(i) where the taxpayer disposes of the borrowed security and includes the gain or loss, if any, from the disposition in the computing its income from a business, the compensation amount, or

(ii) in any other case, the lesser of

(i) is, to the extent of the amount of the interest or dividend paid in respect of the borrowed security, deemed to be a payment made by the borrower to the lender of interest or a dividend, as the case may be, payable on the borrowed security, and

(ii) is, to the extent of the amount of the interest, if any, paid in respect of the borrowed security, deemed

(i) to receive its specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount received by the partnership in that fiscal period, and

(ii) in respect of the receipt of its specified proportion of that amount, to be the same person as the partnership;

(i) if the partnership is not a registered securities dealer, the corporation's specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount paid by the partnership (other than an amount for which a deduction in computing income may be claimed under subsection (6.1) by the corporation), and

(ii) if the partnership is a registered securities dealer, 1/3 of the corporation's specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount paid by the partnership (other than an amount for which a deduction in computing income may be claimed under subsection (6.1) by the corporation).

(i) to receive the individual's specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount received by the partnership in that fiscal period, and

(ii) in respect of the receipt of the individual's specified proportion of that amount, to be the same person as the partnership; and

(i) after May 1999 and before April 2002, the reference in the schedule to that corporation is to be read as a reference to "CitiFinancial Canada, Inc./CitiFinancière Canada, Inc.", and

(i) the previous borrowings became owing after the last time that the affiliate became a controlled foreign affiliate of the particular corporation, and

(ii) the previous borrowings have, at all times after they became owing, been used for a purpose described in subparagraph (8)(a)(i) or (ii); or

(i) the property was acquired, and the unpaid purchase price became owing, by the affiliate after the last time that it became a controlled foreign affiliate of the particular corporation,

(ii) the unpaid purchase price is in respect of the property, and

(iii) throughout the period that began when the unpaid purchase price became owing by the affiliate and ended when the unpaid purchase price was so paid, the property had been used principally to earn income described in clause (8)(a)(i)(A) or (B).

"(ii) each person resident in Canada that does not deal at arm's length with the taxpayer,"; and

"(iv) each person resident in Canada that does not deal at arm's length with a person resident in Canada described in subparagraph (iii);".

"(iii) the taxpayer and each person resident in Canada with whom the taxpayer does not deal at arm's length;"; and

(i) is, if the amount is received or becomes receivable on or before the taxpayer's filing-due date for the taxpayer's taxation year in which the taxpayer disposed of the property, to be included in computing the taxpayer's proceeds of disposition of the property, and

(ii) is, if the amount is received or becomes receivable after that filing-due date, deemed to be a capital gain of the taxpayer from the disposition, by the taxpayer of the property, that occurs at the time when the amount is received or becomes receivable; and

(i) is, if the amount is paid or becomes payable on or before the taxpayer's filing-due date for the taxpayer's taxation year in which the taxpayer disposed of the property, to be deducted in computing the taxpayer's proceeds of disposition of the property, and

(ii) is, if the amount is paid or becomes payable after that filing-due date, deemed to be a capital loss of the taxpayer from the disposition, by the taxpayer of the property, that occurs at the time when the amount is paid or becomes payable.

(i) if, at the time immediately before the winding-up, the subsidiary holds one or more shares of a foreign affiliate of the subsidiary, there shall be added to the cost amount, at that time, of each of those shares (referred to in this subparagraph as the "particular share") the amount determined by the formula

where

A is the total of all amounts each of which is the amount, if any, by which

exceeds

(B) the portion of that dividend that may reasonably be considered to have reduced the foreign affiliate's exempt or taxable surplus in respect of the subsidiary that arose after the acquisition of control of the subsidiary by the parent (determined on the assumption that a dividend is paid out of the foreign affiliate's exempt or taxable surplus, as the case may be, in respect of the subsidiary, in the reverse order to that in which it was added to the foreign affiliate's exempt or taxable surplus in respect of the subsidiary),

B is the fair market value of the particular share immediately before the winding-up, and

C is the total of all amounts each of which is the fair market value of a share of the foreign affiliate held by the subsidiary immediately before the winding-up, and

where

D is the total of all amounts each of which is the amount, if any, by which

E is the fair market value of the particular partnership interest immediately before the winding-up, and

F is the total of all amounts each of which is the fair market value of a partnership interest in the holding partnership held by the subsidiary immediately before the winding-up;

(i) is deemed to have been disposed of, at that time, by the disposing foreign affiliate to the taxpayer for proceeds of disposition that are equal to

(ii) is deemed to have been acquired, at that time, by the taxpayer at a cost equal to the amount, determined under subparagraph (i), to be the disposing foreign affiliate's proceeds of disposition of the distributed property;

(i) to have been disposed of, at that time, by the disposing foreign affiliate to the taxpayer for proceeds of disposition that are equal to the fair market value, at that time, of the distributed property, and

(ii) to have been acquired, at that time, by the taxpayer at a cost equal to the amount, determined under subparagraph (i), to be the disposing foreign affiliate's proceeds of disposition of the distributed property;

(i) a return of an amount that was received by the disposing foreign affiliate as consideration for the issuance of the particular share, or

(ii) a return of an amount of contributed surplus that was received by the disposing foreign affiliate before that time, as a contribution of capital to the disposing foreign affiliate by the shareholder that held the particular share at the time of the contribution; and

(i) the holder held the relevant share, and

(ii) the holder was

(A) a foreign affiliate of the particular corporation,

(B) a foreign affiliate of a corporation resident in Canada that was related to the particular corporation,

(C) a partnership of which a foreign affiliate of the particular corporation was a member, or

(D) a partnership of which a foreign affiliate, of a corporation resident in Canada that was related to the particular corporation, was a member;

(i) to have been a dividend received on the share from the affiliate by the disposing corporation or the disposing affiliate, as the case may be, immediately before the disposition, and

(ii) not to have been received as proceeds of disposition; and

(A) the amount determined by the formula

(i) the amount of the capital gain determined under paragraph 39(2)(a) for the taxation year that includes that time in respect of

(i) the amount of the capital gain of the corporation resident in Canada, of the foreign affiliate of the corporation resident in Canada, or of the partnership (to the extent that such a gain is reasonably attributable to the corporation resident in Canada, or to the foreign affiliate of the corporation resident in Canada, as the case may be) determined under paragraph 39(2)(a) for the taxation year that includes that time in respect of

