Income Tax Act — I-3.3 18.2
rticular year, tax-indifferent persons or partnerships that do not deal at arm’s length with the taxpayer or any eligible group entity in respect of the taxpayer. ( entité exclue ) excluded interest , for a taxation year or fiscal period, means an amount of interest or a lease financing amount, if (a) the amount is paid in, or payable in or in respect of, the year or period by a corporation or partnership (in this definition referred to as the “payer”) to another corporation or partnership (in this definition referred to as the “payee”) in respect of a debt or a lease in respect of a particular property; (b) throughout the period during which the amount accrued (in this definition referred to as the “relevant period”) (i) if the amount is interest, the debt is owed by the payer to the payee, or (ii) if the amount is a lease financing amount, the lease is between the payer and payee; (c) where the payee is a financial institution group entity, the payer (i) is a financial institution group entity, or (ii) would be a special purpose loss corporation, if the reference to “financial holding corporation” in paragraph (a) of the definition special purpose loss corporation were read as a reference to “financial institution group entity”; (d) throughout the relevant period and at the time of payment (i) each of the payer and payee is (A) a taxable Canadian corporation, or (B) a partnership, no member of which is a natural person, a trust or a corporation that is not a taxable Canadian corporation, and (ii) one of the following conditions is met: (A) if the payee is a partnership, all the members of the payee (other than another partnership) are eligible group entities in respect of (I) if the payer is a partnership, each member of the payer (other than another partnership), and (II) in any other case, the payer, or (B) if the payee is not a partnership, the payee is an eligible group entity in respect of (I) if the payer is a partnership, each member of the payer (other than another partnership), and (II) in any other case, the payer; and (e) the payer — or, if the payer is a partnership, each member of the payer — and the payee — or, if the payee is a partnership, each member of the payee — file with the Minister, in respect of the year or period of both the payer and the payee, a joint election in writing in prescribed manner under this paragraph that (i) specifies (A) the amount of the interest or lease financing amount, (B) if the amount is interest, the amounts outstanding, at the beginning and end of the relevant period, as or on account of the debt in respect of which this paragraph applies, and (C) if the amount is a lease financing amount, the fair market value of the particular property at the time the lease began, and (ii) is filed on or before the earliest of the filing-due date of (A) the payer for its year, (B) the payee for its year, and (C) if the payer or the payee is a partnership, any member of the payer or payee for the member’s taxation year that includes the end of the fiscal period of the payer or the payee, as the case may be. ( intérêts exclus ) excluded lease for a taxation year of a taxpayer means a lease (a) to which the rules in subsection 16.1(1) apply; (b) that would not be considered to be a lease for a term of more than one year for purposes of paragraph (b) of the definition specified leasing property in subsection 1100(1.11) of the Income Tax Regulations ; or (c) that is in respect of property (i) that would not be considered, at the time the lease was entered into, to have a fair market value in excess of $25,000 for purposes of paragraph (c) of that definition, or (ii) that would be considered, at all times in the taxation year, exempt property for purposes of subsection 1100(1.13) of the Income Tax Regulations . ( bail exclu ) exempt interest and financing expenses of a taxpayer for a taxation year means the total of all amounts, each of which would, if the description of A in the definition inter