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.
XXX
Our comments are as follows.
In our opinion the investment activities of the above noted corporation in respect to its subsidiaries are of an extensive enough scale as to constitute a carrying on of an active business therefore this income would be income from an active business and not foreign accrual property income.
The investment activities of the above noted corporation are, in our opinion, extensive enough in the 1978 taxation year as to constitute a carrying on of an active business. In 1977, the dividends from other foreign affiliates are excluded from foreign accrual property income by clause 95(1)(b)(i)(B). However the interest income from the Canadian parent company that was earned in 1977 that is, in our opinion, income from property or a business other than an active business is not excluded from foreign accrual property income by subparagraph 95(2)(a)(i) as the source of this income is not from a country other than Canada.
The investment activities of the above noted corporation are not, in our opinion, extensive enough to constitute a carrying on of an active business. However, as its only investment income is the interest on its loan to XXX and this loan interest is deductible in computing income from an active business or income from property that pertains to or is incident to an active business by XXX it is excluded from foreign accrual property income by subparagraph 95(2)(a)(i).
Factors that were taken into consideration in determining whether we would want to take the position that XXX and XXX were not carrying on active businesses are that the tax potential is minimal and that the taxpayer, XXX does not appear to be obtaining any undue or unintended Canadian tax advantage.
XXX
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