(i) the amount of the capital gain of the corporation resident in Canada, of the foreign affiliate of the corporation resident in Canada, or of the partnership (to the extent that such a gain is reasonably attributable to the corporation resident in Canada, or to the foreign affiliate of the corporation resident in Canada, as the case may be) determined under paragraph 39(2)(a) for the taxation year that includes that time in respect of

(i) the amount of the capital gain of the corporation resident in Canada, of the foreign affiliate of the corporation resident in Canada, or of the partnership (to the extent that such a gain is reasonably attributable to the corporation resident in Canada, or to the foreign affiliate of the corporation resident in Canada, as the case may be) determined under paragraph 39(2)(a) for the taxation year that includes that time in respect of

(i) the taxpayer,

(ii) each person that does not deal at arm's length with the taxpayer,

(iii) each of not more than four persons (other than the taxpayer or a person described in subparagraph (ii)) resident in Canada, and

(iv) each person that does not deal at arm's length with a person resident in Canada described in subparagraph (iii);

(a) from the dispositions of property other than dispositions of excluded property,

(b) from dispositions of excluded property to which any of paragraphs (2)(c), (c.2), (d), (d.1), (e), (e.1), (e.3) to (e.5) and (f.4) and 88(3)(a) applies, or

(c) arising because of a gain under subsection 40(3) in respect of a share because of a dividend on the share referred to in subparagraph (2)(e.3)(iv) or (e.4)(v),

(A) of each country in which the business is carried on through a permanent establishment (as defined by regulation) in that country and of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued,

(B) of the country in which the business is principally carried on, or

(C) if the affiliate is related to a non-resident corporation, of the country under whose laws that non-resident corporation is governed and any of exists, was (unless that non-resident corporation was continued in any jurisdiction) formed or organized, or was last continued, if those regulating laws are recognized under the laws of the country in which the business is principally carried on and all of those countries are members of the European Union, or

(i) more than five employees full time in the active conduct of the business, or

(ii) the equivalent of more than five employees full time in the active conduct of the business taking into consideration only the services provided by its employees and the services provided outside Canada to the affiliate or to the operating partnership by employees of

if the corporations referred to in clause (A), the providing members referred to in subclause (B)(I), the designated corporations referred to in subclause (B)(II) or (C)(II), the designated partnerships referred to in subclause (B)(III) or (C)(III), or the providing shareholders referred to in subclause (C)(I) receive compensation from the affiliate or the operating partnership, as the case may be, for the services provided to the affiliate or to the operating partnership, as the case may be, by those employees the value of which is not less than the cost to those corporations, members, partnerships or shareholders of the compensation paid or accruing to the benefit of those employees that performed the services during the time the services were performed by those employees;

(i) the income or loss

(ii) the income or loss is derived from amounts that were paid or payable, directly or indirectly, to the particular foreign affiliate or a partnership of which the particular foreign affiliate was a member

(iii) the income or loss is derived by the particular foreign affiliate from the factoring of trade accounts receivable acquired by the particular foreign affiliate, or a partnership of which the particular foreign affiliate was a member, from a non-resident corporation to which the particular foreign affiliate and the taxpayer are related throughout the year to the extent that the accounts receivable arose in the course of an active business carried on in a country other than Canada by the non-resident corporation,

(iv) the income or loss is derived by the particular foreign affiliate from loans or lending assets acquired by the particular foreign affiliate, or a partnership of which the particular foreign affiliate was a member, from a non-resident corporation to which the particular foreign affiliate and the taxpayer are related throughout the year to the extent that the loans or lending assets arose in the course of an active business carried on in a country other than Canada by the non-resident corporation,

(v) the income or loss is derived by the particular foreign affiliate from the disposition of excluded property that is not capital property, or

(vi) the income or loss is derived by the particular foreign affiliate under or as a result of an agreement that provides for the purchase, sale or exchange of currency and that can reasonably be considered to have been made by the particular foreign affiliate to reduce its risk, with respect to an amount required by this paragraph to be included in computing the particular foreign affiliate's income or loss from an active business, of fluctuations in the value of the currency in which the amount was denominated;

(i) the amount paid or payable in consideration for those services or for the undertaking to provide those services

(ii) the services are, or are to be, performed by

(i) the vendor disposes at any time of a share of the capital stock of a foreign affiliate, of the particular corporation, (which share is referred to in this paragraph, paragraphs (c.2) to (c.4) and subsection (3.3) as the "specified share", which time is referred to in this paragraph and paragraphs (c.2) to (c.4) as the "original disposition time" of the specified share and which foreign affiliate is referred to in paragraphs (c.4) and (c.6) and in subsection (3.3) as the "disposed foreign affiliate" ) to a person or partnership (referred to in this paragraph as the "purchaser") that is, immediately after that time, a specified purchaser in respect of the particular corporation,

(ii) immediately before the original disposition time, the specified share is excluded property of the vendor (or would be excluded property of the vendor if the vendor were, immediately before the original disposition time, a foreign affiliate of the particular corporation),

(iii) the vendor would, were this Act read without reference to paragraph (c.2), have a taxable capital gain from the disposition of the specified share, and

(iv) none of paragraphs (2)(c), (d) to (e.1) and (e.3) to (e.5) and 88(3)(a) applies to the vendor in respect of the disposition of the share;

(i) where the vendor is not a partnership, the vendor's proceeds of disposition (determined without reference to subsection 93(1)) from the disposition of the specified share are deemed to be an amount that is equal to

(ii) where the vendor is a partnership of which a particular foreign affiliate of the particular corporation referred to in the definition "specified vendor" in subsection (3.2) is a member, for the purpose of computing the particular foreign affiliate's taxable capital gain from the disposition by the partnership of the specified share, the vendor's proceeds of disposition from the disposition of the specified share are deemed to be an amount that is equal to

(I) the specified share is a share referred to in subsection 93(1.3) in respect of the particular foreign affiliate,

(II) no other share of the disposed foreign affiliate was disposed of at the original disposition time of the specified share,

(III) the particular foreign affiliate was the only member of the partnership, and

(IV) the specified share was disposed of for consideration equal to its fair market value at the original disposition time of the specified share, or

