18 March 1992 T.I. (Tax Window, No. 18, p. 4, ¶1816)

Where a Canadian subsidiary guarantees a loan obtained by its U.S. parent from the U.S. bank, the Canadian subsidiary is performing a service to its U.S. parent the value of which is a taxable benefit under s. 15(1), notwithstanding that there might be no benefit under s. 15(1) if the U.S. parent had instead pledged the shares of the Canadian subsidiary as security for the loan.

Where a Canadian subsidiary guarantees the U.S. bank debt of its U.S. parent, the amount of a reasonable guarantee fee will be included in its income as an amount for other services. The decision in Melford Developments Inc. v. The Queen, 80 DTC 6075 at 6076-77 (FCTD), affirmed 81 DTC 5020 (FCA), affirmed 82 DTC 6281, [1982] 2 S.C.R. 504 established that a loan guarantee constitutes other services.