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Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
Foreign Affiliate Dumping
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Foreign Affiliate Dumping

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Foreign Affiliate Dumping by Jennifer Hanna

Foreign Affiliate Dumping by Jennifer Hanna

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  • 1. gobeyondbordersgobreakgroundstrengthinnumbersFOREIGN AFFILIATE DUMPINGJennifer Hanna
  • 2. Foreign Affiliate Dumping Jennifer Hanna March 20132Agenda• Introduction• Conditions for application• Consequences• Meaning of “investment”• PLOI• Dividend substitution election• PUC suppression and reinstatement• Closely connected business exception• Internal reorganization exceptions• Miscellaneous supporting rules
  • 3. Foreign Affiliate Dumping Jennifer Hanna March 2013History• 2008 – Advisory Panel on Canada’s system ofinternational taxation• “foreign debt dumping”• March 28, 2012 Federal Budget• “foreign affiliate dumping”, deemed interest rules• August 14, 2012 – Legislative proposals releasedfor consultation• Indirect investment• October 15, 2012 – NWMM• Tweaks and fixes3
  • 4. Foreign Affiliate Dumping Jennifer Hanna March 2013Introduction – Example of dumping• Can Sub incurs interestexpense to fundinvestment in preferredshares of foreign sub ofParent• Can Sub earns a fixedrate of return on thepreferred shares• Preferred share return ispaid via exempt surplusdividends• No expectation of “equity-like” return on investment• No Canadian taxation ofincome4Foreign ParentForeign Sub1 Can SubForeign Sub2Interest bearingdebtFixed rate preferredsharesOperationsgenerating exemptsurpluscommonshares
  • 5. Foreign Affiliate Dumping Jennifer Hanna March 2013Introduction - legislation• Section 212.3 – anti-FA dumping rules• Section 17.1 – deemed interest inclusion rulesfor downstream debt elected to be PLOI• Section 15.1 – deemed interest inclusion rulesfor shareholder debt elected to be PLOI5
  • 6. Foreign Affiliate Dumping Jennifer Hanna March 2013Introduction – Coming into force• Generally applies to transactions and events occurring after March 28,2012• Grandfathering - rules do not apply to pre-2013 transactions betweenparties dealing at arm’s length if:• Either• (A) indirect acquisition; CRIC obligated to complete acquisition undera written agreement with a public company target dated pre-March29, 2012, or• (B) parties obligated to complete transaction under pre-March 29,2012 written agreement, and• No release from obligation due to amendments to Act• Rules modified for pre-August 14, 2012 transactions on elective basis• Elections for substituted dividends and/or PLOI - extension to 365days after Royal Assent6
  • 7. Foreign Affiliate Dumping Jennifer Hanna March 2013Conditions for application – Anti-Dumping• 212.3(1)• Corporation resident in Canada (CRIC)• CRIC is controlled by a foreign corporation(Parent)• CRIC makes an “investment” in a subjectcorporation• Subject corporation is a foreign affiliate of CRIC7
  • 8. Foreign Affiliate Dumping Jennifer Hanna March 2013Conditions for application – Example of Parent• 212.3(15)(a)• Foreign sub 1 is thecontrolling “Parent” ofCan Sub• Foreign Co is not the“Parent” for purposes ofthe dumping rules8Foreign CoForeign Sub1CRICForeign Sub251%49%100%
  • 9. Foreign Affiliate Dumping Jennifer Hanna March 2013Conditions for application – Example of Parent• Foreign Co is thecontrolling “Parent” ofCan Sub9Foreign CoForeign Sub1CRICForeign Sub350%100%Foreign Sub250%100%
  • 10. Foreign Affiliate Dumping Jennifer Hanna March 2013Conditions for application – Example of no Parent• 212.3(15)(b)• CRIC is deemed not controlledby Foreign Sub 1 or Foreign Cobecause both are controlled byCanadian parent10Foreign CoForeign Sub1CRICForeign Sub251%49%100%CanadianParent
  • 11. Foreign Affiliate Dumping Jennifer Hanna March 2013Consequences• 212.3(2)(a) deemed dividend paid by CRIC to Parent =FMV of• any property (other than shares of the CRIC) transferred,obligation assumed, benefit otherwise conferred, by theCRIC, or• property transferred to the CRIC which results in areduction of an amount owing to the CRICthat reasonably relates to the “investment”11