(I) the amount determined by clause (A) in respect of the specified share, and

(II) the amount that is the lesser of the fair market value of the consideration received by the vendor in respect of the disposition and the amount that the particular corporation designates in the election,

(A) the amount that would, but for the application of this paragraph, have been the relevant foreign affiliate's taxable capital gain in respect of that disposition, if the vendor's proceeds of disposition in respect of that disposition were equal to the fair market value of the consideration received by the vendor in respect of that disposition,

exceeds

(B) the amount of the relevant foreign affiliate's taxable capital gain in respect of that disposition;

(i) the first time, after the original disposition time, that a specified purchaser in respect of the particular corporation that holds, immediately before that first time, the specified share makes a triggering disposition of the specified share, and

(ii) the first time, after the original disposition time, that a specified purchaser in respect of the particular corporation (which specified purchaser is referred to in this subparagraph as the "current holder") that holds, immediately before that first time, the specified share ceases to be a specified purchaser in respect of the particular corporation otherwise than because of a specified discontinuance of the current holder;

(A) where the property was excluded property of the particular foreign predecessor corporation immediately before the foreign merger, an amount that is equal to the relevant cost base, immediately before the foreign merger, of the property to the particular foreign predecessor corporation, or

(B) in any other case, an amount equal to the fair market value, immediately before the foreign merger, of the property,

(I) unless a valid election is made under subclause (II), the adjusted cost base, immediately before the foreign merger, of the share, to the shareholder, and

(II) the amount that the corporation resident in Canada elects in respect of the disposition in the prescribed manner and in the prescribed time, which amount may not be less than the adjusted cost base, immediately before the foreign merger, of the share, to the shareholder and may not be greater than the fair market value, immediately before the foreign merger, of the share, and

(iv) the new foreign corporation is deemed to be the same person as, and a continuation of, the particular foreign predecessor corporation

(v) the taxation year of the particular predecessor foreign corporation that would otherwise include the time of the foreign merger is deemed to have ended immediately before that time, and

(vi) where the fair market value of the share referred to in clause (iii)(A), immediately before the foreign merger, exceeds the fair market value of the share referred to in clause (iii)(B), immediately after the foreign merger, and it can reasonably be considered that all or any portion of the excess is a benefit that that shareholder desired to have conferred on another shareholder of the new corporation,

(i) each property of the new foreign corporation that was a property of a predecessor foreign corporation immediately before the merger is deemed to have been disposed of by the predecessor foreign corporation immediately before the merger for proceeds of disposition equal to the cost amount of the property to the predecessor foreign corporation at that time,

(ii) the new foreign corporation is deemed to be the same corporation as, and a continuation of, the predecessor foreign corporation for the purposes of

(iii) for greater certainty, nothing in this paragraph affects the determination of whether any property of a predecessor foreign corporation is disposed of on a foreign merger other than a foreign merger to which this paragraph applies, and

(iv) subsection 87(4) applies to each foreign affiliate of the taxpayer that, immediately before the merger, owned shares of the capital stock of a predecessor foreign corporation as if the reference in that subsection to

(i) the disposed foreign affiliate's proceeds of disposition of the property are deemed to be

(ii) the cost of the property to the shareholder immediately after the particular time is deemed to be an amount equal to the disposed foreign affiliate's proceeds of disposition of the property determined by subparagraph (i),

where

A is the total of all amounts each of which is the cost to the shareholder, immediately after the particular time, of a property received by the shareholder as consideration for the disposition of the shares of the disposed foreign affiliate disposed of in the course of the liquidation and dissolution,

B is the total of all amounts each of which is the amount of a debt that was owing by the disposed foreign affiliate, or any other obligation of the disposed foreign affiliate to pay an amount that was outstanding, immediately before it was assumed or cancelled, as the case may be, by the shareholder,

C is the fair market value, immediately before the commencement of the liquidation and dissolution, of the particular share, and

D is the fair market value, immediately before the commencement of the liquidation and dissolution, of all the shares of the disposed foreign affiliate disposed of by that shareholder,

(v) any gain from the disposition of the shares of the disposed foreign affiliate disposed of by the shareholder in the course of the liquidation and dissolution that, but for this subparagraph, would be a gain from the disposition of excluded property of the shareholder, is deemed to be the lesser of

(vi) the shareholder is deemed to be the same person as, and a continuation of, the disposed foreign affiliate

(vii) the taxation year of the disposed foreign affiliate that would otherwise include the time that the disposed foreign affiliate is dissolved is deemed to have ended immediately before that time;

(i) each property of the disposing affiliate that was so distributed to another foreign affiliate of the taxpayer is deemed to have been disposed of by the disposing affiliate for proceeds of disposition equal to the cost amount of the property to the disposing affiliate immediately before the distribution,

(ii) the other affiliate is deemed to be the same corporation as, and a continuation of, the disposing affiliate for the purposes of

(iii) the other affiliate's proceeds of disposition of the shares of the capital stock of the disposing affiliate disposed of in the course of the liquidation is deemed to be the adjusted cost base of those shares to the other affiliate immediately before the disposition;

(i) the surplus entitlement percentage of the corporation resident in Canada, in respect of the foreign affiliate, immediately before the redemption, acquisition or cancellation, is more than 90%, the surplus entitlement percentage of the corporation resident in Canada, in respect of the foreign affiliate is, immediately after the redemption, acquisition or cancellation, nil, and the foreign affiliate has no issued and outstanding shares immediately after the redemption, acquisition or cancellation, or

(ii) in the course of the redemption, acquisition or cancellation, property that has a fair market value equal to or greater than 90% of the fair market value, immediately before the redemption, acquisition or cancellation, of the property owned by the foreign affiliate is, because of the redemption, acquisition or cancellation, distributed to the shareholders of the foreign affiliate;

(i) the foreign affiliate's proceeds of disposition of the property are deemed to be

(ii) the cost of the property to the shareholder immediately after the particular time is deemed to be an amount equal to the foreign affiliate's proceeds of disposition of the property determined by subparagraph (i),

(iii) the amount of that dividend or distribution, in respect of the property, is deemed to be equal to the amount of the foreign affiliate's proceeds of disposition of the property determined by subparagraph (i), and

