Subsection 17(1) - Amount owing by non-resident
Cases
Liampat Holdings Ltd. v. The Queen, 96 DTC 6020, [1996] 1 CTC 343 (FCTD)
The taxpayer's counsel was unsuccessful in an argument that the deemed receipt of interest pursuant to s. 17(1) was a rebuttable rather than an...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 165 - Subsection 165(1) | 137 | |
| Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions | "deems" is irrebuttable | 31 |
See Also
Upper Lakes Shipping Ltd. v. MNR, 92 DTC 2381, [1993] 1 CTC 2011 (TCC)
An agreement between the taxpayer and the other arm's length shareholder of a Bermudan subsidiary ("Open Bulk") provided that to the extent that...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Retroactivity/Retrospectivity | 123 |
Leonard Reeves Incorporated v. Minister of National Revenue, 91 DTC 425, [1991] 1 CTC 2293 (TCC)
The Minister conceded that s. 17 of the Act does not authorize the imputation of interest with respect to loans made by a Canadian corporation to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(2) | 67 | |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(n) | 85 |
E.H. Price Limited v. Minister of National Revenue, 91 DTC 135, [1991] 1 CTC 2045 (TCC)
Trade accounts receivable owing to the taxpayer by an Australian corporation in respect of merchandise shipped to the Australian corporation by...
A.C. Simmonds & Sons Ltd. v. MNR, 89 DTC 707, [1990] 1 CTC 2087 (TCC)
Because a U.S. affiliate ("Dynacharge U.S.") of the taxpayer had insufficient bank credit, the taxpayer obtained letters of credit addressed to...
Administrative Policy
28 May 2019 Internal T.I. 2018-0772971I7 - Interaction between sections 94, 17, 247
The beneficiaries of CdnTrust, a trust resident in Canada that wholly-owns Canco, and of NRTrust, a factually non-resident trust that wholly-owns...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 94 - Subsection 94(2) - Paragraph 94(2)(f) | failure to charge for services rendered by a Canco to a NR sub of a NR trust tainted the NR trust under s. 94(2) | 258 |
| Tax Topics - Income Tax Act - Section 94 - Subsection 94(2) - Paragraph 94(2)(a) | NIB loan by a Canco to a NR sub of a NR trust tainted the NR trust under s. 94(2) | 222 |
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | any subsequent adjustment under s. 247(2) would not affect the application of s. 94(2)(a) to an NIB loan by Canco to a NR Trust sub | 331 |
9 March 2011 External T.I. 2003-0017231E5 - Application of section 17
The phrase "owes an amount" in s. 17(1) is not limited to money that is loaned, and includes unpaid consideration, amounts owing to a corporation...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 17 - Subsection 17(11.2) | 26 |
16 October 2007 Internal T.I. 2007-0253161I7 F - Revenu d'intérêts réputés
Canco, which had a May 31 year end, on June 1, 2004, sold a property to an unrelated non-resident corporation (Foreign Co), giving rise to an...
28 August 2003 Internal T.I. 2003-0019767 F - Investissement dans une société étrangère
All the shares of Foreignco, which made investments in stock market shares, were held by Mr. A (apparently, non-resident). Mr. B (apparently,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Controlled Foreign Affiliate | redeemable convertible rights of a Canco investor in Foreignco were not shares, so that Foreignco was not a CFA | 141 |
| Tax Topics - Income Tax Act - Section 94.1 - Subsection 94.1(1) | inferred satisfaction of main reason test where all stock market investment income and gains were reinvested free of local tax | 377 |
16 February 1995 External T.I. 9432245 - INTEREST ON LOAN TO NON-RESIDENT
Where the non-resident subsidiary subsequently becomes resident in Canada, s. 17(1) will cease to apply to any amounts still outstanding after...
October 1992 Central Region Rulings Directorate Tax Seminar, Q. K (May 1993 Access Letter, p. 231)
The reasonable rate of interest should reflect the amount that the lender would expect to receive if the loans were made on an arm's length basis.
