Income Tax Act — I-3.3 95
es principally with persons with whom the affiliate deals at arm’s length, and (B) that is principally carried on through a permanent establishment in a country other than Canada, and (iii) for the purpose of enabling the acquisition or disposition of the property by a person who, at the time of the acquisition or disposition, deals at arm’s length with the affiliate and the eligible Canadian bank; and (b) the affiliate is a foreign bank or a trader or dealer in securities and the activities of the business are regulated (i) under the laws of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued, and under the laws of each country in which the business is carried on through a permanent establishment in that country, (ii) under the laws of the country (other than Canada) in which the business is principally carried on, or (iii) if the affiliate is related to a corporation, under the laws of the country under whose laws that related corporation is governed and any of exists, was (unless that related corporation was continued in any jurisdiction) formed or organized, or was last continued, if those regulating laws are recognized under the laws of the country in which the business is principally carried on and all those countries are members of the European Union. Rules for clause (2)(b)(ii)(B) (3.02) For the purposes of clause (2)(b)(ii)(B), (a) a relevant person is (i) a person resident in Canada, or (ii) a non-resident person if the non-resident person performs the services referred to in subparagraph (2)(b)(ii) in the course of a business (other than a treaty-protected business) carried on in Canada; and (b) any portion of a business carried on by a non-resident person that is carried on in Canada is deemed to be a business that is separate from any other portion of the business carried on by the person. Designated property — subparagraph (2)(a.1)(i) (3.1) Designated property referred to in subparagraph (2)(a.1)(i) is property that is described in the portion of paragraph (2)(a.1) that is before subparagraph (i) that is (a) property that was sold to non-resident persons other than the affiliate, or sold to the affiliate for sale to non-resident persons, and (i) that (A) was — in the course of carrying on a business in Canada — manufactured, produced, grown, extracted or processed in Canada by the taxpayer, or by a person with whom the taxpayer does not deal at arm’s length, or (B) was — in the course of a business carried on by a foreign affiliate of the taxpayer outside Canada — manufactured or processed from tangible property, or for civil law corporeal property, that, at the time of the manufacturing or processing, was owned by the taxpayer or by a person related to the taxpayer and used or held by the owner in the course of carrying on a business in Canada, if the manufacturing or processing was in accordance with the specifications of the owner of that tangible or corporeal property and under a contract between that owner and that foreign affiliate, (ii) that was acquired, in the course of carrying on a business in Canada, by a purchaser from a vendor, if (A) the purchaser is the taxpayer or is a person resident in Canada with whom the taxpayer does not deal at arm’s length, and (B) the vendor is a person (I) with whom the taxpayer deals at arm’s length, (II) who is not a foreign affiliate of the taxpayer, and (III) who is not a foreign affiliate of a person resident in Canada with whom the taxpayer does not deal at arm’s length, or (iii) that was acquired by a purchaser from a vendor, if (A) the purchaser is the taxpayer or is a person resident in Canada with whom the taxpayer does not deal at arm’s length, (B) the vendor is a foreign affiliate of (I) the taxpayer, or (II) a person resident in Canada with whom the taxpayer does not deal at arm’s length, and (C) that property was manufactured, produc