in-print-bilateral-benefits-0409-en

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Unformatted text preview: fiscale canadienne ( 2009) vol. 5 7 , n o 1 The words “directly or indirectly” complicate the application of the base-erosion test. Depending on the circumstances, it may not be clear whether there has in fact been an indirect payment. For example, will interpretive tests similar to those that currently apply to the “directly or indirectly” test in subparagraph 95(2)(a)(ii) of the act be applied in the context of the base-erosion test for Canadian tax purposes? if so, the information required to make such a determination may be difficult or impossible to obtain. Moreover, should the payments made by a subsidiary of a us parent company or the gross income of the us subsidiary be taken into account when the base-erosion test is applied to the us parent company? suppose, for example, that the us subsidiary is a member of the us tax consolidated group. Will the us subsidiary’s gross income or its deductible expenses paid to a non-qualifying person be included in the baseerosion computati...
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