Philip Halvorson, Dalia Hamdy, "An Overview of the Foreign Affiliate Dumping Rules", (OBA article), 23 February 2016

Summary Under
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(3)

Background to introduction of Foreign-Affiliate Dumping rules (p.2)

[P]art of the Advisory Panel’s mandate was to provide recommendations to...

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Summary Under
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(1)

Purpose of s. 212.3(1)(b)(i) safe harbour (p. 3 at f.n. 7)

The purpose of the safe harbor rule is to reduce impediments to corporate takeovers....

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Summary Under
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(6)

Prevention of structured access to 30% intra-Canadian exception (p.5)

[G]iven that the CRIC must be controlled by a non-resident person in the...

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Summary Under
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(11)

Activation of dead asset under PLOI rules (p. 7)

[T]he FAD Rules are based on the presumption that an investment by a foreign-controlled CRIC in a...

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Summary Under
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(9)

PUC reinstatment rule avoids a double PUC grind or recognizes deployment of proceeds in Canada (p.8)

[A] investment by a foreign-controlled CRIC...

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Summary Under
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(16) - Paragraph 212.3(16)(a)

More closely-connected test for investments that otherwise would have been made (p. 8)

This first exception is intended to allow a Canadian...

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Summary Under
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(18) - Paragraph 212.3(18)(a)

Purpose of s. 212.3(18) exceptions (p. 9)

[T]hese exceptions are generally intended to prevent the application of the FAD rules when there is no...

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Summary Under
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(18) - Paragraph 212.3(18)(c)

Supplemented by anti-stuffing meansures (p. 10)

[S]imilar to the rules in paragraph 212.3(18)(a), paragraph 212.3(18)(c) also contains various...

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Summary Under
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(18.1)

Avoidance of misuse of PLOI exception (p. 10)

Subsection 212.3(18.1)…would prevent a CRIC from first acquiring a debt that was a PLOI (which...

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Summary Under
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(19)

Preferred share exception (p. 10)

Subsection 212.3(19) overrides the bona fide business exception or the internal reorganization exception on an...

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Summary Under
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(4) - Dividend Time

Prevention of stuffing by accommodating vendor within 1 year before CRIC acquisition (p. 6)

In the geneal case, one would expect that the...

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