Income Tax Regulations — 5903
g under subsection (3) the foreign accrual property loss of the affiliate for a taxation year, if the affiliate or another corporation receives a payment described in subsection 5907(1.3) from a non-resident corporation that is, at the time of the payment, a foreign affiliate of a relevant person or partnership in respect of the taxpayer and any portion of the payment can reasonably be considered to relate to a loss or portion of a loss of the affiliate for the year described in the description of D in the definition foreign accrual property income in subsection 95(1) of the Act, the amount of the loss or portion of the loss is deemed to be nil. (5) For the purposes of this section, section 5903.1 and section 18.2 of the Act, (a) if paragraph 95(2)(d.1) of the Act applies to a foreign merger, the new foreign corporation referred to in that paragraph is, except in the determination of the foreign accrual property income of a foreign affiliate predecessor referred to in that paragraph, deemed to be the same corporation as, and a continuation of, each foreign affiliate predecessor; and (b) if paragraph 95(2)(e) of the Act applies to a liquidation and dissolution, of a disposing affiliate referred to in that paragraph, that is a designated liquidation and dissolution of the disposing affiliate, the shareholder affiliate referred to in that paragraph is, except in the determination of the foreign accrual property income of the disposing affiliate, deemed to be the same corporation as, and a continuation of, the disposing affiliate. (6) In this section and section 5903.1, a relevant person or partnership , in respect of the taxpayer at any time, means the taxpayer or a person (other than a designated acquired corporation of the taxpayer), or a partnership, that is at that time (a) a person (other than a partnership) that is resident in Canada and does not, at that time, deal at arm’s length (otherwise than because of a right referred to in paragraph 251(5)(b) of the Act) with the taxpayer; (b) an antecedent corporation of a relevant person or partnership in respect of the taxpayer; (c) a partnership a member of which is at that time a relevant person or partnership in respect of the taxpayer under this subsection; or (d) where paragraph (1)(b) is being applied, a corporation of which the taxpayer is an antecedent corporation. (7) For the purposes of paragraphs (6)(a) to (d), (a) if a person or partnership (referred to in this paragraph as the “relevant person”) is not dealing at arm’s length (otherwise than because of a right referred to in paragraph 251(5)(b) of the Act) with another person or partnership (referred to in this paragraph as the “particular person”) at a particular time, the relevant person is deemed to have existed and not to have dealt at arm’s length with the particular person, nor with each antecedent corporation (other than a designated acquired corporation of the particular person) of the particular person, throughout the period that began when the particular person or the antecedent corporation, as the case may be, came into existence and that ends at the particular time; and (b) where paragraph (1)(b) is being applied, if a corporation of which a particular person (other than a designated acquired corporation of the corporation) is an antecedent corporation is not dealing at arm’s length (otherwise than because of a right referred to in paragraph 251(5)(b) of the Act) with another person or partnership at any time, the particular person is deemed to exist and not to be dealing at arm’s length with the other person or the partnership, as the case may be, at that time. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] SOR/80-141, s. 2; SOR/85-176, s. 2; SOR/89-135, s. 2; SOR/94-686, s. 79(F); SOR/97-505, s. 5; 2013, c. 34, ss. 42, 81 2024, c. 15, s. 82