A) the relevant inter-affiliate interest, and (B) the amount determined by the formula (F − G) × H ÷ I where F is the payer affiliate’s relevant affiliate interest and financing revenues for the payer affiliate year, G is the amount that would be the payer affiliate’s relevant affiliate interest and financing expenses for the payer affiliate year if the payer affiliate had no relevant inter-affiliate interest for the payer affiliate year, H is the amount determined for E, and I is the total of all amounts, each of which is an amount of relevant inter-affiliate interest of the payer affiliate for the payer affiliate year that would, in the absence of this paragraph, be included in the payer affiliate’s relevant affiliate interest and financing expenses; and (b) the amount included, in respect of the relevant inter-affiliate interest, in the recipient affiliate’s relevant affiliate interest and financing revenues for the recipient affiliate year is the lesser of (i) the amount referred to in E, and (ii) the amount determined by the formula J × K ÷ L where J is the amount determined for B, K is the amount determined for C, and L is the amount determined for D. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] 2007, c. 35, s. 12; 2009, c. 2, s. 6 2024, c. 15, s. 7 2024, c. 17, s. 80 2026, c. 3, s. 4