Income Tax Act — I-3.3 95
deemed to be the fair market value of a property of the affiliate that is excluded property at that particular time: (A) the total of all amounts each of which is the fair market value of an upstream deposit or Canadian indebtedness owing to, or an eligible currency hedge of, the affiliate, and (B) the amount, if any, by which (I) the affiliate’s relationship deposits for the calendar month that is two months prior to the particular time (or if the affiliate was formed less than two months prior to the particular time, for the calendar month that includes the particular time) exceeds (II) the amount of the affiliate’s organic assets for the calendar month that is two months prior to the particular time (or if the affiliate was formed less than two months prior to the particular time, for the calendar month that includes the particular time), and (iii) the amount, if any, by which the amount in clause (ii)(A) exceeds the amount in subparagraph (ii) is deemed to be the fair market value of a property of the eligible bank affiliate that is not excluded property at that time. Definitions for paragraph (2)(a.3) (2.5) For the purpose of paragraph 95(2)(a.3), excluded income and excluded revenue for a taxation year in respect of a foreign affiliate of a taxpayer mean, respectively, income or revenue, that is (a) derived directly or indirectly from a specified deposit with a prescribed financial institution, (b) derived directly or indirectly from a lease obligation of a person (other than the taxpayer or a person that does not deal at arm’s length with the taxpayer) resident in Canada relating to property used by the person in the course of carrying on a business through a permanent establishment outside Canada, (c) included in computing the affiliate’s income for the year from carrying on a business through a permanent establishment in Canada, or (d) included in computing the affiliate’s income or loss from an active business for the year because of subparagraph (2)(a)(ii); ( revenu exclu ) indebtedness does not include obligations of a particular person under agreements with non-resident corporations providing for the purchase, sale or exchange of currency where (a) the agreements are swap agreements, forward purchase or sale agreements, forward rate agreements, futures agreements, options or rights agreements, or similar agreements, (b) the particular person is a bank, a trust company, a credit union, an insurance corporation or a trader or dealer in securities or commodities resident in Canada, the business activities of which are subject by law to the supervision of a regulating authority in Canada such as the Superintendent of Financial Institutions or a similar authority of a province, (c) the agreements are entered into by the non-resident corporation in the course of a business conducted principally with persons with whom the non-resident corporation deals at arm’s length, if (i) the business is principally carried on in the country (other than Canada) under whose laws the non-resident corporation is governed and any of exists, was (unless the non-resident corporation was continued in any jurisdiction) formed or organized, or was last continued, or (ii) the non-resident corporation is a foreign affiliate of the particular person, or of a person related to the particular person, and (A) the non-resident corporation is a foreign bank, a trust company, a credit union, an insurance corporation or a trader or dealer in securities or commodities, and (B) the activities of the business are regulated (I) under the laws of the country under whose laws the non-resident corporation is governed and any of exists, was (unless the non-resident corporation 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 principa