Income Tax Act

Marginal note:Shares held by partnership

• 93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of a specified provision, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that

  • (a) the fair market value of the member’s interest in the partnership at that time

  is of

  • (b) the fair market value of all members’ interests in the partnership at that time.

• Marginal note:Specified provisions for subsection (1)

  (1.1) For the purposes of subsection (1), the specified provisions are

  • (a) subsections (2), (5), 20(12) and 39(2.1), sections 90, 93, 93.3 and 113, paragraphs 128.1(1)(c.3) and (d), section 212.3, subsection 219.1(2) and section 233.4;

  • (b) section 95 to the extent that section is applied for the purposes of the provisions referred to in paragraph (a);

  • (c) any regulations made for the purposes of the provisions referred to in paragraph (a); and

  • (d) paragraph 95(2)(g.04), subsection 95(2.2) and section 126.

• Marginal note:Where dividends received by a partnership

  (2) Where, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a foreign affiliate of a corporation resident in Canada (in this subsection referred to as “affiliate shares”) are owned by a partnership and at that time the affiliate pays a dividend on affiliate shares to the partnership (in this subsection referred to as the “partnership dividend”),

  • (a) for the purposes of sections 93 and 113 and any regulations made for the purposes of those sections, each member of the partnership (other than another partnership) is deemed to have received the proportion of the partnership dividend that

    • (i) the fair market value of the member’s interest held, directly or indirectly through one or more other partnerships, in the partnership at that time

    is of

    • (ii) the fair market value of all the interests in the partnership held directly by members of the partnership at that time;

  • (b) for the purposes of sections 93 and 113 and any regulations made for the purposes of those sections, the proportion of the partnership dividend deemed by paragraph (a) to have been received by a member of the partnership at that time is deemed to have been received by the member in equal proportions on each affiliate share that is property of the partnership at that time;

  • (c) for the purpose of applying section 113, in respect of the dividend referred to in paragraph (a), each affiliate share referred to in paragraph (b) is deemed to be owned by each member of the partnership; and

  • (d) notwithstanding paragraphs (a) to (c),

    • (i) where the corporation resident in Canada is a member of the partnership, the amount deductible by it under section 113 in respect of the dividend referred to in paragraph (a) shall not exceed the portion of the amount of the dividend included in its income pursuant to subsection 96(1), and

    • (ii) where another foreign affiliate of the corporation resident in Canada is a member of the partnership, the amount included in that other affiliate’s income in respect of the dividend referred to in paragraph (a) shall not exceed the amount that would be included in its income pursuant to subsection 96(1) in respect of the partnership dividend received by the partnership if the value for H in the definition foreign accrual property income in subsection 95(1) were nil and this Act were read without reference to this subsection.

• Marginal note:Tiered partnerships

  (3) A person or partnership that is (or is deemed by this subsection to be) a member of a particular partnership that is a member of another partnership is deemed to be a member of the other partnership, and the person or partnership is deemed to have, directly, rights to the income or capital of the other partnership to the extent of the person or partnership’s direct and indirect rights to that income or capital, for the purposes of applying

  • (a) except to the extent that the context otherwise requires, a provision of this subdivision;

  • (b) any of paragraphs 13(21.2)(a), 14(12)(a), 18(13)(a), 40(2)(e.1), (e.3) and (g) and (3.3)(a); and

  • (c) subsections 39(2.1), 40(3.6) and 87(8.3).

• Marginal note:Partnership deemed to be corporation

  (4) For the purpose of applying clause 95(2)(a)(ii)(D) in respect of an amount paid or payable by a partnership to a foreign affiliate, of a taxpayer, that is a member of the partnership or to another foreign affiliate of the taxpayer,

  • (a) if, at any time, all the members (in this subsection referred to as “member affiliates”) of the partnership are foreign affiliates of the taxpayer,

    • (i) the partnership is deemed to be, at that time in respect of the taxpayer and the member affiliates, a non-resident corporation without share capital, and

    • (ii) all the membership interests in the partnership are deemed to be, at that time, equity interests in the corporation held by the member affiliates; and

  • (b) if, at any time, all the member affiliates are resident in a particular country and the partnership does not carry on business outside the particular country, the partnership is deemed to be, at that time, resident in the particular country.

• Marginal note:Computing FAPI in respect of partnership

  (5) For the purpose of applying a relevant provision in respect of a foreign affiliate of a taxpayer resident in Canada, if at any time the taxpayer is a partnership of which a particular corporation resident in Canada, or a foreign affiliate of the particular corporation, is a member and if, based on the relevant assumptions, the particular corporation and the taxpayer would be related, then

  • (a) a non-resident corporation that is, at that time, a foreign affiliate of the particular corporation is deemed to be, at that time, a foreign affiliate of the taxpayer; and

  • (b) the taxpayer is deemed to have, at that time, a qualifying interest in respect of that foreign affiliate if the particular corporation has, at that time, a qualifying interest in respect of the non-resident corporation.

• Marginal note:Relevant provisions and assumptions

  (6) For the purposes of subsection (5),

  • (a) the relevant provisions are

    • (i) paragraph (b) of the description of A in the definition foreign accrual property income in subsection 95(1),

    • (ii) in determining whether a property of a foreign affiliate of a taxpayer is excluded property of the affiliate, the description of B in the definition foreign accrual property income in subsection 95(1),

    • (iii) paragraphs 95(2)(a) and (g), and

    • (iv) subsections 95(2.2) and (2.21); and

  • (b) the relevant assumptions are that

    • (i) the partnership is a non-resident corporation having capital stock of a single class divided into 100 issued shares that each have full voting rights, and

    • (ii) each member of the partnership (other than another partnership) owns, at any time, the proportion of the issued shares of that class that

      • (A) the fair market value of the member’s interest held, directly or indirectly through one or more partnerships, in the partnership at that time

      is of

      • (B) the fair market value of all the interests in the partnership held directly by members of the partnership at that time.