CRA considers that a cross-border notional cash-pooling arrangement engages the B2B loan rules

CRA considers that a notional cash pooling arrangement between a non-resident parent and its various subsidiaries including Canco, and a non-resident bank, as a result of which Canco has an overdraft balance in its pool account, will be caught by the back-to-back loan rules in ss. 18(6)(c)(i) and 212(3.1)(c)(i) (i.e., some pool account deposits of non-resident affiliates of Canco will be considered to be “intermediary debts”). Accordingly, it was not necessary to consider whether the right of the non-resident bank to offset overdraft balances of any pool participants against deposit balances of other pool participants without prior notice engaged the specified right rules in ss. 18(6)(c)(ii) and 212(3.1)(c)(ii).

Neal Armstrong. Summary of 2015 TEI Roundtable, Q.6, 2015-0614241C6 under s. 212(3.1)(c).