I-3 - Taxation Act

Section 577.7 Disposition versions

2017-02-08

577.7. Section 577.5 does not apply in respect of

(a)  a loan or indebtedness that is repaid, other than as part of a series of loans or other transactions and repayments, within two years of the day the loan was made or the indebtedness arose;

(b)  indebtedness that arose in the ordinary course of the business of the creditor or a loan made in the ordinary course of the creditor’s ordinary business of lending money if, at the time the indebtedness arose or the loan was made, bona fide arrangements were made for repayment of the indebtedness or loan within a reasonable time;

(c)  a loan that was made, or indebtedness that arose, in the ordinary course of carrying on a life insurance business outside Canada if

i.  the loan or indebtedness is owed by the taxpayer or by a subsidiary wholly-owned corporation of the taxpayer,

ii.  the taxpayer, or the subsidiary wholly-owned corporation, as the case may be, is a life insurance corporation resident in Canada,

iii.  the loan or indebtedness directly relates to a business of the taxpayer, or of the subsidiary wholly-owned corporation, that is carried on outside Canada, and

iv.  the interest on the loan or indebtedness is included in computing the active business income of the creditor, or if the creditor is a partnership, a member of the partnership, under clause A of subparagraph ii of paragraph a of subsection 2 of section 95 of the Income Tax Act (R.S.C. 1985, c. 1, (5th Suppl.)), or would be so included if it were otherwise income from property within the meaning of subsection 1 of that section 95; and

(d)  an upstream deposit owing to an eligible bank affiliate, subject to section 577.7.1.

2015, c. 21, s. 191; 2017, c. 1, s. 140.

2015-10-21

577.7. Section 577.5 does not apply in respect of

(a)  a loan or indebtedness that is repaid, other than as part of a series of loans or other transactions and repayments, within two years of the day the loan was made or the indebtedness arose;

(b)  indebtedness that arose in the ordinary course of the business of the creditor or a loan made in the ordinary course of the creditor’s ordinary business of lending money if, at the time the indebtedness arose or the loan was made, bona fide arrangements were made for repayment of the indebtedness or loan within a reasonable time; and

(c)  a loan that was made, or indebtedness that arose, in the ordinary course of carrying on a life insurance business outside Canada if

i.  the loan or indebtedness is owed by the taxpayer or by a subsidiary wholly-owned corporation of the taxpayer,

ii.  the taxpayer, or the subsidiary wholly-owned corporation, as the case may be, is a life insurance corporation resident in Canada,

iii.  the loan or indebtedness directly relates to a business of the taxpayer, or of the subsidiary wholly-owned corporation, that is carried on outside Canada, and

iv.  the interest on the loan or indebtedness is included in computing the active business income of the creditor, or if the creditor is a partnership, a member of the partnership, under clause A of subparagraph ii of paragraph a of subsection 2 of section 95 of the Income Tax Act (R.S.C. 1985, c. 1, (5th Suppl.)), or would be so included if it were otherwise income from property within the meaning of subsection 1 of that section 95.

2015, c. 21, s. 191.