Section 90

Subsection 90(1) - Dividend from non-resident corporation

See Also

Ahmad v. The Queen, 2013 DTC 1112 [at 601], 2013 TCC 127 (Informal Procedure)

The taxpayer held 1000 shares in a Bermudan corporation ("Tyco"). In a corporate reorganization, Tyco distributed 250 shares to the taxpayer of...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Revenue and Customs Commissioners v. First Nationwide, [2012] BTC 99, [2012] EWCA Civ 278

The taxpayer, in cooperation with two banks, a Cayman Islands corporation and its parent, implemented the following series of transactions:

The...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Substance 73

Marshall v. The Queen, 2011 DTC 1353 [at 1976], 2011 TCC 497

The taxpayer was a shareholder of a Bermudian corporation ("Tyco"), and received shares as part of the same spin-off described in Capancini, where...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Capancini v. The Queen, 2010 DTC 1394 [at 4569], 2010 TCC 581 (Informal Procedure)

Under a reorganization, the Canadian-resident taxpayer received, in exchange for shares he previously held of Tyco International Ltd. (a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Morasse v. The Queen, 2004 DTC 2435, 2004 TCC 239 (Informal Procedure)

The taxpayer, who held American Depositary Receipts for a Mexican public company (Telmex) became the owner of an equal number of shares of another...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Cangro Resources Ltd. v. MNR, 67 DTC 582 (TAB)

A payment received by the taxpayer that was stated to be made out of "paid-in capital and paid-in surplus" pursuant to the provisions of the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
dividend
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) 118
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Dividend distributions out of share premium based on number of shares held were dividends 231

Robwaral Ltd. v. MNR, 60 DTC 1025, [1960] CTC 16 (Ex Ct), briefly aff'd 64 DTC 5266 (SCC)

A private Ontario company declared a dividend on December 21, 1953 payable to common shareholders of record on December 31, 1953, and then drew...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
received
Locations of other summaries Wordcount
Tax Topics - General Concepts - Payment & Receipt dividend not received until cheque received 41

Administrative Policy

25 August 2014 External T.I. 2014-0528361E5 - premium on redemption of foreign affiliate shares

After noting that in 2012-0439741I7 "we indicate that upon redemption of MRPS [mandatory redeemable preference shares], the redemption premium...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Dividend redemption premium is proceeds 76

30 April 2013 Internal T.I. 2012-0439741I7

withdrawn by CRA on 25 August 2014

Mandatory Redeemable Preferred Shares ("MRPS"): are voting; have a mandatory redemption date approximately 10...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Dividend treatment of MRPS as equity 198
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Share treatment of MRPS as equity 193

12 July 2011 External T.I. 2010-0391621E5 - Capital Gains Distributions

Capital gains distributions made to Canadian-resident shareholders by U.S. non-diversified closed-ended management investment companies, comprised...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

21 October 2004 Internal T.I. 2004-0060131I7 - Characterization of Foreign Dividend

The distribution of amounts out of a share premium account of a foreign corporation that could have been declared and paid as a dividend under the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

31 August 1999 APFF Roundtable Q. 3, 9920920 F - RAPATRIEMENT DU CAPITAL D'UNE LLC

Publico, a Canadian public corporation, invested $1 million in its wholly-owned US affiliate which is an LLC under the American corporate law. ...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

28 October 1997 External T.I. 9711965 - RETURN OF CAPITAL FROM A U.S. CORPORATION

Whether a capital distribution made to a Canadian shareholder of a U.S. corporation would be a dividend or a return of capital for Canadian tax...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Income Tax Technical News, No. 11, September 30, 1997, "U.S. Spin-Offs (Divestitures) - Dividends in Kind"

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 52 - Subsection 52(1) 21

8 January 1996 External T.I. 9428025 - RETURN OF CAPITAL FROM A DELAWARE CORPORATION

It is the Department's view that a dividend can include any distribution of property by a corporation to its shareholders that is not a return of...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

