Excise Tax Act — E-15 217.1
d to include any related transactions completed in contemplation of the series. Internal charge (4) For the purposes of this Division, any part of an amount in respect of a transaction or dealing between a particular qualifying establishment of a qualifying taxpayer in Canada and another qualifying establishment of the qualifying taxpayer in a particular country other than Canada is an internal charge for a specified year of the qualifying taxpayer if (a) the amount meets the following criteria: (i) the amount would be allowed as a deduction, an allowance or an allocation for a reserve under the Income Tax Act in computing the income of the particular qualifying establishment for the specified year if (A) that Act applied to the particular qualifying establishment, (B) the income of the particular qualifying establishment were computed in accordance with that Act, and (C) for the purposes of that Act, (I) anything done by the qualifying taxpayer through the particular qualifying establishment were the carrying on of a business in Canada, (II) the particular qualifying establishment were a permanent establishment, and (III) the specified year were the particular qualifying establishment’s taxation year, (ii) where the qualifying taxpayer has not specified pursuant to paragraph 217.2(2)(c) that subparagraph (iii) is to apply in all cases in determining the internal charges for the specified year and the particular country is a taxing country (as defined in subsection 126(7) of the Income Tax Act ) that has a tax treaty (as defined in subsection 248(1) of that Act) with Canada, the amount would be required to be included in computing, under a taxing statute of the particular country that applies to the qualifying taxpayer, or that would apply if the other qualifying establishment were a permanent establishment for the purposes of that statute, the other qualifying establishment’s income or profits for any period (in this paragraph referred to as a “taxing period”) that ends during the specified year if (A) the taxing statute applied to the other qualifying establishment, (B) the other qualifying establishment’s income or profits were computed in accordance with the taxing statute, and (C) for the purposes of the taxing statute, (I) anything done by the qualifying taxpayer through the other qualifying establishment were the carrying on of a business in the particular country, and (II) the other qualifying establishment were a permanent establishment and had the same taxing periods that the qualifying taxpayer would have under the taxing statute, and (iii) where subparagraph (ii) does not apply, the amount would be required to be included in computing under the Income Tax Act the other qualifying establishment’s income for the specified year if (A) the laws of Canada, and not the laws of the particular country, applied, with any modifications that the circumstances require, in the particular country, (B) that Act applied to the other qualifying establishment, (C) the other qualifying establishment’s income were computed in accordance with that Act, and (D) for the purposes of that Act, (I) anything done by the qualifying taxpayer through the other qualifying establishment were the carrying on of a business in the particular country, (II) the other qualifying establishment were a permanent establishment, and (III) the specified year were the other qualifying establishment’s taxation year; and (b) the part of the amount is not (i) an amount determined under the description of A in the formula in the definition external charge in section 217 in calculating an external charge of the qualifying taxpayer for the specified year or a preceding specified year of the qualifying taxpayer, (ii) a permitted deduction of the qualifying taxpayer for the specified year or a preceding specified year of the qualifying taxpayer, other than a permitted deduction of the qualifying taxpayer that is included under paragraph (a) of the description of B in