(iv) where, but for this subparagraph, the shareholder would, because of subsection 40(3), have a gain in respect of the share because of the dividend or distribution and the share is excluded property of the shareholder (or would be excluded property of the shareholder if the shareholder were a foreign affiliate of the particular corporation), for the purpose of applying subsection 40(3), the amount prescribed by paragraph 5900(1)(c) of the Regulations to have been paid out of the pre-acquisition surplus of the particular corporation's foreign affiliate from which the property was received, otherwise determined, in respect of the dividend or distribution in respect of the share is deemed to be the lesser of

(A) the amount that, but for this subparagraph, would be so prescribed, and

(B) the amount, not exceeding the amount referred to in clause (A), that the particular corporation elects in prescribed manner and within the prescribed time;

(i) the foreign affiliate's proceeds of disposition of the property are deemed to be

(ii) the cost immediately after the particular time of the property to the shareholder is deemed to be an amount equal to the amount of the foreign affiliate's proceeds of disposition of the property determined by subparagraph (i),

(iii) the property is deemed to have been received by the shareholder as a dividend on the share and the amount of that dividend, in respect of the property, is deemed to be equal to the amount of the proceeds of disposition of the property determined by subparagraph (i),

(iv) if the share is excluded property of the shareholder (or would be excluded property of the shareholder if the shareholder were a foreign affiliate of the particular corporation), the shareholder is deemed to have disposed of the share for proceeds of disposition of an amount equal to the cost amount of the share to the shareholder immediately before the disposition, and

(v) where, but for this subparagraph, the shareholder would, because of subsection 40(3), have a gain in respect of the share referred to in subparagraph (iv) because of the dividend referred to in subparagraph (iii) received by the shareholder in respect of the redemption of the share, for the purposes of applying subsection 40(3), the amount prescribed by paragraph 5900(1)(c) of the Regulations to have been paid out of the pre-acquisition surplus of the foreign affiliate — of the corporation resident in Canada — from which the property was received, otherwise determined, in respect of the dividend referred to in subparagraph (iii) in respect of the share is deemed to be the lesser of

(A) the amount that, but for this subparagraph, would be so prescribed, and

(B) the amount, not exceeding the amount referred to in clause (A), that the corporation resident in Canada elects in prescribed manner and within the prescribed time;

(i) the foreign affiliate's proceeds of disposition of the property are deemed to be

(ii) the cost of the property to the shareholder immediately after the particular time is deemed to be an amount equal to the foreign affiliate's proceeds of disposition of the property determined by subparagraph (i),

(iii) the property is deemed to have been received by the shareholder as proceeds of disposition of shares of the foreign affiliate disposed of by the shareholder in the course of the particular redemption,

(iv) the particular share disposed of to the foreign affiliate because of the particular redemption is deemed to have been disposed of for proceeds that are equal to the amount determined by the formula

where

(i) shares of a foreign affiliate of the corporation resident in Canada that are property of the partnership, or are deemed under this paragraph to be property of the partnership, are deemed to be owned at that time by each member of the partnership in a proportion equal to the proportion of the shares that

(B) the fair market value, at that time, of all partnership interests in the partnership,

(ii) each amount determined under any of paragraphs (e) and (e.3) to (e.5) in respect of the partnership in respect of the shares of the foreign affiliate described in subparagraph (i) is deemed to be the amount determined under that paragraph in respect of the foreign affiliate in respect of those shares, and

(iii) the income, gain or loss derived by the partnership, while the foreign affiliate is a member of the partnership, in respect of the shares deemed by subparagraph (i) to be owned by the foreign affiliate

(i) if that gain or loss is the gain or loss of a foreign affiliate from the disposition of property to which any of paragraphs (c), (c.2), (d) to (e), (e.3) to (e.5), (f.4) and 88(3)(a) applies or from any other disposition of property (other than excluded property), in Canadian currency, and

(i) the foreign affiliate were resident in Canada,

(ii) the Act were read without reference to subsections 14(1.01) to (1.03), 17(1) and 18(4) and section 91,

(iii) the income or loss were computed in Canadian currency, and

(iv) there were not included in computing the income or loss the portion of the income or loss that can reasonably be considered to have been realized or to have accrued during any period throughout which the affiliate was not a foreign affiliate of the taxpayer, of a person described in any of subparagraphs (f)(iii) to (vii) or of a partnership described in subparagraph (f)(viii);

(i) the vendor disposes at any time of a property (which property is referred to in this paragraph and paragraphs (f.4) and (f.5) and (f.7) to (f.9) as the "specified property" and which time is referred to in this paragraph and paragraphs (f.4), (f.5), (f.8) and (f.9) as the "original disposition time" of the specified property) to a person or partnership (in this paragraph referred to as the "purchaser") that is, immediately after that time, a specified purchaser in respect of the particular corporation,

(ii) immediately before the original disposition time, the specified property is excluded property of the vendor (or would be excluded property of the vendor if the vendor were, immediately before the original disposition time, a foreign affiliate of the particular corporation), and

(iii) the vendor would, were this Act read without reference to paragraph (f.4), have income or a taxable capital gain from the disposition of the specified property;

(i) the vendor's proceeds from the disposition of the specified property are deemed to be

(ii) the purchaser's cost of the specified property is deemed to be an amount that is equal to the fair market value of the specified property at the original disposition time,

(iii) the vendor's cost of a particular property that was received as consideration for the disposition of the specified property is deemed to be the fair market value of the particular property at the original disposition time, and

(iv) the vendor that is a foreign affiliate of the particular corporation resident in Canada or a foreign affiliate of the particular corporation resident in Canada that is a member of a partnership that is the vendor (which vendor or foreign affiliate is referred to in this subparagraph and subparagraph (f.5) as the "relevant foreign affiliate") is deemed to have an unadjusted suspended income or gain in respect of a specified property disposed of, at the original disposition time, by the specified vendor that is equal to the amount, if any, by which

(A) the amount that is the income or twice the amount of the taxable capital gain, as the case may be, that, but for the application of this paragraph, would have been realized by the relevant foreign affiliate in respect of that disposition,

exceeds

(B) the amount that is the income or twice the amount of the taxable capital gain, as the case may be, that was realized by the relevant foreign affiliate in respect of that disposition;

(i) the first time, after the original disposition time, that a specified purchaser in respect of the particular corporation that holds, immediately before that first time, the specified property makes a triggering disposition of the specified property, and

