Income Tax Act — I-3.3 95
gth, (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, produced, grown, extracted or processed in the country (I) under whose laws the vendor is governed and any of exists, was (unless the vendor was continued in any jurisdiction) formed or organized, or was last continued, and (II) in which the vendor’s business is principally carried on; or (b) property that is an interest in real property, or a real right in an immovable, located in, or a foreign resource property in respect of, the country (i) 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 (ii) in which the affiliate’s business is principally carried on. Contract manufacturing (3.2) For the purposes of clause (2)(a.1)(ii)(A), property of a particular foreign affiliate of a taxpayer is deemed to have been manufactured by the particular affiliate in a particular country if the property is (a) developed and designed by the particular affiliate in the particular country in the course of an active business carried on by the particular affiliate in the particular country; and (b) manufactured, produced or processed outside the particular country by another foreign affiliate of the taxpayer, during a period throughout which the taxpayer has a qualifying interest in the other affiliate, (i) under a contract between the particular affiliate and the other affiliate, and (ii) in accordance with specifications provided by the particular affiliate. Definitions (4) In this section, direct equity percentage at any time of any person in a corporation is the percentage determined by the following rules: (a) for each class of the issued shares of the capital stock of the corporation, determine the proportion of 100 that the number of shares of that class owned by that person at that time is of the total number of issued shares of that class at that time, and (b) select the proportion determined under paragraph (a) for that person in respect of the corporation that is not less than any other proportion so determined for that person in respect of the corporation at that time, and the proportion selected under paragraph (b), when expressed as a percentage, is that person’s direct equity percentage in the corporation at that time; ( pourcentage d’intérêt direct ) eligible controlled foreign affiliate , of a taxpayer, at any time, means a foreign affiliate of the taxpayer at that time, if (a) the affiliate is a controlled foreign affiliate of the taxpayer at that time and at the end of the affiliate’s taxation year that includes that time, and (b) the following condition is met: A ≥ 90% where A is the total of all amounts each of which would be the participating percentage (determined at the end of the taxation year) of a share owned by the taxpayer of the capital stock of a corporation, in respect of the affiliate, if (i) the definition relevant cost base were read without reference to the words “if the affiliate is an eligible controlled foreign affiliate of the taxpayer at that time,” in its subparagraph (b)(i), and (ii) the definition participating percentage in subsection (1) were read without reference to its paragraph (a) and the portion of its paragraph (b) before subparagraph (i); ( société étrangère affiliée contrôlée admissible ) equity percentage at any time of a person, in any particular corporation, is the total of (a) the person’s direct equity percentage at that time in the particular corporation, and (b) all percentages each of which is the product obtained when the person’s equity percentage at that time in any corporation is multiplied by that corporation’s direct equity percentage at that time in the particular corporation except that for the purposes of the definition participating percentage in subsection 95(1), par