Munich Reinsurance Co. v. The Queen, 96 DTC 6185 (FCTD)
Interest earned by the taxpayer (a German corporation carrying on a reinsurance business throughout the world, including through a branch in Canada) on income tax instalments which it had overpaid, were included in its income under s. 12(1)(c) and, therefore, were not subject to tax under Part XIII of the Act.
Twentieth Century Fox Film Corp. v. The Queen, 85 DTC 5513,  2 CTC 328 (FCTD)
All the film-rental revenues of the Canadian branch of the U.S. plaintiff were exempted from withholding tax by regulations 802 and 805(1), the court being satisfied that the rental of films in Canada formed an essential and integral part of the Canadian business of the plaintiff. "[T]he Canadian organization was by no means a mere token presence whose real purpose was merely to avoid Part XIII tax."
An argument of the Crown that the case should be approached as if the U.S. head office were charging a commission or rental to its Canadian branch on the amount of Canadian sales was rejected for the reason that "a legal entity cannot rent to or contract with itself."
It was indicated, obiter, that the Crown might have succeeded in challenging the method of computation of the Canadian branch profits as being unduly artificial, if the Crown had so chosen. Charges to the branch were adjusted each year to ensure that in each year the branch's net income was 1.7% of its revenues.
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|Tax Topics - Income Tax Act - Section 115 - Subsection 115(1) - Paragraph 115(1)(a) - Subparagraph 115(1)(a)(ii)||business conducted through agent/film distribution in Canada (without production) was Cdn business||174|
|Tax Topics - Income Tax Regulations - Regulation 805||film revenues were reasonably attributable to a Canadian distributorship business notwithstanding they were also attributable to U.S. movie production||187|