Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Application of section 17
Position: See below
Reasons: See below
TEI Conference
December 6, 2000
Question 23
Subsection 17(2) - Inter-affiliate Loans
Would subsection 17(2) apply where a Canadian resident corporation loans funds ("First Loan") at a fair market value interest rate to its non-resident parent that, in turn, loans the funds ("Second Loan") to a related non-resident corporation that is not a controlled foreign affiliate of the Canadian resident corporation?
Agency's Position
Assuming that the requirements of paragraph 17(2)(b) are satisfied, subsection 17(2) would apply and, as a result, the non-resident corporation would be deemed to owe an amount equal to the amount of the Second Loan to the Canadian resident corporation.
The Department of Finance is aware that subsection 17(2) may produce unintended results in the foregoing circumstances.
Author: Daryl Boychuk
File: 2000-005605
Date: November 28, 2000
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