Income Tax Regulations — 5903.1
5903.1 (1) For the purposes of the description of F.1 in the definition foreign accrual property income in subsection 95(1) of the Act, subject to subsection (2), the prescribed amount for the year (referred to in this subsection and subsection (2) as the “particular year”) is the total of all amounts each of which is a portion designated for the particular year by the taxpayer of the foreign accrual capital loss of the affiliate for a taxation year of the affiliate that is (a) one of the twenty taxation years of the affiliate that immediately precede the particular year; or (b) one of the three taxation years of the affiliate that immediately follow the particular year. (2) For the purposes of this subsection and subsection (1), (a) a portion of a foreign accrual capital loss of the affiliate for any taxation year of the affiliate may be designated for the particular year only to the extent that the foreign accrual capital loss exceeds the total of all amounts each of which is a portion, of the foreign accrual capital loss, designated by the taxpayer for a taxation year of the affiliate that precedes the particular year; (b) no portion of the foreign accrual capital loss of the affiliate for a taxation year of the affiliate is to be designated for the particular year until the foreign accrual capital losses of the affiliate for the preceding taxation years referred to in paragraph (1)(a) have been fully designated; and (c) if any person or partnership that was, at the end of a taxation year (referred to in this paragraph as the “relevant loss year”) of the affiliate, a relevant person or partnership in respect of the taxpayer designates for a taxation year (referred to in this paragraph as the “relevant claim year”) of the affiliate a particular portion of the foreign accrual capital loss of the affiliate for the relevant loss year, there is deemed to have been designated for the relevant claim year by the taxpayer the portion of that loss that is the greater of (i) the particular portion, and (ii) the greatest of the portions of that loss that are so designated by any other relevant persons or partnerships in respect of the taxpayer. (3) For the purposes of this section, and subject to subsection (4), foreign accrual capital loss of the affiliate for a taxation year of the affiliate means (a) where, at the end of the year, the affiliate is a controlled foreign affiliate of a person or partnership that is, at the end of the year, a relevant person or partnership in respect of the taxpayer, the amount, if any, by which (i) the amount determined under paragraph (a) of the description of E in the formula in the definition foreign accrual property income in subsection 95(1) of the Act in respect of the affiliate for the year exceeds (ii) the amount determined for E in that formula in respect of the affiliate for the year; and (b) in any other case, nil. (4) In computing under subsection (3) the foreign accrual capital loss of the affiliate for a taxation year, if the affiliate or another corporation receives a payment described in subsection 5907(1.3) from a non-resident corporation that is, at the time of the payment, a foreign affiliate of a relevant person or partnership in respect of the taxpayer and any portion of the payment can reasonably be considered to relate to an allowable capital loss or a portion of an allowable capital loss of the affiliate for the year described in the description of E in the definition foreign accrual property income in subsection 95(1) of the Act, the amount of the loss or portion of the loss is deemed to be nil. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] 2013, c. 34, s. 82