  • 12. Foreign Affiliate Dumping Jennifer Hanna March 2013Consequences• 212.3(2)(b) PUC reduction of CRIC shares = increase inPUC that reasonably relates to the “investment”12
  • 13. Foreign Affiliate Dumping Jennifer Hanna March 2013Consequences (a)• 212.3(2)(a)• CRIC deemed to pay dividend toparent (Foreign Sub1)• But, see whether PUCsuppression rule under 212.3(7)applies to override dividendtreatment13Foreign ParentForeign Sub1CRICForeign Sub251%49%100%DividendInvestment
  • 14. Foreign Affiliate Dumping Jennifer Hanna March 2013Consequences (b)• 212.3(2)(b)• E.g. CRIC receives Foreign Sub2shares from Foreign Parentand/or Foreign Sub1 in exchangefor CRIC shares, resulting in anincrease to the PUC of CRICshares• 212.3(2)(b) reduces the PUC ofCRIC shares14Foreign ParentForeign Sub1CRICForeign Sub251%49%100%PUC reduction
  • 15. Foreign Affiliate Dumping Jennifer Hanna March 2013What is an “Investment”? (a)• 212.3(10)(a)• Acquisition of shares of thesubject corporation by theCRIC15Foreign ParentCRICForeign Sub
  • 16. Foreign Affiliate Dumping Jennifer Hanna March 2013Investment (b)• 212.3(10)(b)• Contribution of capital to thesubject corporation by theCRIC• Includes any benefit conferredon the CRIC16Foreign ParentCRICForeign Sub$$
  • 17. Foreign Affiliate Dumping Jennifer Hanna March 2013Investment (c)• 212.3(10)(c)• An amount becomes owing tothe CRIC by the subjectcorporation• Excludes:• Ordinary course of business, repaidw/in 180 days, or• Pertinent loan or indebtedness(“PLOI”)17Foreign ParentCRICForeign SubLoan
  • 18. Foreign Affiliate Dumping Jennifer Hanna March 2013Investment (d)• 212.3(10)(d)• Acquisition of debt of subjectcorporation from another person• Excludes:• Acquired in the ordinary course ofbusiness from arm’s length person,or• Pertinent loan or indebtedness(“PLOI”)18ForeignParentCRICForeignSub 2LoanBankForeignParentCRICForeignSub 2LoanBank
  • 19. Foreign Affiliate Dumping Jennifer Hanna March 2013Investment (e)• 212.3(10)(e)• Extension of maturity date ofshares or debt• Excludes:• Pertinent loan or indebtedness(“PLOI”)• 212.3(5) – Deems there to bea transfer of property equalto the amount owing or theFMV of the sharesimmediately after the time ofthe extension19Foreign ParentCRICForeign SubExisting loan –maturity date isextendedShares – redemption/acquisition/ cancellationdate is extended
  • 20. Foreign Affiliate Dumping Jennifer Hanna March 2013Investment (f)• 212.3(10)(f)• Indirect acquisition throughacquisition of a Canadiancorporation (Target)• FMV of Target’s shares of foreignaffiliates (directly or indirectlyowned) > 75% of the FMV of all ofTarget’s property• Without reference to debt obligations ofCanadian resident corporation(s) inwhich Target has a direct/indirect interest• Without double-counting value of tieredFA shares20Foreign ParentCRICForeign SubCan Target
  • 21. Foreign Affiliate Dumping Jennifer Hanna March 2013Investment (f)• 212.3(10)(f)• Some anomalies in value test• Value of Foreign Sub debt is a“good” property?• Likely exempt from s.17 incomeattribution rules under 17(8)• Value of Can Sub debt is notincluded in “good” property?• Canadian debt is deemed to bedisregarded• Disregarding debt may notalways result in an increase inthe value of the other goodproperty (Can Sub shares) – e.g.shares of a joint venturecompany21Foreign ParentCRICForeign SubCan TargetCan Sub50%50%100%DebtThirdpartyDebt
  • 22. Foreign Affiliate Dumping Jennifer Hanna March 2013Investment (f) – “anti-stuffing” rule• 212.3(14)(a) deems 75% test in(10)(f) to be satisfied (and an“investment” to be made) if• after the acquisition of Can Targetby CRIC and as part of the series,Can Target property (direct/indirect,other than FA shares) is disposed of,and• after the acquisition and during theseries, the 75% test would havebeen satisfied• E.g. Can Target sells non-coreCanadian assets after CRICacquires Can Target22Foreign ParentCRICForeign SubCan TargetCan Sub 2Can Sub 1Non-core assets
  • 23. Foreign Affiliate Dumping Jennifer Hanna March 2013Investment (g)• 212.3(10)(g)• An acquisition of an option,interest in, right in… shares,debt of subject corporation• Excludes:• Amounts that would be excludedunder (c) or (d)23Foreign ParentCRICForeign SubInterests/ rights/options, etc.