8 December 1995 External T.I. 9415515 - PAID-UP CAPITAL REDUCTIONS- DELAWARE CORPORATIONS

FA1, a Delaware corporation, wishes to make a cash distribution to Canco by reducing its capital. However, as under Delaware corporate law a cash...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(3) capital distribution by Delaware corp 141

24 March 1994 External T.I. 9402855 - DISTRIBUTIONS FROM FOREIGN TRUSTS

Dividends received from a non-resident corporation, including a mutual fund, are generally included in income as dividend income for the Canadian...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Articles

Tina Korovilas, Drew Morier, "Non-Corporate Vehicles in the Foreign Affiliate Context", 2018 Conference Report (Canadian Tax Foundation), 20:1 – 114

Most pro rata corporate distributions are dividends (pp. 20:16-17)

Cangro Resources … held that for the purposes of the Act, “dividend” was...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
dividend
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 96 122
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) 111
Tax Topics - General Concepts - Ownership 245
Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(11.2) - Paragraph 5907(11.2)(b) 181
Tax Topics - Income Tax Act - Section 93.1 - Subsection 93.1(2) - Paragraph 93.1(2)(a) 120
Tax Topics - Income Tax Act - Section 93.1 - Subsection 93.1(2) - Paragraph 93.1(2)(d) - Subparagraph 93.1(2)(d)(i) 80
Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(2) - Paragraph 5901(2)(b) 91
Tax Topics - Income Tax Act - Section 93 - Subsection 93(1.3) 168
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Excluded Property - Paragraph (e) 155
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Excluded Property - Paragraph (a) 368
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Excluded Property - Paragraph (c) 290
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(y) 64
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph. 95(2)(z) 332
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(a) - Subparagraph 95(2)(a)(ii) - Clause 95(2)(a)(ii)(B) - Subclause 95(2)(a)(ii)(B)(II) 169
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(a) - Subparagraph 95(2)(a)(ii) - Clause 95(2)(a)(ii)(D) 688
Tax Topics - Income Tax Act - Section 94 - Subsection 94(1) - Exempt Foreign Trust - Paragraph (h) - Subparagraph (h)(ii) - Clause (h)(ii)(C) 615

Subsection 90(2) - Dividend from foreign affiliate

Administrative Policy

2016 Ruling 2015-0617351R3 - payments under a German profit transfer agrmt “PTA"

Current structure

XX2, an indirect controlled foreign affiliate of a Canadian public corporation, is the sole limited partner of a German KG, and...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 87 - Subsection 87(8.1) survivor merger of two German CFAs 44

11 April 2017 Internal T.I. 2016-0670541I7 - Foreign affiliate share redemption

Canco owned 100% of the preferred shares of a Barbados International Business Company (“FA”), all of whose common shares are held by a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Dividend redemption proceeds might in part be a dividend under Barbados law 147
Tax Topics - Income Tax Act - Section 95 - Subsection 95(6) - Paragraph 95(6)(b) skewing exempt surplus to Canco could engage s. 95(6) 137

2015 Ruling 2014-0541951R3 - Foreign Affiliate Debt Dumping

A limited liability partnership (FA1) will pay a distribution proportionately to its partners who directly comprise (i) a limited partner...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(9) - Paragraph 212.3(9)(b) - Subparagraph 212.3(9)(b)(ii) s. 212.3(9)(b)(ii) PUC restoration for upper-tier QSCs on the payment by a U.S. LLP of a proportionate “dividend” to lower tier CRIC partners 349
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation proportionate distribution by LLP treated as dividend 128
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(3) two Canadian corporate partners immediately beneath the U.S. border are QSCs respecting investments made by lower-tier CRICs in a U.S. LLP 238

26 May 2016 IFA Roundtable Q. 6, 2016-0642081C6 - German Organschafts

Under an “Organschaft,” a German corporation (“Parentco”) and another corporation resident in Germany (“Subco”) enter into a Profit...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(a) - Subparagraph 95(2)(a)(ii) - Clause 95(2)(a)(ii)(B) profit transfer payments made by a German sub to German parent are s. 90(2) dividends not within s. 95(2)(a)(ii)(B) after 2016 153
Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(c) German profit transfer payment to loss subsidiary is contribution of capital 158
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) loss compensation payment under Organschaft 123