12 March 1992 External T.I. 5-910839
With respect to an advance made by a Canadian licensor to a U.S. licensor that was repayable only out of royalties to be earned by the licensor,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(d) - Subparagraph 212(1)(d)(vi) | 82 |
10 March 1992 T.I. (Tax Window, No. 17, p. 20, ¶1800)
An advance by a Canadian corporation to an unrelated U.S. corporation to assist the U.S. corporation in the development of specific computer...
6 February 1992 T.I. 903218 (March 1993 Access Letter, p. 68, ¶C9-257; Tax Window, No. 16, p. 23, ¶1734)
S.17(1) will not apply if it is determined that nil is the reasonable rate of interest in the particular situation.
91 C.R. - Q.52
Re consequences of repossession by a non-resident individual.
17 April 1991 Memorandum (Tax Window, No. 2, p. 17, ¶1203)
On a merger of a direct U.S. subsidiary with a grandchild U.S. subsidiary under U.S. laws which provide that the assets and liabilities of a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 17 - Subsection 17(3) | 65 |
3 October 1990 Memorandum (Tax Window, Prelim. No. 1, p. 19, ¶1029)
Where a Canadian lender assigns the non-resident loan, s. 17(1) cannot apply to the assignee because the assignee did not make a loan to the...
Articles
N. Boidman, "Revised Loan Proposals would Hit both Canadian and Foreign-Based Multi-Nationals: A Startling About-face", Tax Management International Journal, Vol. 28, No. 2, February 12, 1999, p. 75.
Elinore J. Richardson, A. Nikolakakos, "Proposed Amendments to the Taxation of Foreign Source Income", Corporate Finance, Vol. VII, No. 1, 1998, p. 574.
Subsection 17(1.1)
Administrative Policy
7 October 2020 APFF Roundtable Q. 10, 2020-0852221C6 F - Interest-free loan to a related foreign company
Is an individual who makes an interest-free loan to a non-resident corporation with which the individual does not deal at arm's length required to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) - Paragraph 247(2)(a) | s. 247 would apply to an interest-free loan made by a Canadian individual to a non-arm’s length non-resident corporation | 255 |
26 April 2017 IFA Roundtable Q. 1, 2017-0691071C6 - Interaction between s17 and s247
CRA indicated that even though a cross-border loan from Canco to a CFA was subject to s. 17 (so that interest income was imputed at 1%), the total...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(7) | s. 247(2) generally applies to boost the imputed cross-border interest arising under s. 17 | 171 |
Subsection 17(2) - Anti-avoidance rule — indirect loan
Administrative Policy
2012 Ruling 2012-0452291R3 - XXXXXXXXXX - ATR
Existing structure.
A Canadian public company (Pubco) has x% (apparently, over 50%) of its common shares held by a non-resident public company...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(2) | 589 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Share | MRPS were shares | 147 |
12 May 2000 Internal T.I. 2000-0008237 F - Round table question 6 - Quebec CGA
When asked to describe a situation in which s. 17(2) would apply and which would not have been GAARable before the enactment of s. 17(2), CRA...
12 May 2000 Internal T.I. 2000-0008247 F - Loan to non-resident person
A wholly owned Canadian subsidiary (Canco) of a US shareholder had two foreign affiliates (FC 1) and FC 2), both of which had unrelated...
Articles
Joanna R. Barsky, "CCRA Oversteps its Bounds With Outbound Loans", Canadian Current Tax, Vol. 16 No. 1, October 2005, p. 1.
Allan R. Lanthier, "Not Comfortably in Debt", Canadian Tax Highlights, Vol. 8, No. 9, 26 September 2000, p. 70.
Subsection 17(3) - Exception to anti-avoidance rule — indirect loan
Cases
Massey-Ferguson Ltd. v. The Queen, 77 DTC 5013, [1977] CTC 6 (FCA)
It was found that the taxpayer had loaned funds on a non-interest-bearing basis to a wholly-owned Canadian subsidiary ("Verity") whose business...
See Also
Distillers Corp - Seagrams Ltd v. MNR, 80 DTC 1649 (T.R.B.)
An indirect subsidiary of the taxpayer did not qualify as a subsidiary controlled corporation given that "the word 'belong' means that the shares...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Subsidiary Controlled Corporation | 33 |
Administrative Policy
31 January 1994 External T.I. 9331835 F - Loans to Non Residents Used in Their Business
RC's answer to Question 10 of the 1988 Revenue Canada Round Table remains the same.
