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Although the Directorate indicated that one possible interpretation would require the associated CCPCs to convert each component of their TCEC computation (which the Directorate noted “would be administratively burdensome, especially when the associated corporations could not rely on subsection 261(7)”), the Directorate concluded: The day the TCEC of the associated corporation is considered to “arise” for the purposes of determining the conversion rate according to paragraph 261(5)(c) is the last day of the taxation year of the associated corporation for which it is computed because that is the day when the amount of the TCEC is determined pursuant to section 181.2 (hence when an amount relevant to computing the Taxpayer’s Canadian tax results is created). ...

In this regard, CRA ruled that, for the purposes of s. 55(3.1)(b)(i)(A)(II), in determining whether 10% or more of the FMV of the Foreign Spinco common shares is derived from shares of TC or DC “any indebtedness of Foreign Spinco that is not a secured debt and that is not a debt related to a particular property will be considered to reduce the FMV of each property of Foreign Spinco pro rata in proportion to the relative FMV of all property of Foreign Spinco.” ...

Here, since Canco directly owned 100% of a non-resident corporation (Nrco1), and indirectly owned 100% of each of the other two non-resident corporations (Nrco2 and Nrco3), through Nrco1, Canco would be considered the lowest-tier corporation in the group of taxpayers resident in Canada. ...

If the employee worked in Canada but the employment duties required significant time in another country, an apportionment of the individual’s salary or wages based on the number of working days spent in Canada and in that other country is (per Folio S5-F2-C1) usually considered appropriate in determining the amount of foreign-source employment income for the purpose of the foreign tax credit calculation. ...

S. 51.1 will apply to the conversions in 1 and 5 such that Forco and the Partnership will be considered to dispose of the Notes for their ACB and to have reacquired them for the same amount. ...

[T]he term "paid... for the year"...relates to the year for which the taxpayer is liable to pay tax to the foreign jurisdiction for the income which is considered to have been earned under the tax law of the foreign jurisdiction even though the income may not be realized in Canada in the year for which the foreign tax is paid. ...

" The letter then states: For the purposes of subclause 55(3.1)(b)(i)(A)(II), in determining whether XXX% or more of the FMV of the common shares of Foreign Spinco that Foreign Pubco owns was derived from the shares of Canco, TCo, Newco 3, Forco, Foreign Pubco, Newco 4 and New Holdco as described [above], the External Debt of Foreign Spinco…will be considered to reduce the FMV of each property of Foreign Spinco pro rata in proportion to the relative FMV of all property of Foreign Spinco. ...

[and] [f]or this purpose, ACo will not be considered to have been wound up until it has been formally dissolved. ...

" Consequently, a corporation which has neither assets nor liabilities at the end of a taxation year (or, in any event, has no liabilities at that time) cannot generally be considered insolvent for purposes of ITA subparagraph 50(1)(b)(iii). ...

Respecting who are the objects of the test provided in subsection 74.4(2), which refers to where it may reasonably be considered that where one of the main reasons for a transfer or a loan of property to a corporation may be to reduce the income of the transferor and to benefit a designated person in respect of the individual, we are of the view that a designated person in respect of Trust A would include, in this situation, a person under 18 years who would be beneficially interested in Trust A if subsection 248(25) applied without taking into account clauses (b)(iii)(A)(II) to (IV), or a person under 18 years who did not deal at arm's length with a person who would be beneficially interested in Trust A if subsection 248(25) applied without taking into account clauses (b)(iii)(A)(II) to (IV). ...