An Analysis of the 1994 Amendments to the FAPI and Foreign Affiliate Rules

family application program interface | FAPI

foreign accrual property income provisions [ FAPI provisions ]

(1.5) If subsection (1.4) applied to reduce an amount that would, in the absence of subsection (1.4), be prescribed by paragraph (1.3)(a) to be foreign accrual tax applicable to an amount (referred to in this subsection as the “FAPI amount”) included in the taxpayer’s income under subsection 91(1) of the Act for a taxation year (referred to in subsection (1.6) as the “FAPI year”) of the taxpayer, an amount equal to that reduction is, for the purpose of paragraph (b) of the definition “foreign accrual tax” in subsection 95(1) of the Act, prescribed to be foreign accrual tax applicable to the FAPI amount in the taxpayer’s taxation year th ...[+++]at includes the last day of the designated taxation year, if any, of the particular affiliate referred to in paragraph (1.3)(a).

(a) in the particular year, or in the particular affiliate’s taxation year (referred to in this paragraph as the “PATY”) ending in the FAPI year and one or more taxation years of the particular affiliate each of which follows the PATY and the latest of which is the particular year, all losses of the particular affiliate and the other corporations referred to in paragraph (1.3)(a) for their taxation years ending in the FAPI year would, on the assumption that the particular affiliate and each of those other corporations had no foreign accrual property income for any taxation year, reasonably be considered to have been fully deducted (under ...[+++] the tax law referred to in paragraph (1.3)(a)) against income (as determined under that tax law) of the particular affiliate or those other corporations;

If, after all, you seek to tax investors whose mutual fund invests elsewhere, and minimize the tax burden; and if you want to say to those who are taxable, sorry, you must pay the tax differential — which I understand and which is appropriate policy — can you not simply say that RRIFs and RRSPs, absence tax avoidance section 248, are exempt as you de facto did with Foreign Accrual Property Income, FAPI?

This deals with the calculation of foreign accrual property income, affectionately referred to as FAPI. This says that the deductible loss of an affiliate.you're not required to claim the whole loss of the affiliate.