8 January 2016 Internal T.I. 2015-0604491I7 - mandatory redeemable preferred shares

CRA applied the two-step approach to entity classification to find that MRPS (Luxembourg hybrid instruments which were “very similar to...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
equity
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Share MRPS (Luxembourg hybrid instruments which were “very similar to traditional shares under Canadian business corporations statutes”) were equity 731

2015 Ruling 2014-0527961R3 - Deemed dividend under subsection 90(2)

underline;">: €/US$ share structure. The constating documents of FA (which is a wholly-owned subsidiary of Canco that was incorporated and is...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

17 June 2014 External T.I. 2013-0506731E5 - Immigration

An individual shareholder immigrates to Canada, thereby becoming a Canadian resident, and then receives $1,000 from a wholly-owned non-resident...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Payment & Receipt note satisfied dividend 83
Tax Topics - Income Tax Act - Section 128.1 - Subsection 128.1(1) dividend receivable acquired on immigration 141

2013 Ruling 2012-0463611R3 - Foreign Divisive Reorganization

Structure

Canco, a Canadian public company, directly owns a portion of the shares of FA1. FA1 is a controlled foreign affiliate of Canco...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

23 May 2013 IFA Round Table, Q. 2

Canco owns 100% of the shares of FA1 and FA1 owns 100% of the shares of FA2. FA3 is either formed with nominal assets by FA1 or comes into...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Articles

Melanie Huynh, Paul Barnicke, "German Organschafts", Canadian Tax Highlights, Vol. 24, No. 6, June 2016, p. 5

Unclear whether CRA view on application of s. 90(2) to Organschaft profit transfers applies where s. 90(2) applies retroactively (p. 6)

Referring...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Michael Gemmiti, "FA Dividends Must be Pro Rata", Vol. 3, No. 3, August 2013, p. 7

The new pro rata rule can present problems. For example, a US LLC (which qualifies as an FA of a taxpayer) may have only one class of units but...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Patrick W. Marley, Kim Brown, "Foreign Mergers and 'Demergers' Under Recent Canadian Proposals", Tax Management International Journal, 10 February 2012, Vol 41, No. 2, p. 86

A demerger, which under the foreign corporate law, might be viewed as one stream splitting into two, might not qualify under draft s. 90(2) as a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Geoffrey S. Turner, "Upending the Surplus Ordering Rules: Implications of the New Regulation 5901(2)(b) Election", CCH Tax Topics, No. 2079, p. 1, 12 January 2012

Elaine Buzzell, "Distributions of Share Premium by Foreign Affiliates", Corporate Finance, Vol. XVII, No. 2, 2011, p. 1962

Includes discussion of the treatment under the previous version of s. 90 of payments out of a share premium account as a dividend or shareholder...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Subsection 90(3) - Qualifying return of capital

Commentary

S. 90(3) override of s. 90(2)

S. 90(2) deems most distributions to a taxpayer by a foreign affiliate (made pro rata to its shareholding), other...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Administrative Policy

20 March 2015 External T.I. 2014-0535971E5 - Meaning of "paid-up capital" in subsection 90(3)

How is the paid-up capital of a US LLC computed for purposes of s. 90(3)? Would the paid-up capital be computed differently if the US LLC were...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Paid-Up Capital LLC with partner capital-account style LLC Agreement does not have PUC 74

6 December 2011 TEI Roundtable Q. 5, 2011-0427001C6 - 2011 TEI Q#5 - Distributions from Foreign Corp.

Under what circumstances will CRA apply subsection 15(1) to distributions of share premium? CRA stated:

[T]he proper approach for determining the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) share premium 30

2004 Ruling 2004-0065921R3 - Conversion of corporations into LLCs

Conversions of corporations incorporated under the laws of Delaware and California into limited liability corporations would not result in...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition conversion into California or Delaware LLC 104

9 May 2002 Internal T.I. 2002-0135307 F - Application du paragraphe 39(2)

USco1, a subsidiary of Canco (held directly and through a Canadian subsidiary), will declare and make a distribution which will qualify as a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

