Income Tax Act — I-3.3 93.4
dividend, and (ii) the reference to “the foreign tax prescribed to be applicable to such portion of the dividend” in subparagraph 113(1)(b)(i) refers to the foreign affiliate’s underlying foreign tax applicable (as defined in subsection 5907(1) of the Income Tax Regulations ) determined without regard to the affiliate’s underlying FABI surplus tax. Pre-2023 taxation years (4) An election is deemed to have been timely made by a taxpayer under subsection (2) for each of its taxation years that begin before April 7, 2022, if (a) an election is made by the taxpayer in prescribed form and manner on or before the filing-due date for the taxpayer’s first taxation year that begins after 2025, or (b) where the taxpayer is a partnership, an election is made, by or on behalf of the partnership, in prescribed form and manner on or before the day on which a return is required by section 229 of the Income Tax Regulations to be filed in respect of the first fiscal period that begins after 2025 or would be required to be filed if that section applied to the partnership. Pre-2026 taxation years (5) An election is deemed to have been timely made by a taxpayer under subsection (2), and under subsection (3) as applicable, for each of its taxation years that begin after April 6, 2022 and before 2026, if (a) an election is made by the taxpayer in prescribed form and manner on or before the filing-due date for the taxpayer’s first taxation year that begins after 2025, or (b) where the taxpayer is a partnership, an election is made, by or on behalf of the partnership, in prescribed form and manner on or before the day on which a return is required by section 229 of the Income Tax Regulations to be filed in respect of the first fiscal period that begins after 2025 or would be required to be filed if that section applied to the partnership. Tax-free surplus balance computation (6) If a taxpayer has made an election under this section in respect of any taxation year, the tax-free surplus balance (as defined in subsection 5905(5.5) of the Income Tax Regulations ) of a foreign affiliate of the taxpayer (or, if the taxpayer is a partnership, a foreign affiliate of a member of the partnership) at any time in the taxation year and any subsequent taxation year is to be determined as if subparagraph 5905(5.5)(b)(i) of the Income Tax Regulations were read as follows: (i) the amount, if any, determined by the formula A + B where A is the lesser of (A) the amount, if any, determined by the formula C × D where C is the affiliate’s underlying FABI surplus tax (as defined in subsection 93.4(1) of the Act) in respect of the corporation at that time, and D is the amount by which the amount that would be the corporation’s relevant tax factor (as defined in subsection 95(1) of the Act) for the corporation’s taxation year that includes that time if it were determined under paragraph (a) of that definition, exceeds one, and (B) the affiliate’s FABI surplus (as defined in subsection 93.4(1) of the Act) in respect of the corporation at that time, and B is the lesser of (A) the amount, if any, determined by the formula E × F where E is the affiliate’s underlying foreign tax other than its underlying FABI surplus tax (as defined in subsection 93.4(1) of the Act) in respect of the corporation at that time, and F is the amount by which the corporation’s relevant tax factor (as defined in subsection 95(1) of the Act) for the corporation’s taxation year that includes that time, exceeds one, and (B) the affiliate’s taxable surplus other than its FABI surplus (as defined in subsection 93.4(1) of the Act) in respect of the corporation at that time, and [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] 2026, c. 3, s. 27