  • 24. Foreign Affiliate Dumping Jennifer Hanna March 2013Pertinent Loan or Indebtedness• 212.3(11)• Excludes debt from being an “investment”• Amount owing by subject corporation to CRIC• Amount became owing after March 28, 2012 (or thematurity date was extended after that date)• CRIC and parent jointly elect• On or before filing due-date for the year in which theamount becomes owing or in which the maturity dateextension is made• Three-year period for late-filing (212.3(12))24
  • 25. Foreign Affiliate Dumping Jennifer Hanna March 2013Pertinent Loan or Indebtedness• 17.1(1) applies instead of 212.3:• Deemed interest income to the CRIC• Greater of prescribed rate (currently 5%) and theamount of interest payable on debt incurred by theCRIC (or certain non-arm’s length persons) in orderto fund the PLOI• 17.1(2)• 180 days of transitional relief from 17.1(1) where non-resident acquires control of CRIC• 17.1(3)• Deemed not to be PLOI where a treaty would apply toreduce the income of the CRIC25
  • 26. Foreign Affiliate Dumping Jennifer Hanna March 2013Dividend substitution election• 212.3(3)• Election to modify the (2)(a) deemed dividend• Election is made among:• CRIC• Qualifying substitute corporation(s)• Parent and/or another non-resident corporation that is controlled by theparent• Agreed amounts are deemed to be paid as dividend(s) by thequalifying substitute corporation and not the CRIC• Also, they are deemed to be paid to the parent and/or other non-resident corporation• Election due on filing due-date – with 3 year late filing period26
  • 27. Foreign Affiliate Dumping Jennifer Hanna March 2013“Qualifying substitute corporation”• 212.3(4) definition• QSC:• Controlled by Parent• Has an equity % in CRIC• Shares of which are owned by theParent or other non-residentcorporation not at arm’s length withParent• Can Sub deemed to pay dividendto Parent• Allows for treaty relief on deemeddividend• 5% rate applies under many treaties ifthe recipient of the dividend is acorporation that owns >10% of theshares of the dividend payer27Foreign ParentCRICForeign Sub100%InvestmentDividendCan SubQSC
  • 28. Foreign Affiliate Dumping Jennifer Hanna March 2013“Other non-resident corporation”• 212.3(3)(a)• Also for accessing treatyprotection• Also, to optimize PUCsuppression rules• Normally (2)(a) dividend deemedpaid by CRIC to foreign parent• Election permits some/all ofdividend to be deemed to bepaid by CRIC to Foreign Sub128Foreign ParentCRICForeign Sub 2InvestmentForeign Sub 150%50%100%DividendDividend
  • 29. Foreign Affiliate Dumping Jennifer Hanna March 2013“QSC” and “other non-resident corporation”• 212.3(3)(b)• Normally (2)(a) dividend isdeemed paid by CRIC toforeign parent• Election permits dividend to bedeemed to be paid by Can Subto Foreign Sub1 to ForeignParent• Can still have any portion ofthe dividends to be paid byCRIC to Foreign Sub1 and/orForeign Parent29Foreign ParentCRICForeign Sub 295% equityInvestmentDividendCan SubForeign Sub15% equity100% votes100%Dividend
  • 30. Foreign Affiliate Dumping Jennifer Hanna March 2013Dividend substitution election• 212.3(3)• Can Sub1 and Can Sub2must each be a party inmaking the election even ifthey are not “paying” any ofthe deemed dividends.30Foreign ParentCRICForeign Sub 2InvestmentCan Sub1Foreign Sub1100%DividendCan Sub2100%45%45%10%
  • 31. Foreign Affiliate Dumping Jennifer Hanna March 2013PUC suppression rule• 212.3(6) and (7)• Reduces or eliminates deemed dividend(s)• Reduces the PUC of CRIC and/or QSC shares• In previous drafts, PUC suppression was byelection, now automatic (if conditions met)• Controlled by making dividend substitution election(DSE)31