8 January 1996 External T.I. 9428025 - RETURN OF CAPITAL FROM A DELAWARE CORPORATION

It is the Department's view that a dividend can include any distribution of property by a corporation to its shareholders that is not a return of...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

8 December 1995 External T.I. 9415515 - PAID-UP CAPITAL REDUCTIONS- DELAWARE CORPORATIONS

FA1, a Delaware corporation, wishes to make a cash distribution to Canco by reducing its capital. However, as under Delaware corporate law a cash...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(1) capital distribution by Delaware corp 141

Articles

Tim Fraser, Jim Samuel, "The Preacquisition Surplus Election: More Than Meets the Eye?", Canadian Tax Journal (2021) 69:2, 595 - 627

Tertium quid distributions under foreign corporate law (p. 602)

  • Not all foreign affiliate distributions fit neatly into the categories of a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Subsection 90(4) - Connected person or partnership

Articles

David Bunn, Sandra Slaats, "A Critique of Proposed Subsections 90(4) to (10)", International Tax Planning, Vol XVII, no. 1, 2011

Technical deficiencies discussed include that there is a double income inclusion where a a foreign subsidiary of a partnership makes a loan the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Drew Morier, "Canadian Proposals Mark a Decade of Changes to the Foreign Affiliate Rules", Journal of International Taxation, January 2012, p.26

Discusses application of rule where cash is not redeployed within a Canadian controlled group.

Jason D. Durkin, "Upstream Loan Rules - Why Now?", CCH Tax Topics, No. 2073, 1 December 2011, p. 1

Includes references to technical deficiencies.

Sandra Slats, David Burns, "Canada Considers New Rules on Repatriation", Tax Notes International, Vol 63, No. 9, 29 August 2011, p. 641

General discussion.

Subsection 90(6) - Loan from foreign affiliate

Administrative Policy

4 August 2016 Internal T.I. 2016-0645521I7 - 90(6) & sale of creditor affiliate

Where a non-resident subsidiary (FA) of Canco has made a loan to a non-resident subsidiary (SisterCo) of Canco’s non-resident parent (Foreign...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(14) deduction not dependent on FA being creditor affiliate at repayment time 215

30 October 2014 External T.I. 2013-0488881E5 - Upstream Loan

As a result of a wind-up of a 2nd tier FA following a s. 90(6) loan to Canco, there technically would be a double income inclusion to Canco under...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

14 November 2013 External T.I. 2013-0499121E5 - upstream loan

Canco wholly owns FA 1 which wholly-owns FA 2. Each has a calendar taxation year. On December 31, 2012, FA 2 has US$1,000 of exempt and net...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

22 May 2014 May IFA Roundtable, 2014-0526731C6 - IFA 2014 Q. 3bb - Upstream Loan

When is the interest on a loan made by a creditor affiliate to a specified debtor treated as indebtedness for purposes of s. 90(6), for example, a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

22 May 2014 IFA Roundtable, 2014-0526751C6 - Adjusted cost base of foreign affiliate shares

  • On September 1, 2011 a foreign affiliate (FA) of a corporation resident in Canada (Canco) made a loan to a "specified debtor" in respect of...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(6) no relief from interest and penalties 117
Tax Topics - Income Tax Act - Section 92 - Subsection 92(5) no administrative relief even where rollover at partnership level 210

22 May 2014 IFA Roundtable, 2014-0526751C6 - Adjusted cost base of foreign affiliate shares

Will CRA apply IT-119R4 to give administrative relief from interest and penalties relating to the requirement to withhold tax on deemed dividends...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(6) s. 90(6) relationship tested at time of loan 367
Tax Topics - Income Tax Act - Section 92 - Subsection 92(5) no administrative relief even where rollover at partnership level 210

Articles

Clara Pham, "An Unpaid Amount Could Be an Upstream Loan", Canadian Tax Focus, Vol. 5, No. 3, August 2015, p.5.

