2012 Ruling 2011-0417711R3

Canco, which is a grandchild subsidiary of Parentco (a resident of Country 1), borrows money from time to time under note offerings in Canada or through issuing commercial paper in Canada, in each case, under a Parentco guarantee, and uses the proceeds to make interest-bearing loans (at not less than the rate prescribed under Regulation 4301(c), and at a positive spread, and at a term of X to Y years) to non-resident members of the Parentco group which are not foreign affiliates of Canco.

Rulings that such loans will be exempt loans under s. 17(15) and will not be subject to s. 15(2) by virtue of s. 15(2.3), and that there will be no income inclusion under s. 17(1).

Canco, which is a grandchild subsidiary of Parentco (a resident of Country 1), borrows money from time to time under note offerings in Canada or through issuing commercial paper in Canada, in each case, under a Parentco guarantee, and uses the proceeds to make interest-bearing loans (at not less than the rate prescribed under Regulation 4301(c), and at a positive spread, and at a term of X to Y years) to non-resident members of the Parentco group which are not foreign affiliates of Canco.

Rulings that such loans will be exempt loans under s. 17(15), and will not be subject to s. 15(2) by virtue of s. 15(2.3).