Income Tax Act — I-3.3 95
(other than an amount described in paragraph (a)) but does not include the amount of an eligible Canadian indebtedness or upstream deposit owing to the affiliate. ( actif organique ) qualifying indebtedness , owing to an eligible bank affiliate of an eligible Canadian bank, means an upstream deposit owing to, or an eligible Canadian indebtedness of, the affiliate, to the extent that it can reasonably be considered that (a) the upstream deposit or the acquisition of eligible Canadian indebtedness, as the case may be, is funded by (i) property transferred or lent by a person other than the bank or a person resident in Canada that was not, at the time of the transfer or loan, dealing at arm’s length with the bank, (ii) a repayment of all or part of an upstream deposit owing to the affiliate, or (iii) the purchase of eligible Canadian indebtedness by the bank or a person resident in Canada that was not, at the time of the transfer or loan, dealing at arm’s length with the bank; and (b) the proceeds of the upstream deposit or the proceeds received by the vendor of the eligible Canadian indebtedness, as the case may be, are used for a purpose other than to fund a transfer or loan of property by the bank — or another person resident in Canada that was not, at the time of the transfer or loan, dealing at arm’s length with the bank — to the affiliate or another foreign affiliate of the bank or of the other person. ( dettes déterminées ) relationship deposits , of an eligible bank affiliate of an eligible Canadian bank for a month, means the total of all amounts included in the amounts reported as demand and notice deposits, and fixed-term deposits in the liabilities section of the consolidated monthly balance sheet accepted by the Superintendent of Financial Institutions that is filed for the month by the bank, or another corporation resident in Canada that is related to the bank at the end of the month, that are deposits (other than of a temporary nature) of the affiliate made by a person who at the end of the month (a) deals at arm’s length with the affiliate; and (b) is not resident in Canada. ( dépôts apparentés ) total specified indebtedness , owing to an eligible bank affiliate of an eligible Canadian bank for a taxation year of the affiliate, means the average of all amounts each of which is, in respect of a month that ends in the year, the greatest total amount at any time in the month that is the total of all amounts each of which is (a) the amount of an upstream deposit owing to the affiliate; (b) the amount of an eligible Canadian indebtedness owing to the affiliate; or (c) the positive or negative fair market value of an eligible currency hedge of the affiliate. ( dettes désignées totales ) upstream deposit , owing to an eligible bank affiliate of an eligible Canadian bank, means indebtedness owing by the bank to the affiliate. ( dépôt en amont ) FAPI adjustment — eligible bank affiliate (2.44) If a non-resident corporation (in this subsection referred to as the “affiliate”) is, throughout a taxation year of the affiliate, an eligible bank affiliate of an eligible Canadian bank, and the bank elects in writing under this subsection, in respect of the affiliate for the year, and files the election with the Minister on or before the filing-due date of the bank for the particular taxation year of the bank in which the year ends, (a) there is to be deducted in computing the amount determined for A in the definition foreign accrual property income in subsection (1) in respect of the affiliate for the year, the lesser of (i) the amount determined, without reference to this paragraph, for A in that definition in respect of the affiliate for the year, and (ii) the amount determined by the following formula, where each amount referred to in the formula is to be determined using Canadian currency: A – B – C – D where A is the total of all amounts each of which is the affiliate’s income for the year that is from a qualifying indebtedne