Potential double inclusion for unpaid fee owing by Canco to FA (p.5)

Assume that Canco owns a foreign affiliate (FA). Both Canco and FA have...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Paul Barnicke, Melanie Huynh, "Upstream Loans: CRA Update", Canadian Tax Highlights, Vol. 21, No. 12, December 2013, p. 3

Their discussion includes a summary of an as-yet unpublished CRA technical interpretation [2013-0499121E5, now summarized above], which dealt with...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Ken J. Buttenham, "Are you Ready for the Upstream Loan Rules?", Canadian Tax Journal, (2013) 61:3, 747-68

Relationships tested when upstream loan arose (pp. 761-2)

The application of subsection 90(6) and other upstream loan rules is based on the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Subsection 90(6.1)

Articles

Joint Committee, "Technical Amendments Package of September 16, 2016", Submission letter of 15 November 2016

No relief where upstream lender ceases to be an FA

The proposed continuity rules in ss. 90(6.1) and (6.11) do not provide relief from an income...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Subsection 90(7) - Back-to-back loans

Administrative Policy

26 May 2016 IFA Roundtable, Q. 5

FA2 lends excess liquidity $10M to its wholly-owning parent, FA1, which on-lends the $10M to its wholly-owning Canadian parent, Canco. At the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Paragraph 90(7)(a)

Administrative Policy

John Lorito and Trevor O'Brien, "International Finance – Cash Pooling Arrangements," draft version of paper for CTF 2014 Conference Report.

In the case of notional pooling, loans to and from the third party bank may be subject to the upstream loan rules through the application of the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Subsection 90(8) - Exceptions to subsection (6)

Paragraph 90(8)(a)

Administrative Policy

2017 Ruling 2016-0670971R3 - Repayments of upstream loans and series test

Background

Canco3, which was a CRIC (corporation resident in Canada) and an indirect wholly-owned subsidiary of a non-resident corporation...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(14) loan repayment not part of a prohibited series 143
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition automatic loan renewals did not entail the making of new loans 58

3 March 2017 Internal T.I. 2016-0673661I7 - Upstream loans – allocation of repayments

Prior to August 19, 2011, Canco borrowed $50M (“Advance A”) from its wholly-owned non-resident subsidiary (“FA”), and borrowed a further...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

26 May 2016 IFA Roundtable Q. 4, 2016-0642151C6 - Upstream loan converted to PLOI

Canco indirectly distributed $10M of excess cash to its non-resident parent (NRco) in 2010 through a capital contribution by it to a new foreign...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
series

24 November 2015 CTF Roundtable Q. 8, 2015-0610621C6 - FA Liquidation and upstream loans

A loan from a foreign affiliate to its Canadian parent (Canco) generally must be repaid within two years lest the amount of the loan be included...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

24 November 2013 CTF Roundtable, 2013-0508151C6 - Upstream Loans

A loan or indebtedness will be considered to have been repaid by a debtor by way of set-off against a receivable of the debtor "if the set-off...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Payment & Receipt repayment by set-off 75

2013 Ruling 2013-0491061R3 - Upstream Loans

Non-resident subsidiaries (perhaps resident in the US) of a non-resident public company ("Parent") hold stacked non-resident companies (FA 1 to 4...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(25) - Paragraph 212.3(25)(b) s. 212.3(25)(b) avoids acquisition on partnership winding-up 423

Articles

Geoffrey S. Turner, "Transitional Tax Treatment of Grandfathered Upstream Loans – Repayment Deadline Approaching", International Tax (Wolters Kluwer CCH), No. 88, June 2016, p. 7

August 19, 2016 repayment deadline for pre-August 20, 2011 loans (p.7)

The paragraph 90(8)(a) carve-out from the upstream loan rules provides...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Subsection 90(9) - Corporations: deduction for amounts included under subsection (6) or (12)

Administrative Policy

20 March 2017 External T.I. 2014-0545591E5 - Upstream Loan and Debt Forgiveness Rules

FA makes a loan to Canco, its wholly-owning parent. Canco then sells its interest in FA to a third party, but due to foreign tax and other...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Excluded Obligation - Paragraph (a) s. 80 non-application where s. 90(6) applies to forgiven loan even if offsetting surplus deduction 156
Tax Topics - Income Tax Act - Section 90 - Subsection 90(14) debt forgiveness not a repayment 56