93 CPTJ - Q.4
S.17(3) will not apply where a Canadian corporation loans money on an interest-free basis to a U.S. holding company which then uses the proceeds...
91 CPTJ - Q.8
The exception in s. 17(3) will not apply where a Canadian parent makes an interest-free loan to its wholly-owned U.S. subsidiary (a holding...
17 April 1991 Memorandum (Tax Window, No. 2, p. 17, ¶1203)
Where a Canadian corporation makes a non-interest bearing loan to its wholly-owned U.S. subsidiary and then transfers the shares of the subsidiary...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 17 - Subsection 17(1) | 136 |
26 March 1990 T.I. (August 1990 Access Letter, ¶1366)
In light of the meaning given to the word "belongs" by the trial judge in Massey-Ferguson, the term "subsidiary controlled corporation" does not...
88 C.R. - Q.10
If the activities of the subsidiary consisted of financing other corporations, then the number of loans and the reasonableness of the interest...
80 C.R. - Q.28
If the principal activity of a nonresident subsidiary controlled corporation consists of financing other corporations, then the number of loans...
79 C.R. - Q.25
Where the funds are invested by the wholly-owned foreign subsidiary ("WOS") in a controlled subsidiary for use in gaining or producing income from...
Subsection 17(7) - Exception
Articles
Mark D. Brender, Marc Richardson Arnould, Patrick Marley, "Cross-Border Cash-Pooling Arrangements Involving Canadian Subsidiaries: A Technical Minefield", Tax Management International Journal, 2014, p. 345.
Cash pooling description (p.345)
[W]e will examine a typical cash-pooling arrangement involving a Canadian subsidiary of a multinational group....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | 249 |
Subsection 17(8) - Exception
Administrative Policy
5 May 2021 IFA Roundtable Q. 5, 2021-0887671C6 - 2021 IFA Q5 - Applicability of 247(7)
A limited partnership (LP) between two resident related corporations (ACo and BCo) made a non-interest bearing loan to FA, which was wholly-owned...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(7) | a s. 17(8) exception for a loan by a partnership of two related Cancos to an FA does not imply a s. 247(7) exclusion of s. 247(2) | 231 |
Paragraph 17(8)(a)
Subparagraph 17(8)(a)(i)
Administrative Policy
15 May 2017 External T.I. 2016-0676701E5 - Subsection 17(8)
When asked to clarify its views on the indirect use of funds in the context of s. 17(8)(a)(i)(A), CRA stated:
We… agree that the exceptions to...
Subparagraph 17(8)(a)(ii)
Administrative Policy
13 January 2012 Internal T.I. 2011-0414111I7 F - Deemed Interest Incomes - Exception 17(8)
Where a taxable Canadian corporation makes a non-interest bearing loan to a controlled foreign affiliate (CFA 1) which, in turn, uses the proceeds...
Subsection 17(8.1) - Borrowed money
Paragraph 17(8.1)(b)
Administrative Policy
5 June 2015 Internal T.I. 2015-0569061I7 F - Non-interest-bearing loan to a controlled foreign affiliate
CFA 2, a controlled foreign affiliate of the taxpayer (a corporation resident in Canada), used the proceeds of a loan received from another CFA...
Subsection 17(11.2) - Back-to-back loans
Administrative Policy
9 March 2011 External T.I. 2003-0017231E5 - Application of section 17
CRA considers a deposit with a bank or other financial institution to be a loan to the institution, including for the purposes of s. 17(11.2).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 17 - Subsection 17(1) | 97 |
Subsection 17(15) - Definitions
Controlled foreign affiliate
Articles
Angelo Nikolakakis, "Lehigh Cement Limited v. The Queen – A Bridge Too FAAAR", International Tax Planning, Volume XIX, No. 1, 2013, p. 1284
In the course of a submission that it was contrary to the scheme of the Act to apply s. 95(6)(b) to attack indirect loans to a non-resident...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(n) | 276 | |
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(6) - Paragraph 95(6)(b) | 327 |
Exempt loan or transfer
Administrative Policy
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(2.3) | Finco makes eligible under ordinary course exemption | 118 |