Income Tax Regulations — 5907
ax laws (referred to in subsection (1.07) as the “relevant foreign tax law”) of any country other than Canada under the laws of which any income of another corporation — that is, at any time in the year, a pertinent person or partnership in respect of the particular affiliate — is subject to income taxation, to own less than all of the shares of the capital stock of the other corporation that are considered to be owned by the specified owner for the purposes of the Act; or (b) under the income tax laws (referred to in subsection (1.08) as the “relevant foreign tax law”) of any country other than Canada under the laws of which any income of a particular partnership — that is, at any time in the year, a pertinent person or partnership in respect of the particular affiliate — is subject to income taxation, to have a lesser direct or indirect share of the income of the particular partnership than the specified owner is considered to have for the purposes of the Act. (1.04) For the purposes of subsections (1.03) and (1.07), a specified owner , at any time, in respect of a corporation means the corporation or a person or partnership that is, at that time, (a) a partnership of which the corporation is a member; (b) a foreign affiliate of the corporation; (c) a partnership a member of which is a foreign affiliate of the corporation; or (d) a person or partnership referred to in any of subparagraphs (1.06)(a)(i) to (iii). (1.05) For the purposes of this subsection and subsection (1.03), a pertinent person or partnership , at any time, in respect of a particular foreign affiliate of a corporation means the particular affiliate or a person or partnership that is, at that time, (a) another foreign affiliate of the corporation (i) in which the particular affiliate has an equity percentage, or (ii) that has an equity percentage in the particular affiliate; (b) a partnership a member of which is at that time a pertinent person or partnership in respect of the particular affiliate under this subsection; or (c) a person or partnership referred to in any of subparagraphs (1.06)(b)(i) to (iii). (1.06) For the purposes of subsections (1.04) and (1.05), if, as part of a series of transactions or events that includes the earning of the foreign accrual property income referred to in subsection (1.03), a foreign affiliate (referred to in this subsection as the “funding affiliate”) of the corporation or of a person (referred to in this subsection as the “related person”) resident in Canada that is related to the corporation, or a partnership (referred to in this subsection as the “funding partnership”) of which such an affiliate is a member, directly or indirectly provided funding to the particular affiliate, or a partnership of which the particular affiliate is a member, otherwise than by way of loans or other indebtedness that are subject to terms or conditions made or imposed, in respect of the loans or other indebtedness, that do not differ from those that would be made or imposed between persons dealing at arm’s length or by way of an acquisition of shares of the capital stock of any corporation, then (a) if the funding affiliate is, or the funding partnership has a member that is, a foreign affiliate of the related person, the following persons and partnerships are deemed, at all times during which the foreign accrual property income is earned by the particular affiliate, to be specified owners in respect of the corporation: (i) the related person, (ii) each foreign affiliate of the related person, and (iii) each partnership a member of which is referred to in subparagraph (i) or (ii); and (b) the following persons and partnerships are deemed, at all times during which the foreign accrual property income is earned by the particular affiliate, to be pertinent persons or partnerships in respect of the particular affiliate: (i) the funding affiliate or the funding partnership, (ii) a non-resident corporation (A) in which the funding affiliate has a