28 May 2015 IFA Roundtable Q. 4, 2015-0581501C6 - Upstream loans: ss. 90(9) deduction

Part A: LIFO ordering/s. 113(1)(a) deduction for actual dividends

In 2013 FA, which had exempt surplus ("ES") and net surplus ("NS") of US$100,...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

30 October 2014 External T.I. 2013-0488881E5 - Upstream Loan

Scenario 1 [90-day rule unavailable]

On December 31, 2012, FA has a nil "net surplus" balance and no relevant deficits. In its 2013 (calendar)...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) no double inclusion following FA creditor wind-up 60
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3) notional s. 40(3) gain does not generate surplus 70
Tax Topics - Income Tax Act - Section 90 - Subsection 90(6) no double inclusion following FA creditor wind-up or for 2nd loan in series 121
Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(1.1) notional Reg. 5901(1.1) election 30
Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(2) - Paragraph 5901(2)(a) 90-day rule unavailable 28
Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(2) - Paragraph 5901(2)(b) notional Reg. 5901(2)(b) election 31
Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(1) - Underlying Foreign Tax notional UFT disproportionate election 37

22 May 2014 May IFA Roundtable Q. 3a, 2014-0526721C6 - IFA 2014 Q. 3a(a) - Upstream Loan

An indirectly-owned foreign affiliate ("FA1") generates substantial exempt surplus during a taxation year and uses the resulting cash flow to...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

22 May 2013 IFA Roundtable, 2013-0483791C6 - Upstream Loans

Assume that Canco owns all the shares of FA. FA has $100 of taxable surplus ("TS"), no exempt surplus and no underlying foreign tax (UFT)...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Articles

Tim Barrett, Andrew Morreale, "Foreign Affiliate Update", 2019 Conference Report (Canadian Tax Foundation), 35: 1 – 53

Issues with upstream loan rules

  • Remaining issues with the upstream loan rules include:
    • “Surplus deficits in entities above the lending entity...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Michael N. Kandev, Sandra Slaats, "Recent Developments in the Foreign Affiliate Area", 2015 Annual CTF Conference paper

Inappropriate reduction of reserve by blocking deficit of intermediate FA Holdco (pp. 31:31-31:34)

One of the fundamental issues with the reserve...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Geoffrey S. Turner, "Transitional Tax Treatment of Grandfathered Upstream Loans – Repayment Deadline Approaching", International Tax (Wolters Kluwer CCH), No. 88, June 2016, p. 7

Perennial reserve and inclusion mechanism (p. 6)

When the Canadian taxpayer (or the "specified debtor") finally repays the upstream loan or...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Geoffrey S. Turner, "Upstream Loans and Dispositions of Foreign Affiliate Shares", International Tax (Wolters Kluwer CCH), No. 85, December 2015, p.1

Upstream loan must be repaid to escape rule (p.1)

[U]nder the current rules, anomalous results can be avoided with certainty only by causing the...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Ian Bradley, Marianne Thompson, Ken J. Buttenham, "Recommended Amendments to the Upstream Loan Rules", Canadian Tax Journal, (2015) 63:1, 245-67.

Narrowness of s. 90(11) (p. 261)

Subsection 90(11) incorporates only the surplus of the downstream foreign affiliates that are directly or...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(14) 678

Ken J. Buttenham, "Are you Ready for the Upstream Loan Rules?", Canadian Tax Journal, (2013) 61:3, 747-68

Uncertainties under s. 90(9) (p. 763)

The operation of subsection 90(9) raises a host of unanswered questions and is probably what will create...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Finance

26 April 2017 IFA Finance Roundtable, Q.11

[approbation of CRA workaround for dealing with an upper-tier blocking deficit respecting upstream...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Paragraph 90(9)(b)

Administrative Policy

5 May 2021 IFA Roundtable, Q.8

Canco received a loan from a controlled foreign affiliate (“CFA”) that remained outstanding at the end of years 1, 2 and 3, and was then...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Subsection 90(10)

