I-3 - Taxation Act

Section 175.2.9 Disposition versions

2006-03-01

175.2.9. In computing the income of an authorized foreign bank from its Canadian banking business for a taxation year, there may be deducted on account of interest for each calculation period of the bank for the year,

(a)  where the total amount at the end of the period of its branch advances and debts to other persons and partnerships is 95% or more of the amount of its assets at that time, an amount not exceeding

i.  if the amount of debts to other persons and partnerships at that time is less than 95% of the amount of its assets at that time, the amount determined by the formula

E + D × (0.95 × A − C) / B, and

ii.  if the amount of debts to other persons and partnerships at that time is equal to or greater than 95% of the amount of its assets at that time, the amount determined by the formula

E × (0.95 × A) / C; and

(b)  in any other case, the aggregate of

i.  the amount determined by the formula

D + E, and

ii.  the product obtained by multiplying the average, based on daily observations, of the Bank of Canada bank rate for the period by the lesser of the amount claimed by the authorized foreign bank in its fiscal return it is required to file for the year under section 1000 and the amount determined by the formula

(0.95 × A) − (B + C).

In the formulas provided for in the first paragraph,

(a)  A is the amount of the bank’s assets at the end of the period;

(b)  B is the amount of the bank’s branch advances at the end of the period;

(c)  C is the amount of the bank’s debts to other persons and partnerships at the end of the period;

(d)  D is the aggregate of all amounts each of which is a reasonable amount on account of notional interest for the period, in respect of a branch advance, that would be deductible in computing the bank’s income for the year if it were interest payable by, and the advance were indebtedness of, the bank to another person and if this Act were read without reference to sections 133.6 and 175.2.8 to 175.2.11; and

(e)  E is the aggregate of all amounts each of which is an amount on account of interest for the period in respect of a debt of the bank to another person or partnership that would be deductible in computing the bank’s income for the year if this Act were read without reference to sections 133.6 and 175.2.8 to 175.2.11.

2004, c. 8, s. 32.