Income Tax Act — I-3.3 95
 in the formula is to be determined using Canadian currency: A – B – C – D where A is the total of all amounts each of which is the affiliate’s income for the year that is from a qualifying indebtedness owing to, or an eligible currency hedge of, the affiliate and that would, in the absence of this subsection, be included in computing the income of the affiliate from a business other than an active business of the affiliate, B is the total of all amounts each of which is the affiliate’s loss for the year that is from a qualifying indebtedness owing to, or an eligible currency hedge of, the affiliate and that would, in the absence of this subsection, be deducted in computing the income of the affiliate from a business other than an active business of the affiliate, C is the total of all amounts each of which is the amount, if any, by which an amount included in computing the amount determined for A or B in respect of an upstream deposit exceeds the amount that would be the affiliate’s income, or is less than the amount that would be the affiliate’s loss, as the case may be, for the year from the upstream deposit if the interest received or receivable by the affiliate in respect of the upstream deposit were computed at an interest rate equal to the lesser of (A) the rate of interest in respect of the upstream deposit, and (B) the benchmark rate of interest, acceptable to the Minister, that is (I) if the upstream deposit is denominated in a qualifying currency (as defined in subsection 261(1)), the average, for the year, of a daily interbank offered rate for loans denominated in that currency with a term to maturity of three months, or (II) in any other case, the average, for the year, of a daily rate for Canadian dollar denominated bankers’ acceptances with a term to maturity of three months, and D is the amount determined by the formula E × F/G where E is the amount, if any, by which the amount determined for A exceeds the total of the amounts determined for B and C, F is the amount, if any, by which the total specified indebtedness owing to the affiliate for the year exceeds the affiliate’s excess liquidity for the year, and G is the total specified indebtedness owing to the affiliate for the year; and (b) there is to be included, in computing the income of the affiliate from an active business for the year, an amount equal to the proportion of the amount computed under the formula in subparagraph (a)(ii), computed as if each amount referred to in that formula were determined using the affiliate’s calculating currency, that the amount that is required to be deducted under paragraph (a) for the year is of the amount described in subparagraph (a)(ii). Investment business and excluded property (2.45) If an election is made under subsection (2.44) in respect of an eligible bank affiliate of an eligible Canadian bank for a taxation year of the affiliate, (a) for the purposes of the definition investment business in subsection (1), the bank, and any other person resident in Canada that does not deal at arm’s length with the bank, are deemed to deal at arm’s length with the affiliate in respect of the making of upstream deposits, and acquisitions of Canadian indebtedness from the bank or the other person, by the affiliate in the course of a business carried on by the affiliate in the year if the affiliate’s excess liquidity for the year is at least 90% of the total specified indebtedness owing to the affiliate for the year; and (b) for the purposes of paragraph (b) of the definition excluded property in subsection (1), (i) the fair market value of each upstream deposit and Canadian indebtedness owing to, and eligible currency hedge of, the affiliate is deemed to be nil, (ii) at any particular time, the lesser of the following amounts is 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