Income Tax Regulations — (a)
hybrid surplus , of a foreign affiliate (in this definition referred to as the “subject affiliate”) of a corporation in respect of the corporation, at any particular time, means the amount determined by the following formula in respect of the period that begins with the latest of the following times and that ends with the particular time: (a) the first day of the taxation year of the subject affiliate in which it last became a foreign affiliate of the corporation, (b) the last time for which the opening hybrid surplus of the subject affiliate in respect of the corporation was required to be determined under section 5905, and (c) the last time for which the opening hybrid deficit of the subject affiliate in respect of the corporation was required to be determined under section 5905 A – B where A is the total of all amounts, in respect of the period, each of which is (i) the opening hybrid surplus, if any, of the subject affiliate in respect of the corporation as determined under section 5905, at the time established in paragraph (b), (ii) the amount of a capital gain (except to the extent that the taxable portion of the capital gain is included under the description of B in the definition foreign accrual property income in subsection 95(1) of the Act in respect of the subject affiliate), for a taxation year, of the subject affiliate, or of a partnership of which the subject affiliate is a member (to the extent that the capital gain is reasonably attributable to the subject affiliate), in respect of a disposition, at any time in the period, of (A) a share of the capital stock of another foreign affiliate of the corporation, (B) a partnership interest, or (C) a property, that is an excluded property of the subject affiliate because of paragraph (c.1) of the definition excluded property in subsection 95(1) of the Act, that related to (I) an amount that was receivable under an agreement that relates to the sale of a property that is referred to in clause (A) or (B) the capital gain or capital loss from the sale of which is included under this subparagraph or subparagraph (ii) of the description of B, as the case may be, or (II) an amount payable, or an amount of indebtedness, described in clause (c.1)(ii)(B) of that definition excluded property arising in respect of the acquisition of an excluded property of the affiliate that is referred to in clause (A) or (B) any capital gain or capital loss from the disposition of which would, if that excluded property were disposed of, be included under this subparagraph or subparagraph (ii) of the description of B, as the case may be, (iii) the portion of any income or profits tax refunded by the government of a country to the subject affiliate that can reasonably be regarded as having been refunded in respect of an amount referred to in subparagraph (ii) or (iii) of the description of B, (iv) the portion of any dividend received in the period and before the particular time by the subject affiliate from another foreign affiliate of the corporation (including, for greater certainty, any dividend deemed under subsection 5905(7) to have been received by the subject affiliate) that was prescribed under paragraph 5900(1)(a.1) to have been paid out of the payer affiliate’s hybrid surplus in respect of the corporation to the extent that it (A) does not give rise to the application of subsection 12.7(3) of the Act in computing the foreign accrual property income of a foreign affiliate of a taxpayer, and (B) is excluded in computing the subject affiliate’s foreign accrual property income because of subparagraph (b)(i) or (ii) of the description of A, or because an amount is determined for H, in the definition foreign accrual property income in subsection 95(1) of the Act, or (v) an amount added to the hybrid surplus of the subject affiliate or deducted from its hybrid deficit in the period and before the particular time under subsection (1.092), (1.1) or (1.2), and B is the total of those of the follo