Unformatted text preview: resumably usco’s capital investment in Canco is not funded with usco’s surplus funds; nevertheless, the Cra did not raise a concern about the source of usco’s funding. Logically, the Cra should take the same view on interest and other types of income.
because Canco’s operations are 99 times larger than those of the us affiliated group, us Opco may not meet the substantiality test in the third condition, even if Canada takes the position that the test is an anti-avoidance provision, rather than a bright-line test. However, interpretive issues are sure to arise until Canadian tax authorities provide further guidance. derIvaTIve BeNefITs TesT
if the qualifying person tests are not met and the exception under the active trade or business test is not met, a further exception in article xxix a(4), referred to as the derivative benefits test, may give a taxpayer access to certain treaty benefits. article xxix a(4) provides treaty relief that is limited to dividends, interest, and royalties 46 s...
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