(ii) the first time, after the original disposition time, that a specified purchaser in respect of the particular corporation (which specified purchaser is referred to in this paragraph and paragraphs (f.8) and (f.9) as the "current holder") that holds, immediately before that first time, the specified property ceases to be a specified purchaser in respect of the particular corporation otherwise than because of a specified discontinuance of the current holder;

(i) any of paragraphs (2)(c), (c.2), (d), (d.1) (e), (e.1), and (e.3) to (e.5) and subsections 85.1(5) and 88(3) applies to the person or partnership in respect of the disposition of the property, or

(ii) the property was disposed of

(i) the part (referred to in this paragraph as the "part interest") of the initial specified property disposed of, at that time, is deemed to be a specified property of the current holder,

(ii) the portion of the unadjusted suspended income or gain attributable to the part interest is deemed to be that proportion of the adjusted suspended income or gain in respect of the whole of the initial specified property that the fair market value at that time of the part interest is of the fair market value at that time of the initial specified property,

(iii) the part (referred to in this paragraph as the "remaining interest") of the initial specified property not disposed of at that time is deemed to be a specified property of the current holder that was disposed of at the original disposition time, and

(iv) the amount of income or gain that would have been realized on the disposition of the remaining interest at the original disposition time is deemed to be the amount, if any, by which the unadjusted suspended income or gain in respect of the initial specified property exceeds the amount determined by subparagraph (ii) to be the unadjusted suspended income or gain in respect of the part interest;

(i) the designated replacement property (referred to in this paragraph as the "remaining interest") is deemed to be a specified property of the current holder that was disposed of at the original disposition time,

(ii) the unadjusted suspended income or gain in respect of the remaining interest is deemed to be that proportion of the unadjusted suspended income or gain in respect of the whole of the initial specified property (determined without reference to subparagraph (iii)) that the fair market value of the remaining interest, at the time it was acquired, is of the fair market value, at the particular time, of the initial specified property, and

(iii) the unadjusted suspended income or gain in respect of the initial specified property is deemed to be the amount, if any, by which the unadjusted suspended income or gain in respect of the initial specified property (determined without reference to this subparagraph) exceeds the amount determined by subparagraph (ii) to be the unadjusted suspended income or gain in respect of the remaining interest;

(i) for the purpose of determining the cumulative eligible capital of the particular foreign affiliate, at the beginning of its taxation year that includes the status change time in respect of the particular foreign affiliate in respect of the particular Canadian shareholder, in respect of each business other than an active business carried on by the particular foreign affiliate in that taxation year, the particular foreign affiliate is deemed to have disposed, immediately before the beginning of that taxation year, of each eligible property at that time of the particular foreign affiliate in respect of each business carried on by the particular foreign affiliate that is, at that time, a business other than an active business, for proceeds equal to the cost to the particular foreign affiliate of the eligible property at the time of that disposition,

(ii) for the purpose of determining the cost of eligible property to the particular foreign affiliate, and the cumulative eligible capital of the particular foreign affiliate, for its taxation year that includes the status change time in respect of the particular foreign affiliate in respect of the particular Canadian shareholder and for each subsequent taxation year, in respect of each business other than an active business carried on by the particular foreign affiliate in that taxation year or subsequent taxation year, the particular foreign affiliate is deemed to have acquired, immediately after the beginning of its particular taxation year that includes the status change time in respect of the particular foreign affiliate in respect of the particular Canadian shareholder, each eligible property of the particular foreign affiliate, immediately before the beginning of the particular year, in respect of each business carried on by the particular foreign affiliate that is immediately before the beginning of the particular year a business, other than an active business, at a cost equal to the lesser of

(A) the fair market value of the eligible property at the status change time, and

(B) the cost to the particular foreign affiliate of the eligible property immediately before the beginning of the particular year,

(iii) eligible property, in respect of a business carried on by the particular foreign affiliate, means a property, right or thing in respect of which the particular foreign affiliate has, after 1971 and before the status change time, made an eligible capital expenditure in respect of the business,

(iv) for the purpose of determining the undepreciated capital cost to the particular foreign affiliate, at the beginning of its taxation year that includes the status change time in respect of the particular foreign affiliate in respect of the particular Canadian shareholder, of its depreciable capital property used or held in the course of carrying on a business, other than an active business, of the particular foreign affiliate in that taxation year,

(v) for the purpose of determining the capital cost and undepreciated capital cost to the particular foreign affiliate of its depreciable capital property used or held in the course of carrying on each business other than an active business carried on by the particular foreign affiliate, for its taxation year that includes the status change time in respect of the particular foreign affiliate in respect of the particular Canadian shareholder and for subsequent taxation years, the particular foreign affiliate is deemed to have acquired, at the time that is immediately after the beginning of its particular taxation year that includes the status change time in respect of the particular foreign affiliate in respect of the particular Canadian shareholder, each depreciable capital property (each such depreciable capital property referred to in this subparagraph and paragraph (f.93) as a "specified depreciable property") that was owned by the particular foreign affiliate and used or held by the particular foreign affiliate, at the time that is immediately before the beginning of the particular taxation year, in the course of the carrying on of a business, other than an active business, of the particular foreign affiliate, at that time, at a capital cost equal to the lesser of

(A) the fair market value of the specified depreciable property at the status change time, and

(B) the capital cost to the particular foreign affiliate of the specified depreciable property at the time immediately before the beginning of the particular taxation year;

(i) the amount, if any, by which

(B) the particular foreign affiliate's cost, of the eligible property, immediately before the particular disposition, and

(ii) the amount, if any, by which the particular foreign affiliate's proceeds from the particular disposition, as otherwise determined, exceeds the particular foreign affiliate's cost of the eligible property immediately before the particular disposition, and

(i) the amount, if any, by which

(ii) the amount, if any, by which the particular foreign affiliate's proceeds from the particular disposition, as otherwise determined, exceeds the particular foreign affiliate's cost of the eligible property immediately before the particular disposition;

(i) the amount, if any, by which

(B) the particular foreign affiliate's capital cost of the particular specified depreciable property, immediately before the disposition, and

(ii) the amount, if any, by which the particular foreign affiliate's proceeds from the disposition of the particular specified depreciable property, as otherwise determined, exceed the particular foreign affiliate's capital cost of the specified depreciable property at the time immediately before the time of the disposition, and

