Principal Issues: The meaning of non-portfolio earnings as that term is defined in subsection 197(1) of the ITA in a specific hypothetical situation. Is interest income on loans made to a foreign affiliate, that has no operations or property in Canada, by a SIFT partnership, which is not otherwise in the business of lending money, considered non-portfolio earnings of the SIFT partnership?
Position: Question of fact but unlikely given the facts in the hypothetical situation.
Reasons: Based on jurisprudence and given the facts in the hypothetical situation, it is unlikely that the SIFT would be considered to be carrying on a business in Canada in making the loans to the foreign affiliate and it is unlikely that the loans would be considered to be property used by the SIFT in the course of carrying on a business in Canada. Consequently, it is unlikely that the interest income from the loans would be considered non-portfolio earnings of the SIFT as defined in subsection 197(1).