Unformatted text preview: . This approach is inappropriate because it assigns “in connection with” the same meaning as “incidental to” when, in fact, these phrases represent two different concepts. This differentiation is 106 n c anadian tax journal / revue fiscale canadienne ( 2009) vol. 5 7 , n o 1 FIGURE 3 Interest Payments from Canco to US Opco
Austriaco Austria Swissco
Canada Loan 1 United States US Holdco USco
Interest US Opco apparent from the discussion of the meanings of these terms in the technical explanation. For example, in connection with refers to income-producing activity in a source country that is upstream, downstream, or parallel to the activity conducted in a resident country.
Furthermore, the Cra expressed its view about the dividend income earned by usco or a capital gain realized by usco on the disposition of shares in a Canco subsidiary at the 2008 round table.46 The active trade or business exception is available to usco in these circumstances if, among other conditions, Canco’s active business is the same as or complementary to the business carried on in by usco in the united states. P...
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