(i) the amount, if any, by which

(ii) the amount, if any, by which the particular foreign affiliate's proceeds from the disposition of the particular specified depreciable property, as otherwise determined, exceed the particular foreign affiliate's capital cost of the particular specified depreciable property, immediately before the disposition;

(i) the surplus entitlement percentage of the particular corporation resident in Canada, immediately before the merger or combination or the winding-up, in respect of the specified foreign affiliate is not less than 90%, and

(ii) the surplus entitlement percentage of the particular corporation resident in Canada, immediately after the merger or combination or the winding-up, in respect of the foreign parent corporation or new foreign corporation, as the case may be, is not less than 90%;

(i) a debt obligation that was owing to

(ii) the redemption, cancellation or acquisition of a share of the capital stock of, or the reduction of the capital of, the particular affiliate or a qualified foreign corporation, or

(iii) the disposition to a qualified foreign corporation of a share of the capital stock of another qualified foreign corporation;

(i) the vendor disposes at any time of a property (which property is referred to in this paragraph and paragraphs (h.1) to (h.5) as the "specified property" and which time is referred to in this paragraph and paragraphs (h.1) to (h.5) as the "original disposition time" of the specified property) that, at that time, is not depreciable property, eligible capital property or an excluded property, of the vendor (or would not be excluded property of the vendor if the vendor were, at that time, a foreign affiliate of the particular taxpayer) to a person or partnership (referred to in paragraph (h.1) as the "purchaser") that is, immediately after that time, a specified purchaser in respect of the particular taxpayer, and

(ii) the vendor would, were this Act read without reference to paragraph (h.1), have a loss or allowable capital loss from the disposition of the specified property;

(i) the vendor's proceeds from the disposition of the specified property are deemed to be an amount that is equal to the vendor's adjusted cost base of the specified property at the original disposition time,

(ii) the purchaser's cost of the specified property is deemed to be an amount that is equal to the fair market value of the specified property at the original disposition time,

(iii) the vendor's cost of a particular property that was received as consideration for the disposition of the specified property is deemed to be the fair market value of the particular property at the original disposition time,

(iv) the vendor that is a foreign affiliate of the particular taxpayer resident in Canada or a foreign affiliate of the particular taxpayer resident in Canada that is a member of a partnership that is the vendor (which vendor or foreign affiliate is referred to in this subparagraph as the "relevant foreign affiliate") is deemed to have an unadjusted suspended loss or capital loss in respect of the specified property disposed of, at the original disposition time, by the vendor that is equal to the amount, that is the loss or twice the amount of the allowable capital loss, as the case may be, that, but for the application of this paragraph, would have been realized by the relevant foreign affiliate in respect of that disposition, and

(v) notwithstanding subsection 40(3.3), subsection 40(3.4) does not apply to the vendor in respect of the disposition of the specified property;

(i) the first time, after the original disposition time, that a specified purchaser in respect of the particular taxpayer (which specified purchaser is referred to in paragraphs (h.4) and (h.5) as the "current vendor") that holds, immediately before that first time, the specified property makes a triggering disposition of the specified property, and

(ii) the first time, after the original disposition time, that a specified purchaser in respect of the particular taxpayer (which specified purchaser is referred to in this subparagraph as the "current holder") that holds, immediately before that first time, the specified property ceases to be a specified purchaser in respect of the particular taxpayer otherwise than because of a specified discontinuance of the current holder;

(i) the part (referred to in this paragraph as the "part interest") of the initial specified property disposed of, at that time, is deemed to be a specified property of the current vendor,

(ii) the portion of the unadjusted suspended loss or capital loss attributable to the part interest is deemed to be that proportion of the adjusted suspended loss or capital loss in respect of the whole of the initial specified property that the fair market value at that time of the part interest is of the fair market value at that time of the initial specified property,

(iii) the part (referred to in this paragraph as the "remaining interest") of the initial specified property not disposed of at that time is deemed to be a specified property of the current vendor that was disposed of at the original disposition time, and

(iv) the amount of loss or capital loss that would have been realized on the disposition of the remaining interest at the original disposition time is deemed to be the amount, if any, by which the unadjusted suspended loss or capital loss in respect of the initial specified property exceeds the amount determined by subparagraph (ii) to be the unadjusted suspended loss or capital loss in respect of the part interest;

(i) the designated replacement property (referred to in this paragraph as the "remaining interest") is deemed to be a specified property of the current vendor that was disposed of at the original disposition time,

(ii) the unadjusted suspended loss or capital loss in respect of the remaining interest is deemed to be that proportion of the unadjusted suspended loss or capital loss in respect of the whole of the initial specified property (determined without reference to subparagraph (iii)) that the fair market value of the remaining interest, at the time it was acquired, is of the fair market value, at the particular time, of the initial specified property, and

(iii) the unadjusted suspended loss or capital loss in respect of the initial specified property is deemed to be the amount, if any, by which the unadjusted suspended loss or capital loss in respect of the initial specified property (determined without reference to this subparagraph) exceeds the amount determined by subparagraph (ii) to be the unadjusted suspended loss or capital loss in respect of the remaining interest;

(i) derived from the settlement or extinguishment of a debt all or substantially all of the proceeds from which were used at all times to acquire excluded property or to earn income from an active business or for a combination of those uses, or

(ii) derived under or as a result of an agreement that provides for the purchase, sale or exchange of currency and that can reasonably be considered to have been made by the affiliate to reduce its risk, with respect to a debt referred to in subparagraph (i), of fluctuations in the value of the currency in which the debt was denominated;

(i) the operator carries on a business (referred to in this paragraph and paragraph (j.2) as a "foreign business"),

(ii) the foreign business includes the insuring of risks,

(iii) the foreign business is not, at any time, a taxable Canadian business,

(iv) the foreign business is

(v) in respect of the foreign business, the operator would, were it a corporation carrying on the foreign business in Canada, be required by law to report to, and be subject to the supervision of, a regulatory authority that is the Superintendent of Financial Institutions or a similar authority of a province;

(i) the operator is deemed to carry on the foreign business in Canada throughout that part of the specified taxation year, and of each of those subsequent taxation years or fiscal periods, in which the foreign business is carried on by the operator, and

(ii) for the purposes of Part XIV of the Regulations,

(i) in the specified taxation year, the operator carries on a business (referred to in this paragraph and, subject to paragraph (k.6), in paragraph (k.1), as a "foreign business"),

