Income Tax Act — I-3.3 88
se as may reasonably be regarded as being the subsidiary’s expense or loss incurred in the course of carrying on a business and, where a business was carried on by the subsidiary in that year, such portion of the non-capital loss as may reasonably be regarded as being in respect of an amount deductible under paragraph 110(1)(k) in computing its taxable income for the year, is deductible only (i) if that business is carried on by the subsidiary or the parent for profit or with a reasonable expectation of profit throughout the particular year, and (ii) to the extent of the total of the parent’s income for the particular year from that business and, where properties were sold, leased, rented or developed or services rendered in the course of carrying on that business before that time, from any other business substantially all of the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services and for the purpose of this paragraph, where this subsection applied to the winding-up of another corporation in respect of which the subsidiary was the parent and this paragraph applied in respect of losses and restricted interest and financing expenses of that other corporation, the subsidiary shall be deemed to be the same corporation as, and a continuation of, that other corporation with respect to those losses and restricted interest and financing expenses, (f) any portion of a loss of the subsidiary that would otherwise be deemed by paragraph 88(1.1)(c), 88(1.1)(d) or 88(1.1)(d.1) to be a loss of the parent for a particular taxation year beginning after the commencement of the winding-up shall be deemed, for the purpose of computing the parent’s taxable income for taxation years beginning after the commencement of the winding-up, to be such a loss of the parent for its immediately preceding taxation year and not for the particular year, where the parent so elects in its return of income under this Part for the particular year, and (g) any portion of a restricted interest and financing expense of the subsidiary that would otherwise be deemed by paragraph (d.2) or (d.3) to be a restricted interest and financing expense of the parent for a particular taxation year beginning after the commencement of the winding-up shall be deemed, for the purpose of computing the parent’s taxable income for taxation years beginning after the commencement of the winding-up, to be a restricted interest and financing expense of the parent for its immediately preceding taxation year and not for the particular year, where the parent so elects in its return of income under this Part for the particular year. Cumulative unused excess capacity of subsidiary (1.11) If a subsidiary has been wound up in the circumstances described in subsection (1.1), for the purpose of computing the cumulative unused excess capacity of the parent for any taxation year of the parent that commenced after the commencement of the winding up, the absorbed capacity, the excess capacity and any transferred capacity, of the subsidiary for any particular taxation year are deemed to be an amount of absorbed capacity, an amount of excess capacity and an amount of transferred capacity, respectively, of the parent for the taxation year of the parent in which the subsidiary’s particular taxation year ended. Adjusted taxable income — non-capital losses of subsidiary (1.12) If paragraph (1.1)(c), (d) or (d.1) deems a particular portion of a non-capital loss for a taxation year (referred to in this paragraph as the “subsidiary loss year”) of a subsidiary that has been wound up to be the parent’s non-capital loss for a taxation year (referred to in this paragraph as the “parent loss year”) and the parent deducts an amount in respect of the parent’s non-capital loss under paragraph 111(1)(a) in computing taxable income for a particular taxation year, for the purpose of determining the amount included under par