I-3 - Taxation Act

Section 592.2 Disposition versions

2017-02-08

592.2. Where shares of a class of the capital stock of a foreign affiliate of a particular corporation resident in Canada are owned, based on the assumptions contained in paragraph c of section 600, by a partnership at the time when the foreign affiliate pays a dividend on those shares to the partnership, the following rules apply:

(a)  for the purposes of sections 589 to 592 and 746 to 749 and any regulations made under those sections,

i.  each member of the partnership (other than another partnership) is deemed to have received a portion of the dividend equal to the proportion of the dividend that the fair market value of the member’s interest held, directly or indirectly through an interest in one or more other partnerships, in the partnership at that time is of the fair market value of all the interests in the partnership held directly by members of the partnership at that time, and

ii.  the portion of the dividend that is deemed to have been received by a member of the partnership at that time, under subparagraph i, is deemed to have been received by the member in equal proportions on each share of the foreign affiliate that is property of the partnership at that time; and

(b)  for the purpose of applying sections 746 to 749, in relation to the dividend referred to in subparagraph i of subparagraph a, each share of the foreign affiliate referred to in subparagraph ii of subparagraph a is deemed to be owned by each member of the partnership.

In addition, notwithstanding subparagraphs a and b of the first paragraph, the following rules apply:

(a)  where the particular corporation is a member of the partnership, the amount deductible under sections 746 to 749, in relation to the dividend referred to in subparagraph i of subparagraph a of the first paragraph shall not exceed the portion of the amount of the dividend included in computing its income pursuant to section 600; and

(b)  where another foreign affiliate of the particular corporation is a member of the partnership, the amount included in computing the income of that other foreign affiliate, in relation to the dividend referred to in subparagraph i of subparagraph a of the first paragraph shall not exceed the amount that would be included in computing its income pursuant to section 600, in relation to that dividend, but for this section and if the foreign accrual property income of that other foreign affiliate were determined without reference to the value of H of the formula provided for in the definition of “foreign accrual property income” in subsection 1 of section 95 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)).

2004, c. 8, s. 123; 2017, c. 1, s. 144.

2006-03-01

592.2. Where shares of a class of the capital stock of a foreign affiliate of a particular corporation resident in Canada are owned, based on the assumptions contained in paragraph c of section 600, by a partnership at the time when the foreign affiliate pays a dividend on those shares to the partnership, the following rules apply:

(a)  for the purposes of sections 589 to 592 and 746 to 749 and any regulations made under those sections,

i.  each member of the partnership is deemed to have received a portion of the dividend equal to the proportion of the dividend that the fair market value of the member’s interest in the partnership at that time is of the fair market value of the aggregate of all members’ interests in the partnership at that time, and

ii.  the portion of the dividend that is deemed to have been received by a member of the partnership at that time, under subparagraph i, is deemed to have been received by the member in equal proportions on each share of the foreign affiliate that is property of the partnership at that time; and

(b)  for the purpose of applying sections 746 to 749, in relation to the dividend referred to in subparagraph i of subparagraph a, each share of the foreign affiliate referred to in subparagraph ii of subparagraph a is deemed to be owned by each member of the partnership.

In addition, notwithstanding subparagraphs a and b of the first paragraph, the following rules apply:

(a)  where the particular corporation is a member of the partnership, the amount deductible under sections 746 to 749, in relation to the dividend referred to in subparagraph i of subparagraph a of the first paragraph shall not exceed the portion of the amount of the dividend included in computing its income pursuant to section 600; and

(b)  where another foreign affiliate of the particular corporation is a member of the partnership, the amount included in computing the income of that other foreign affiliate, in relation to the dividend referred to in subparagraph i of subparagraph a of the first paragraph shall not exceed the amount that would be included in computing its income pursuant to section 600, in relation to that dividend, but for this section and if the foreign accrual property income of that other foreign affiliate were determined without reference to the value of H of the formula provided for in the definition of “foreign accrual property income” in subsection 1 of section 95 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement).

2004, c. 8, s. 123.