  • 32. Foreign Affiliate Dumping Jennifer Hanna March 2013PUC suppression - consequencesConsequences: (212.3(7))• Each deemed dividend is reduced by least of:• the dividend otherwise determined,• if no DSE, and if only one class of CRIC shares, the PUC of thatsingle class of shares,• if no DSE, and more than one class of shares of the CRIC, thePUC of the class(es) of shares that increased due to thetransfer(s) of property used to make the investment• if DSE, the PUC of the class of shares on which the dividend iselected to be paid - may be multiple elected dividends• PUC of the shares of the CRIC and/or QSC reduced in acorresponding manner to the reduction of the deemeddividend(s)32
  • 33. Foreign Affiliate Dumping Jennifer Hanna March 2013• If no DSE, conditions for PUC suppression are as follows:(212.3(6)(b))1. Any shares of CRIC that are not owned by the Parent areowned by an arm’s length person or a non-arm’s length non-residentAND2. Either• Only 1 class of CRIC shares outstanding,or• PUC in respect of CRIC’s shares arose from transfer(s) ofproperty to the CRIC and CRIC used all of the property tomake the investment (or indirect investment)33PUC suppression – no DSE
  • 34. Foreign Affiliate Dumping Jennifer Hanna March 2013• CRIC has only one class ofshares• Owned by• Foreign Parent,• Foreign non-arm’s lengthcorporation, and/or• Arm’s length persons• I.e. – no non-arm’s lengthCanadian residents34Foreign ParentCRICForeign Sub 2Arm’s lengthCanadians /non-residentsCommon sharesForeign Sub 1PUC suppression – no DSE
  • 35. Foreign Affiliate Dumping Jennifer Hanna March 2013• CRIC receives propertyfrom any/all of ForeignParent, Foreign Sub 1, orArm’s length Canadians,resulting in PUC increase• CRIC makes investment inForeign Sub 2 (may bedirect or indirect through aCan Target)• CRIC uses all of theproperty from the PUCincrease to make theinvestment35Foreign ParentCRICForeign Sub 2Arm’s lengthCanadiansForeign Sub 1Class A Class AClass BAll property from PUCincrease is used to makeinvestmentPUC suppression – no DSE
  • 36. Foreign Affiliate Dumping Jennifer Hanna March 2013PUC suppression – no DSE• PUC suppression DOESNOT apply unless adividend substitutionelection is made.36Foreign ParentCRICForeign Sub 2Non-arm’slengthCanadianForeign Sub 1
  • 37. Foreign Affiliate Dumping Jennifer Hanna March 2013PUC suppression – DSE made• If DSE is made, the conditions for PUC suppression are asfollows: (212.3(6)(a))• The dividend substitution election is made in a manner thatmaximizes the aggregate reduction of cross-border, non-arm’slength PUC after the PUC suppression rules apply• (3)(b) election would need to allocate the deemed dividend as follows:• first to the class of shares of the CRIC/QSC of which the parent/NALnon-resident owns the greatest proportion (up to the PUC of suchclass)• then to the class of which the parent/NAL non-resident holds the next-largest proportionate share• and so on37
  • 38. Foreign Affiliate Dumping Jennifer Hanna March 2013PUC suppression – DSE made• The (3)(b) electionmaximizes the deemeddividends on the Class Bshares before the Class Ashares• Under (7) the PUC of theClass B shares must be“used up” before the PUCof the Class A shares isaccessed38Foreign ParentCRICForeign Sub 2Arm’s lengthCanadiansForeign Sub 1Can SubClass AClass BClass A
  • 39. Foreign Affiliate Dumping Jennifer Hanna March 2013PUC reinstatement election• 212.3(9)• Adds back previously suppressed PUC• Conditions:• Previous investment under (10)(a), (b) or (f)• Previous reduction of PUC under (2)(b) or (7) of a“particular corporation” (i.e. CRIC or QSC)• Particular corporation subsequently reduces its PUCand makes distribution of capital• PUC is deemed to be increased immediately beforethe subsequent reduction of the PUC39
