Income Tax Regulations — 5907
cription of E exceeds (b) the amount, if any, determined by the formula [(G – H) × (J – 1)] + K where G is the amount determined by the formula L + M – N where L is the underlying foreign tax of the affiliate in respect of the other taxpayer at the end of the year, M is the amount, if any, by which the amount determined under the description of C in paragraph (a) exceeds the amount determined under the description of D in that paragraph, and N is the amount, if any, by which the amount determined under the description of E in paragraph (a) exceeds the amount determined under the description of F in that paragraph, H is the portion of the value of L that can reasonably be considered to relate to the affiliate’s net earnings for the year in respect of the affiliate’s foreign accrual property income, J is the other taxpayer’s relevant tax factor (within the meaning assigned by subsection 95(1) of the Act) for its taxation year that includes the time that is immediately before the particular time, and K is the amount, if any, by which (i) the total of all amounts required by paragraph 92(1)(a) of the Act to be added at any time in a preceding taxation year in computing the adjusted cost base to the other taxpayer of the shares of the affiliate owned by the other taxpayer at the end of the year exceeds (ii) the total of all amounts required by paragraph 92(1)(b) of the Act to be deducted at any time in a preceding taxation year in computing the adjusted cost base to the other taxpayer of the shares of the affiliate owned by the other taxpayer at the end of the year, and Y is the amount, if any, by which (a) the amount, if any, determined by the formula P – (Q – R) + (S – T) where P is the affiliate’s hybrid surplus in respect of the other taxpayer at the end of the year, Q is the total of all amounts each of which is the amount by which the affiliate’s hybrid underlying tax in respect of the other taxpayer at the end of the year would have increased because of the capital gain of the affiliate that would have arisen if a disposition, deemed under paragraph 128.1(1)(b) of the Act, of a property by the affiliate had been an actual disposition of the property by the affiliate, R is the total of all amounts each of which is the amount otherwise added in computing the affiliate’s hybrid underlying tax in respect of the other taxpayer at the end of the year in respect of income or profits taxes paid to the government of a country in respect of all or a portion of a capital gain of the affiliate referred to in the description of Q, S is the total of all amounts each of which is the amount by which the affiliate’s hybrid underlying tax in respect of the other taxpayer at the end of the year would have decreased because of the capital loss of the affiliate that would have arisen if a disposition, deemed under paragraph 128.1(1)(b) of the Act, of a property by the affiliate had been an actual disposition of the property by the affiliate, and T is the total of all amounts each of which is the amount otherwise deducted in computing the affiliate’s hybrid underlying tax in respect of the other taxpayer at the end of the year in respect of income or profits taxes refunded by the government of a country in respect of all or a portion of a capital loss of the affiliate referred to in the description of S; exceeds (b) the amount, if any, determined by the formula [U × (V – 0.5)] + (W × 0.5) where U is the amount determined by the formula U.1 + U.2 – U.3 where U.1 is the hybrid underlying tax of the affiliate in respect of the other taxpayer at the end of the year, U.2 is the amount, if any, by which the amount determined under the description of Q in paragraph (a) exceeds the amount determined under the description of R in that paragraph, and U.3 is the amount, if any, by which the amount determined under the description of S in paragraph (a) exceeds the amount determined under the description of T in that paragraph, V is the other taxpayer’s relev