Articles

Michael Spinelli, Karthika Ariyakumaran, "Upstream Loans Disadvantage Corporate Members of a Partnership", Canadian Tax Focus, Volume 8, Number 4, November 2018, p.5

Loan by CFA of partnership to one of two arm’s length Cdn partners (p.5)

Assume that Canco 1 and Canco 2 are Canadian-resident corporations...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Subsection 90(14) - Repayment of loan

Administrative Policy

2017 Ruling 2016-0670971R3 - Repayments of upstream loans and series test

An LLC subsidiary of a Canadian subsidiary (Canco3 - that was lower down in a corporate group controlled by a U.S. Pubco) received the repayment...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(8) - Paragraph 90(8)(a) subsequent intercorporate loans and discharges were not part of “series of loans or other transactions and repayments” 302
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition automatic loan renewals did not entail the making of new loans 58

20 March 2017 External T.I. 2014-0545591E5 - Upstream Loan and Debt Forgiveness Rules

When an upstream loan to Canco from its wholly owned CFA is forgiven following a sale of the CFA, this will not qualify as a repayment of the loan...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Words and Phrases
repayment
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(9) potential indefinite application of surplus where upstream loan forgiven after FA sale 203
Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Excluded Obligation - Paragraph (a) s. 80 non-application where s. 90(6) applies to forgiven loan even if offsetting surplus deduction 156

4 August 2016 Internal T.I. 2016-0645521I7 - 90(6) & sale of creditor affiliate

In 2013, FA, which is wholly-owned by Canco, makes a loan to SisterCo., which is wholly-owned by the non-resident parent of Canco (“Foreign...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(6) inclusion not dependent of maintenance of creditor affiliate status 73

22 May 2014 May IFA Roundtable, 2014-0526741C6 - Foreign affiliates - upstream loans

CRA has not yet developed any specific positions on the application of the upstream loan rules to cash pooling arrangements and would welcome a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

2013 Ruling 2013-0477871R3 - 5900(1)(a) and dividends from foreign affiliate

A non-resident subsidiary (ForeignHoldco) of a taxable Canadian corporation (Parent) will eliminate a non-interest-bearing loan previously made by...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(11.2) dividends from Malaysian offshore company 358

Finance

1 May 2018 Finance Comfort letter respecting repayment of back-to-back loans under the upstream loan rules

A Bermuda-resident foreign affiliate (“FA 1") of Canco made loans (the "FA 1 Loans") to Forco 1 which, in turn, has made loans (the "Forco 1...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

16 May 2018 IFA Finance Roundtable, Q.10

The upstream loan regime in s. 90 provides for income inclusions under s. 90(6) for certain loans and indebtedness owing to foreign affiliates,...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Articles

Ian Bradley, Marianne Thompson, Ken J. Buttenham, "Recommended Amendments to the Upstream Loan Rules", Canadian Tax Journal, (2015) 63:1, 245-67.

Narrowness of repayment rule (p. 251)

There are situations in which an upstream loan may cease to represent a synthetic distribution from a...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(9) 702

Ken J. Buttenham, "Are you Ready for the Upstream Loan Rules?", Canadian Tax Journal, (2013) 61:3, 747-68

Application to cash-pooling arrangements (p. 755)

…In practice, it may be challenging for taxpayers and the CRA to determine the correct...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Finance

26 April 2017 IFA Finance Roundtable, Q.10

[relief for where upstream loans no longer are synthetic distributions]

A foreign affiliate (Forco1)...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

Subsection 90(15) - Definitions

Articles

John Lorito, Trevor O'Brien, "International Finance – Cash Pooling Arrangements", 2014 Conference Report, (Canadian Tax Foundation), 20:1-33

Exclusion for loans to NR subs of related Canadian corporations (pp. 11-12)

Consider…the structure…in which BVCo 1 [a NR sub of the immediate...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.

specified debtor

(b)

Administrative Policy

2014 Ruling 2013-0510551R3 - Upstream Loans - Specified Debtor

Current structure

Canco1, a Canadian public corporation, wholly-owns Canco2 and Forco1, which is solely a holding company for the Canco1 equity...

The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.