Income Tax Regulations — (a)
net earnings of a foreign affiliate of a corporation for a taxation year of the affiliate (a) from an active business carried on by it in a country is the amount of its earnings for the year from that active business carried on in that country minus the portion of any income or profits tax paid to the government of a country for the year by the affiliate that can reasonably be regarded as tax in respect of those earnings, (b) in respect of foreign accrual property income is the amount that would be its foreign accrual property income for the year, if the formula in the definition foreign accrual property income in subsection 95(1) of the Act were read without reference to F and F.1 in that formula and the amount determined for E in that formula were the amount determined under paragraph (a) of the description of E in that formula and the Act were read without regard to its clause 95(2)(f.11)(ii)(D), minus the portion of any income or profits tax paid to the government of a country for the year by the affiliate that can reasonably be regarded as tax in respect of that income, (c) from dispositions of property used or held by it principally for the purpose of gaining or producing income from an active business carried on by it in a country that is not a designated treaty country (other than Canada) is the amount, if any, by which (i) the portion of the affiliate’s taxable capital gains for the year from those dispositions that can reasonably be considered to have accrued after November 12, 1981 exceeds (ii) the portion of any income or profits tax paid to the government of a country for the year by the affiliate that can reasonably be regarded as tax in respect of the amount determined under subparagraph (i), (d) [Repealed, 2013, c. 34, s. 85] (e) from the disposition of a property that is an excluded property of the affiliate that is described in paragraph (c) of the definition excluded property in subsection 95(1) of the Act but that would not be an excluded property of the affiliate if that paragraph were read in the manner described in sub-subclause (d)(ii)(E)(II)2 of the definition exempt earnings is the amount, if any, by which (i) the portion of the affiliate’s taxable capital gain for the year from the disposition of the property that accrued after its 1975 taxation year exceeds (ii) the portion of any income or profits tax paid to the government of a country for the year by the affiliate that can reasonably be regarded as tax that was paid in respect of the amount determined under subparagraph (i), and (f) from a particular disposition of a property, that is an excluded property of the affiliate because of paragraph (c.1) of the definition excluded property in subsection 95(1) of the Act, that related to (i) an amount that was receivable under an agreement that relates to the sale of a particular property the taxable capital gain or allowable capital loss from the sale of which is included under any of paragraphs (c) to (e) of this definition or of the definition net loss , as the case may be, (ii) an amount that was receivable and was a property that was described in paragraph (c) of that definition excluded property but that would not have been an excluded property of the affiliate if that paragraph were read in the manner described in sub-subclause (d)(ii)(E)(II)2 of the definition exempt earnings , or (iii) an amount payable, or an amount of indebtedness, described in clause (c.1)(ii)(B) of that definition excluded property arising in respect of the acquisition of an excluded property of the affiliate any taxable capital gain or allowable capital loss from the disposition of which would, if that excluded property were disposed of, be included under any of paragraphs (c) to (e) of this definition or of the definition net loss , as the case may be, is the amount, if any, by which (iv) the portion of the affiliate’s taxable capital gain for the year from the particular disposition that accrued after its 1975 taxation y