Income Tax Act — I-3.3 93.1
Shares held by partnership 93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of a specified provision, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that (a) the fair market value of the member’s interest in the partnership at that time is of (b) the fair market value of all members’ interests in the partnership at that time. Specified provisions for subsection (1) (1.1) For the purposes of subsection (1), the specified provisions are (a) subsections (2), (5), 20(12) and 39(2.1), sections 90, 93, 93.3, 93.4 (other than subsection 93.4(2)) and 113, paragraphs 128.1(1)(c.3) and (d), section 212.3, subsection 219.1(2) and section 233.4; (b) section 95 to the extent that section is applied for the purposes of the provisions referred to in paragraph (a); (c) any regulations made for the purposes of the provisions referred to in paragraph (a); and (d) paragraph 95(2)(g.04), subsections 95(2.2) and (8) to (12) and section 126. Where dividends received by a partnership (2) Where, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a foreign affiliate of a corporation resident in Canada (in this subsection referred to as “affiliate shares”) are owned by a partnership and at that time the affiliate pays a dividend on affiliate shares to the partnership (in this subsection referred to as the “partnership dividend”), (a) for the purposes of sections 93 and 113 and any regulations made for the purposes of those sections, each member of the partnership (other than another partnership) is deemed to have received the proportion of the partnership dividend that (i) the fair market value of the member’s interest held, directly or indirectly through one or more other partnerships, in the partnership at that time is of (ii) the fair market value of all the interests in the partnership held directly by members of the partnership at that time; (b) for the purposes of sections 93 and 113 and any regulations made for the purposes of those sections, the proportion of the partnership dividend deemed by paragraph (a) to have been received by a member of the partnership at that time is deemed to have been received by the member in equal proportions on each affiliate share that is property of the partnership at that time; (c) for the purpose of applying section 113, in respect of the dividend referred to in paragraph (a), each affiliate share referred to in paragraph (b) is deemed to be owned by each member of the partnership; and (d) notwithstanding paragraphs (a) to (c), (i) where the corporation resident in Canada is a member of the partnership, the amount deductible by it under section 113 in respect of the dividend referred to in paragraph (a) shall not exceed the portion of the amount of the dividend included in its income pursuant to subsection 96(1), and (ii) where another foreign affiliate of the corporation resident in Canada is a member of the partnership, the amount included in that other affiliate’s income in respect of the dividend referred to in paragraph (a) shall not exceed the amount that would be included in its income pursuant to subsection 96(1) in respect of the partnership dividend received by the partnership if the value for H in the definition foreign accrual property income in subsection 95(1) were nil and this Act were read without reference to this subsection. Tiered partnerships (3) A person or partnership that is (or is deemed by this subsection to be) a member of a particular partnership that is a member of another partnership is deemed to be a member