  • 40. Foreign Affiliate Dumping Jennifer Hanna March 2013PUC reinstatement election• Amount added back to PUC is least of:• Amount of PUC reduction at the “subsequent time”• The amount of PUC previously suppressed under (2)(b) or (7)• The amount(s) that are distributed on the PUC reduction whichare:• (i) the value of the subject corporation or substituted foreign affiliateshares that are distributed as at the subsequent time, or(ii) the proceeds of disposition of the subject corporation shares (orsubstituted shares), or of dividend/paid-up capital reduction receivedin respect of such shares (within 180 days)• If (i) or (ii) n/a, nil40
  • 41. Foreign Affiliate Dumping Jennifer Hanna March 2013PUC reinstatement election• 212.3(9)• PUC of CRIC wassuppressed uponoriginal investment inFA• CRIC reduces PUC anddistributes shares ofFA to Parent• Election reinstatespreviously suppressedPUC immediatelybefore distribution ofFA shares41ForeignParentCRICForeignSubForeignParentCRICForeignSubSuppressedPUCReinstated,then reducedPUC
  • 42. Foreign Affiliate Dumping Jennifer Hanna March 2013PUC reinstatement election• 212.3(9)• PUC of CRIC suppressed onacquisition of Can Target• CRIC and Can Targetamalgamate, bump shares ofForeign Sub• 212.3(22) supporting rule foramalgamation/wind-up• CRIC Amalco reduces PUCand distributes shares of FAto Parent• Election reinstatespreviously suppressed PUCimmediately beforedistribution of FA shares42ForeignParentCanTargetForeignSubForeignParentCRICAmalcoForeignSubSuppressedPUCReinstated,then reducedPUCCRIC
  • 43. Foreign Affiliate Dumping Jennifer Hanna March 2013Exemption from FAD: Closely connected business• 212.3(16) – FAD rules N/A if CRIC demonstrates:• The business carried on by subject corporation and all othercorporations in which the subject corporation has an equitypercentage (subject subsidiary corporations) are, and are expected toremain,more closely connected tothe business activities carried on in Canada by the CRIC (or Canadianresident non-arm’s length corporation)than tothe business activities carried on by any non-resident corporation withwhich the CRIC does not deal at arm’s length (other than the businessactivities of pre-existing controlled foreign affiliates (s.17) of the CRIC,the subject corporation or the subject subsidiary corporations)43
  • 44. Foreign Affiliate Dumping Jennifer Hanna March 2013Closely connected business (cont)• CRIC also demonstrates that with respect to officers of the CRIC:• They had and exercised (and continue to exercise) principal decision-making authority in respect of the investment• Majority were (and will continue to be) resident and working principally inCanada or in a country where a “connected affiliate” is resident• Connected affiliate is a CFA of the CRIC, carries on business that isas closely connected with that of the subject corporation (and thesubject corporation’s subsidiaries) as the Canadian company’sactivities are connected with the subject corporation (and itssubsidiaries)• Performance evaluations of officers who are resident in and workprincipally in Canada (or above-mentioned connected affiliate’s country)are based on the results of the operations of the subject corporation to agreater extent than will be the performance evaluation of any other officerof a non-arm’s length non-resident corporation (other than an officer ofthe subject corporation, controlled subsidiary of the subject corp., or aconnected affiliate)44
  • 45. Foreign Affiliate Dumping Jennifer Hanna March 2013Closely connected business (cont)• Dual officers rule in 212.3(17)• An officer of both the CRIC and a non-arm’s length non-resident corporation (otherthan the subject corporation, subject subsidiary or connected affiliate) is deemednot to be resident and not to work principally in a country in which a connectedaffiliate is resident.45
