I-3 - Taxation Act

Section 113.1 Disposition versions

2017-12-07

113.1. For the purposes of section 113 and subject to section 127.19, “pertinent loan or indebtedness” means a loan received, or an indebtedness incurred, at any time, by a corporation not resident in Canada (in this section referred to as the “subject corporation”), or by a partnership of which the subject corporation is, at that time, a member, if the loan or indebtedness is an amount owing to a corporation resident in Canada (in this section and sections 113.2 and 113.3 referred to as the “Canadian corporation”) or to a qualifying Canadian partnership in respect of a Canadian corporation and if

(a)  section 113 would, in the absence of this section, apply to the amount owing;

(b)  the amount becomes owing after 28 March 2012;

(c)  at that time, the Canadian corporation is controlled by

i.  the subject corporation, or

ii.  a corporation not resident in Canada that does not deal at arm’s length with the subject corporation; and

(d)  a valid election has been made, in relation to the amount owing, under subparagraph i or ii of paragraph d of subsection 2.11 of section 15 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) by

i.  where the amount is owing to the Canadian corporation, the Canadian corporation and a corporation not resident in Canada that controls the Canadian corporation, or

ii.  where the amount is owing to the qualifying Canadian partnership, all the members of the qualifying Canadian partnership and a corporation not resident in Canada that controls the Canadian corporation.

Chapter V.2 of Title II of Book I applies in relation to an election made under subparagraph i or ii of paragraph d of subsection 2.11 of section 15 of the Income Tax Act.

2017, c. 29, s. 36.