(ii) the foreign business is not, at any time in the specified taxation year, a taxable Canadian business,

(iii) in the specified taxation year, the foreign business is

(iv) in the taxation year of the affiliate or the fiscal period of the partnership that includes the day that is immediately before the beginning of the specified taxation year,

(i) the operator is deemed

(ii) where, in respect of the foreign business, the operator would, if it were a corporation carrying on the foreign business in Canada, be required by law to report to, and be subject to the supervision of, a regulatory authority that is the Superintendent of Financial Institutions or a similar authority of a province,

(iii) paragraphs 138(11.91)(c) to (e) apply to the operator for the specified taxation year in respect of the foreign business as if

(iv) if a particular property is deemed, because of the application of subparagraph (iii) and paragraph 138(11.91)(e), to have been disposed of in the preceding taxation year by the operator (which disposition is referred to in this subparagraph as a "particular disposition" of the particular property),

(i) in the taxation year of the affiliate, or fiscal period of the partnership, (which taxation year or fiscal period is referred to in this paragraph and paragraph (k.3) as "the preceding taxation year") that includes the day immediately before the beginning of the specified taxation year, the affiliate or partnership carried on a business (which is referred to in this paragraph and, subject to paragraph (k.6), in paragraph (k.3), as a "foreign business"),

(ii) the foreign business was not, at any time in the preceding taxation year, a taxable Canadian business,

(iii) in the preceding taxation year, the foreign business was

(iv) either

(i) the operator is deemed to have ceased to carry on the foreign business in Canada at the beginning of the specified taxation year,

(ii) subject to subparagraph (iii), paragraphs 138(11.91)(c) to (e) apply to the operator for the specified taxation year in respect of the foreign business as if

(iii) where the taxpayer so elects, in prescribed manner and within the prescribed time, to have this subparagraph apply in respect of each property that is deemed, because of the application of subparagraph (ii) and paragraph 138(11.91)(e), to have been disposed of in the specified taxation year by the operator (each such property referred to in this subparagraph as a "particular property" and each such disposition of a particular property referred to in this subparagraph as a "particular disposition" of the particular property)

(i) the particular part of the business is deemed to be, at that time, a separate business,

(ii) the assets used, or held, at that time primarily in the course of carrying on the particular part of the business are deemed to be, at that time, used or held in the course of carrying on the separate business,

(iii) any liability incurred, and any reserve established, at that time in the course of carrying on the particular part of the business are deemed to be, at that time, incurred or established in the course of carrying on the separate business, and

(iv) the transactions conducted at that time in the particular part of the business are deemed to be transactions conducted, at that time, in the separate business;

(i) the particular business is the operator's foreign business for the specified taxation year described in paragraph (k) or for the preceding taxation year described in subparagraph (k.2)(i), and

(ii) the activities of the particular business for that specified or preceding taxation year include particular activities deemed by any of paragraphs (a.1) to (b) to be a separate business, other than an active business, carried on by the foreign affiliate for that specified or preceding taxation year and the particular activities were not all the activities of the particular business in that specified or preceding taxation year;

(i) that part of the particular business that consists of activities deemed by any of paragraphs (a.1) to (b) to be a separate business, other than an active business, carried on by the foreign affiliate for a taxation year or for a fiscal period, referred to in paragraph (k.1) or (k.3), of the operator, is deemed to be the operator's foreign business carried on in that taxation year or fiscal period,

(ii) the assets used or held by the operator primarily in the course of carrying on activities deemed by any of paragraphs (a.1) to (b) to be a separate business, other than an active business, carried on by the foreign affiliate for a taxation year or for a fiscal period, referred to in paragraph (k) or (k.2), of the operator, are deemed to be assets used or held by the operator in the course of carrying on the foreign business in that taxation year or fiscal period,

(iii) the portion of the liabilities incurred, and the portion of the reserves established, in the course of carrying onactivities deemed by any of paragraphs (a.1) to (b) to be a separate business, other than an active business, carried on by the foreign affiliate for a taxation year or for a fiscal period, referred to in paragraph (k) or (k.2), of the operator, are deemed to be liabilities incurred and reserves established in the course of carrying on the foreign business in that taxation year or fiscal period, and

(iv) subject to subparagraphs (ii) and (iii), the transactions conducted in the course of carrying on activities deemed by any of paragraphs (a.1) to (b) to be a separate business, other than an active business, carried on by the foreign affiliate for a taxation year or for a fiscal period, referred to in paragraph (k) or (k.2), of the operator, are, to the extent that those transactions relate to those activities, deemed to be transactions conducted in the course of carrying on the foreign business in that taxation year or fiscal period;

(i) in applying paragraphs (a.1) to (b), (j.1) to (k.6) and (l) and the definition "taxable Canadian business" in subsection (1), the person is deemed to be a member of the other partnership, and

(ii) in applying the definition "taxable Canadian business" in subsection (1), the person's share of the income or loss of the other partnership is deemed to be equal to the portion of that income or loss to which the person is directly or indirectly entitled;

(A) of each country in which the business is carried on through a permanent establishment (as defined by regulation) in that country and of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued,

(B) of the country in which the business is principally carried on, or

(C) if the affiliate is related to a non-resident corporation, of the country under whose laws that non-resident corporation is governed and any of exists, was (unless that non-resident corporation was continued in any jurisdiction) formed or organized, or was last continued, if those regulating laws are recognized under the laws of the country in which the business is principally carried on and all of those countries are members of the European Union, and

(i) the non-resident corporation is a foreign affiliate of another corporation that is resident in Canada and that is related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the particular corporation, and

(ii) that other corporation has a qualifying interest in respect of the non-resident corporation;

(i) throughout the period, in the fiscal period of the partnership that includes the particular time, during which the member was a member of the partnership, the particular person is, on a regular, continuous and substantial basis

(ii) throughout the period, in the fiscal period of the partnership that includes the particular time, during which the member was a member of the partnership

(i) the particular person owned 1% or more of the issued and outstanding shares (having full voting rights under all circumstances) in the capital of the corporation,

(ii) the particular person, or the particular person and persons (other than trusts) related to the particular person, owned 10% or more of the issued and outstanding shares (having full voting rights under all circumstances) in the capital of the corporation,

(iii) the total of the fair market value of all the issued and outstanding shares of the corporation owned by the particular person is 1% or more of the total fair market value of all the issued and outstanding shares of the corporation, and