  • 46. Foreign Affiliate Dumping Jennifer Hanna March 2013Closely connected business 212.3(16)• Is the business ofForeign Sub 2 andits subsidiariesmore closelyconnected to theCRIC than to anybusiness of ForeignParent, sister,aunts,grandparents,cousins…?• Imagine if ForeignParent is state-owned46Foreign ParentCRICForeign Sub 2Foreign SisterForeign AuntForeignGrandparentForeign CousinForeign Sub 3 Foreign Sub 4
  • 47. Foreign Affiliate Dumping Jennifer Hanna March 2013Exceptions for Internal Reorganizations• Reorganization exceptions – laundry list:• Acquisition of FA shares (212.3(18)(a), (b)):• from related Canadian corporation, at no time duringthe series dealing at arm’s length• on 87(1) amalgamation forming the CRIC betweenrelated, non-arm’s length predecessor corporations• Under 51(1), 85.1(3), 86(1), 87(8.1) foreign merger,88(3) liquidation/dissolution, redemption of shares ofanother pre-existing FA, or as a dividend/PUCreduction on shares of another pre-existing FA47
  • 48. Foreign Affiliate Dumping Jennifer Hanna March 2013Exceptions for Internal Reorganizations• 212.3(18) (c):• Acquisition of Can Target shares• from related Canadian corporation, at no time duringthe series dealing at arm’s length• on 87(1) amalgamation forming the CRIC betweenrelated, non-arm’s length predecessor corporations• Under 51(1), 86(1)48
  • 49. Foreign Affiliate Dumping Jennifer Hanna March 2013• 212.3(18)(d)• Acquisition of subject corporation or Can Target shares thatresults from the direct acquisition of shares of a Canadianresident corporation• The subject corporation or Can Target shares are received byCRIC as sole consideration for an exchange of a debt obligationowing to the CRIC (other than exchange to which 51(1) applies)49Exceptions for Internal Reorganizations
  • 50. Foreign Affiliate Dumping Jennifer Hanna March 2013• 212.3(18)(c)(v) double-countingrelief• Can Target (or Canadian corporationrelated to both CRIC and CanTarget) makes an investment in thesubject corporation, using propertytransferred by the CRIC, within 30days and as part of the same series• Note: the investment by Can Targetmay be caught by the anti-dumpingrules50Foreign ParentCRICForeign SubCan TargetInvestmentInvestmentExceptions for Internal Reorganizations
  • 51. Foreign Affiliate Dumping Jennifer Hanna March 2013Miscellaneous supporting rules• 212.3(19) – certain internal reorganization exceptions andthe closely connected exception do not apply to anacquisition of preferred shares of the subject corporationunless all of shares of the subject corporation are wholly-owned by the CRIC and/or Canadian resident subsidiaryand/or Canadian resident parent of the CRIC• (20) – assumption of debt on liquidation/dissolution is notexcepted under internal reorganization rules• (21) – anti-avoidance rule – artificially related personsdeemed not to be related for purposes of (18) internalreorganization rules• (22) – amalgamation/windup supporting rules51
  • 52. Foreign Affiliate Dumping Jennifer Hanna March 2013Miscellaneous supporting rules• (23) – No getting around rules by making indirect investment inanother subject corporation which itself makes an investment• (24) – Rules do not apply to investment in subject corporationby CRIC if• The transferred property is used by subject corporation tomake a loan to a controlled foreign affiliate under s. 17(“particular corporation”)• Particular corporation is a corporation to which the closelyconnected business exception would apply• Particular corporation uses the proceeds of the loan in anactive business (95(1)) in its country of residence• (25) – Partnership supporting rules52
  • 53. montréal  ottawa  toronto  hamilton  waterloo region  calgary  vancouver  moscow  londonThank Youwww.taxand.comJennifer Hanna, LL.BTel: 403-298-1892Email: jennifer.hanna@gowlings.com

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