Income Tax Act — I-3.3 95
 not included in computing the income from a business other than an active business of the affiliate under this paragraph because of subsection (2.31)) is derived from the sale of such property (other than a property described in subparagraph (ii) the cost of which to any person is a cost referred to in subparagraph (i)) to persons with whom the affiliate deals at arm’s length (which, for this purpose, includes a sale of property to a non-resident corporation with which the affiliate does not deal at arm’s length for sale to persons with whom the affiliate deals at arm’s length) and, where this paragraph applies to include income of the affiliate from the sale of property in the income of the affiliate from a business other than an active business, (iii) the sale of such property shall be deemed to be a separate business, other than an active business, carried on by the affiliate, and (iv) any income of the affiliate that pertains to or is incident to that business shall be deemed to be income from a business other than an active business; (a.2) in computing the income from a business other than an active business for a taxation year of a foreign affiliate of a taxpayer (i) there shall be included the income of the affiliate for the year from the insurance of specified Canadian risks (which, for the purposes of this paragraph, includes income for the year from the reinsurance of specified Canadian risks), unless more than 90% of the gross premium revenue of the affiliate for the year from the insurance of risks (net of reinsurance ceded) was in respect of the insurance of risks (other than specified Canadian risks) of persons with whom the affiliate deals at arm’s length, (ii) if subparagraph (i) applies to include income of the affiliate from the insurance of specified Canadian risks, (A) the insurance of those risks is deemed to be a separate business, other than an active business, carried on by the affiliate, and (B) any income of the affiliate that pertains to or is incident to that business is deemed to be income from a business other than an active business, (iii) there shall be included the income of the affiliate for the year in respect of the ceding of specified Canadian risks — except to the extent that the income is included because of subparagraph (i) or (ii) — which, for the purposes of this paragraph, includes (A) income of the affiliate from services in respect of the ceding of specified Canadian risks, and (B) except to the extent the amount is included under clause (A), the amount, if any, by which the fair market value of the consideration provided in respect of the ceding of the specified Canadian risks exceeds the affiliate’s cost in respect of those specified Canadian risks, and (iv) if subparagraph (iii) applies to include income of the affiliate in respect of the ceding of specified Canadian risks, (A) the ceding of those risks is deemed to be a separate business, other than an active business, carried on by the affiliate, and (B) any income of the affiliate that pertains to or is incident to that business is deemed to be income from a business other than an active business; (a.21) for the purposes of paragraph (a.2), one or more risks insured by a foreign affiliate of a taxpayer that, if this Act were read without reference to this paragraph, would not be specified Canadian risks (in this paragraph referred to as the foreign policy pool ) are deemed to be specified Canadian risks if (i) the affiliate, or a person or partnership that does not deal at arm’s length with the affiliate, enters into one or more agreements or arrangements in respect of the foreign policy pool, (ii) the affiliate’s risk of loss or opportunity for gain or profit in respect of the foreign policy pool, in combination with its risk of loss or opportunity for gain in respect of the agreements or arrangements, can reasonably be considered to be — or could reasonably be considered to be if the affiliate had entered into the agreement