Income Tax Act — I-3.3 18.2
ment, to the extent that (i) the amount (A) is deductible in computing the taxpayer’s income for the year, or (B) in the case of a capital loss, reduces the amount determined under paragraph 3(b) in respect of the taxpayer or is deductible in computing the taxpayer’s taxable income for the year (except to the extent it has already been taken into account in determining an amount under this paragraph for a previous year), (ii) the agreement or arrangement is entered into (A) as a loan or other financing owing to or provided by the taxpayer, or a person or partnership that does not deal at arm’s length with the taxpayer, or (B) in relation to a loan or other financing owing to or provided by the taxpayer, or a person or partnership that does not deal at arm’s length with the taxpayer, to hedge the cost of funding or the borrowing or other financing, and (iii) the amount can reasonably be considered to reduce the return of the taxpayer, or a person or partnership that does not deal at arm’s length with the taxpayer, in respect of the loan or other financing; (b) in respect of the income or loss of a partnership, for a fiscal period that ends in the year, from any source or from sources in a particular place, an amount determined by the formula H × I where H is an amount that would be described in paragraph (a) if (i) the references to the taxpayer in that paragraph were read as references to the partnership, and (ii) the reference in subparagraph (a)(i) to “the taxpayer’s income for the year” were read as “the partnership’s income or loss from the source, or the source in a particular place, for a fiscal period”, and I is the taxpayer’s specified proportion, if the references in the definition specified proportion in subsection 248(1) to “total income or loss” were read as “income or loss from the source, or the source in a particular place”, (c) the portion of any amount included under the description of A (referred to in this paragraph as the “subject amount”) that can reasonably be considered to be excluded, reduced, offset or otherwise effectively sheltered from tax under this Part because an amount is deductible (i) under any of subsections 20(11) to (12.1) and 126(1) and (2), and (ii) in respect of income or profits tax paid to a country other than Canada that (A) can reasonably be considered to have been paid in respect of the subject amount, and (B) is not a tax substantially similar to tax under subsection 212(1), (d) the portion of any amount included under A that is not, because of an Act of Parliament, subject to tax under this Part. ( revenus d’intérêts et de financement ) lease financing amount means an amount that is the portion of a particular payment in respect of a particular lease entered into by a taxpayer that would be considered to be on account of interest if (a) the lessee had received a loan at the time the particular lease began and in a principal amount equal to the fair market value at that time of the property that is the subject of the particular lease; (b) interest had been charged on the principal amount of the loan outstanding from time to time at the rate — determined in accordance with section 4302 of the Income Tax Regulations — in effect at the time described in paragraph (a), compounded semi-annually not in advance; and (c) the particular payment was a blended payment of principal and interest, calculated in accordance with paragraph (b), on the loan applied firstly on account of interest on principal, secondly on account of interest on unpaid interest and thirdly on account of principal. ( montant du crédit-bail ) public sector authority means His Majesty in right of Canada, His Majesty in right of a province, an entity referred to in any of paragraphs 149(1)(c) to (d.6), a hospital authority (as defined in subsection 123(1) of the Excise Tax Act ) or a registered charity that is a public college , school authority or university (each as defined in subsection 123(1) of the Excise Tax Act ).