(iv) the total of the fair market value of all the issued and outstanding shares of the corporation owned by the particular person or by persons (other than trusts) related to the particular person is 10% or more of the total fair market value of all the issued and outstanding shares of the corporation;

(i) where interests in a partnership or shares of a corporation (which interests or shares are referred to in this subparagraph as "equity interests") are, at any time, property of a partnership or are deemed under this paragraph to be, at any time, property of the partnership, the equity interests are deemed to be owned at that time by each member of the partnership in a proportion equal to the proportion of the equity interests that

(B) the fair market value at that time of all members' partnership interests in the partnership, and

(ii) where interests in a partnership or shares of a corporation (which interests or shares are referred to in this subparagraph as "equity interests") are, at any time, property of a non-discretionary trust (within the meaning assigned by subsection 17(15)) or are deemed under this paragraph to be, at any time, property of such a non-discretionary trust, the equity interests are deemed to be owned at that time by each beneficiary under that trust in a proportion equal to that proportion of the equity interests that

(A) the fair market value at that time of the beneficiary's beneficial interest in the trust

is of

(B) the fair market value at that time of all beneficial interests in the trust;

(i) a particular foreign affiliate - of another corporation that is resident in Canada and that is related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the particular corporation - is a member of the partnership,

(ii) that other corporation has a qualifying interest in respect of the particular foreign affiliate, and

(iii) the particular foreign affiliate is a qualifying member of the particular partnership;

(i) a qualifying shareholder of the foreign affiliate or a person related to such a qualifying shareholder is a qualifying shareholder of the particular corporation,

(ii) the particular corporation

(iii) the total of all amounts each of which is the fair market value of a share of the capital stock of the particular corporation owned by a qualifying shareholder of the foreign affiliate or by a person related to a qualifying shareholder of the foreign affiliate is greater than 50% of the total fair market value of all the issued and outstanding shares of the capital stock of the particular corporation;

(i) the foreign affiliate or a person related to the foreign affiliate is a qualifying member of the particular partnership, and

(ii) the total of all amounts each of which is the fair market value of a partnership interest in the particular partnership held by the foreign affiliate, by a person related to the foreign affiliate or by a qualifying member of the operating partnership (described in that definition) is greater than 50% of the total fair market value of all partnership interests in the particular partnership owned by all members of the particular partnership;

(i) the fair market value at that time of the shares of the capital stock of the other corporation that, at that time, are owned by, or are property of, the shareholder

is of

(ii) the fair market value at that time of all the issued and outstanding shares of the capital stock of the other corporation;

(i) the fair market value at that time of the member's partnership interest in the partnership

is of

(ii) the fair market value at that time of all partnership interests in the partnership;

(i) the fair market value at that time of the beneficiary's beneficial interest in the trust

is of

(ii) the fair market value at that time of all beneficial interests in the trust;

(i) each beneficiary of the particular trust at that time, and

(ii) each settlor (within the meaning assigned by subsection 17(15)) in respect of the particular trust at that time; and

(i) in the course of carrying on, principally with persons with whom the affiliate deals at arm's length, a business (other than a life insurance business) principally carried on in the country (other than Canada) under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued, or

(ii) in the course of a life insurance business carried on by the affiliate principally in a country other than Canada and principally with persons with whom the affiliate deals at arm's length if

(i) a person has, in that year, acquired or disposed of shares of the non-resident corporation or any other corporation and, because of that acquisition or disposition, the non-resident corporation became (or would have become, if paragraph 251(5)(b) did not apply to rights contained in the agreement under which the person acquired the shares), or ceased to be, a non-resident corporation that was related to the taxpayer or to the taxpayer and the foreign affiliate of the taxpayer, and

(ii) at the beginning, or at the end, of that year, the non-resident corporation was related to the taxpayer or to the taxpayer and the foreign affiliate of the taxpayer.

(i) a foreign affiliate of the taxpayer in respect of which the taxpayer had a qualifying interest, or

(ii) related to the taxpayer and to that particular affiliate.

(i) the business is principally carried on in the country (other than Canada) under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued, or

(ii) the affiliate is a foreign bank, a trust company, a credit union, an insurance corporation or a trader or dealer in securities or commodities and the activities of the business are regulated

(i) of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued and of each country in which the business is carried on through a permanent establishment (as defined by regulation) in that country,

(ii) of the country in which the business is principally carried on, or

(iii) if the affiliate is related to a corporation, of the country under the laws of which that related corporation is governed and any of exists, was (unless that related corporation was continued in any jurisdiction) formed or organized, or was last continued, if those regulating laws are recognized under the laws of the country in which the business is principally carried on and all of those countries are members of the European Union, and

(i) a life insurance corporation resident in Canada, the business activities of which are subject by law to the supervision of the Superintendent of Financial Institutions or a similar authority of a province, or

(ii) a corporation resident in Canada that is a subsidiary controlled corporation of a corporation described in subparagraph (i);

(i) in the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued, and

(ii) in the country, if any, in which the business is principally carried on;

(i) that were non-resident at the time that the policies in respect of those risks were issued or effected, and

(ii) that were at that time dealing at arm's length with the affiliate, the taxpayer and all persons that were related at that time to the affiliate or the taxpayer; and

(i) to fund a liability or reserve of the foreign life insurance business, or

(ii) as capital that can reasonably be considered to have been required for the foreign life insurance business.

(i) the business is principally carried on in the country (other than Canada) under whose laws the non-resident corporation is governed and any of exists, was (unless the non-resident corporation was continued in any jurisdiction) formed or organized, or was last continued, or

(ii) the non-resident corporation is a foreign affiliate of the person and

(I) under the laws of the country under whose laws the non-resident corporation is governed and any of exists, was (unless the non-resident corporation was continued in any jurisdiction) formed or organized, or was last continued and under the laws of each country in which the business is carried on through a permanent establishment (as defined by regulation) in that country,

(II) under the laws of the country (other than Canada) in which the business is principally carried, or

(III) under the laws of the country under whose laws a corporation related to the non-resident corporation is governed and any of exists, was (unless that related corporation was continued in any jurisdiction) formed or organized, or was last continued, where those laws are recognized under the laws of the country in which the business is principally carried on and all of those countries are members of the European Union, and