I-3 - Taxation Act

Section 171 Disposition versions

2017-12-07

171. For the purposes of sections 169, 170 and 172, a corporation’s or trust’s outstanding debts at any particular time in a taxation year to specified persons not resident in Canada are the aggregate of all amounts each of which is an amount outstanding at that time in respect of any debt or other obligation to pay an amount payable by the corporation or trust to a person who is, in the year, a specified person not resident in Canada, on which interest paid or payable is or would be, but for section 169, deductible in computing the corporation’s or trust’s income for the year.

However, the outstanding debts referred to in sections 169 and 170 do not include an amount outstanding at the particular time in relation to a debt or other obligation that is

(a)  an obligation to pay an amount to

i.  an insurance corporation not resident in Canada to the extent that the amount outstanding was, for the insurance corporation’s taxation year that included the particular time, designated insurance property in relation to an insurance business carried on in Canada through an establishment, or

ii.  an authorized foreign bank, if the bank uses or holds the amount outstanding at the particular time in its Canadian banking business; or

(b)  a debt obligation described in subparagraph ii of subparagraph a of the second paragraph of section 127.17, to the extent that the proceeds of the debt obligation can reasonably be considered to directly or indirectly fund at the particular time, in whole or in part, a pertinent loan or indebtedness (as defined in subparagraph ii of subparagraph a of the second paragraph of section 127.16) owing to the corporation or another corporation resident in Canada that does not, at the particular time, deal at arm’s length with the corporation.

1972, c. 23, s. 159; 1975, c. 22, s. 22; 1984, c. 15, s. 42; 1990, c. 59, s. 95; 1994, c. 22, s. 108; 1997, c. 3, s. 71; 1998, c. 16, s. 99; 2004, c. 8, s. 30; 2015, c. 24, s. 35; 2017, c. 29, s. 46.

2015-10-26

171. For the purposes of sections 169, 170 and 172, a corporation’s or trust’s outstanding debts at any particular time in a taxation year to specified persons not resident in Canada are the aggregate of all amounts each of which is an amount outstanding at that time in respect of any debt or other obligation to pay an amount payable by the corporation or trust to a person who is, in the year, a specified person not resident in Canada, on which interest paid or payable is or would be, but for section 169, deductible in computing the corporation’s or trust’s income for the year.

However, the outstanding debts referred to in sections 169 and 170 do not include an amount outstanding at the particular time in relation to a debt or other obligation to pay an amount to

(a)  an insurance corporation not resident in Canada to the extent that the amount outstanding was, for the insurance corporation’s taxation year that included the particular time, designated insurance property in relation to an insurance business carried on in Canada through an establishment; or

(b)  an authorized foreign bank, if the bank uses or holds the amount outstanding at the particular time in its Canadian banking business.

1972, c. 23, s. 159; 1975, c. 22, s. 22; 1984, c. 15, s. 42; 1990, c. 59, s. 95; 1994, c. 22, s. 108; 1997, c. 3, s. 71; 1998, c. 16, s. 99; 2004, c. 8, s. 30; 2015, c. 24, s. 35.

2006-03-01

171. The outstanding debts contemplated in sections 169 and 170 mean the aggregate of each amount outstanding at the particular time in respect of any debt or other obligation to pay an amount payable by the corporation to a person who was, in the year, a specified person not resident in Canada, on which interest paid or payable is or would be, but for section 169, deductible in computing the income of the corporation for the year.

However, the outstanding debts referred to in sections 169 and 170 do not include an amount outstanding at the particular time in relation to a debt or other obligation to pay an amount to

(a)  an insurance corporation not resident in Canada to the extent that the amount outstanding was, for the insurance corporation’s taxation year that included the particular time, designated insurance property in relation to an insurance business carried on in Canada through an establishment; or

(b)  an authorized foreign bank, if the bank uses or holds the amount outstanding at the particular time in its Canadian banking business.

1972, c. 23, s. 159; 1975, c. 22, s. 22; 1984, c. 15, s. 42; 1990, c. 59, s. 95; 1994, c. 22, s. 108; 1997, c. 3, s. 71; 1998, c. 16, s. 99; 2004, c. 8, s. 30.