Bradley, "Foreign Affiliates: A Technical Update", 1990 Conference Report, c. 43

Summary Under
Tax Topics - Income Tax Act - Section 91 - Subsection 91(5)

Deficiencies in s. 91(5) (pp. 43:7-43:8):

  • No recognition is provided for FAPI that was taxed in respect of a share while the share was owned by a related Canadian resident
  • If shares of a foreign affiliate are exchanged in the course of a tax rollover transaction (for example, a subsection 85.1(3) share exchange or a subsection 87(8) foreign merger), there is no "substituted property" rule whereby recognition for the previously taxed FAPI can be transferred to the new shares acquired on the exchange.
Summary Under
Tax Topics - Income Tax Act - Section 93 - Subsection 93(1)