controlled foreign company | controlled foreign corporation | CFC [Abbr.]

Information Return Relating to Foreign Affiliates that are not Controlled Foreign Affiliates

foreign corporate equities

foreign company

foreign-controlled subsidiary

resident foreign national

(f) an indirect acquisition by the CRIC of shares of the capital stock of the subject corporation that results from a direct acquisition by the CRIC of shares of the capital stock of another corporation resident in Canada, of which the subject corporation is a foreign affiliate, if the total fair market value of all the shares that are held directly or indirectly by the other corporation and are shares of foreign affiliates of the other corporation exceeds 75% of the total fair market value (determined without reference to debt obligations of any corporation resident in Canada in which the other corporation has a direct or indirect inter ...[+++]est) of all of the properties owned by the other corporation; and

(8.2) For the purposes of the definition “foreign merger” in subsection (8.1), if there is a merger or combination, otherwise than as a result of the distribution of property to one corporation on the winding-up of another corporation, of two or more non-resident corporations (each of which is referred to in this subsection as a “predecessor foreign corporation”), as a result of which one or more predecessor foreign corporations ceases to exist and, immediately after the merger or combination, another predecessor foreign corporation (referred to in this subsection as the “survivor corporation”) owns properties (except amounts receivable ...[+++] from, or shares of the capital stock of, any predecessor foreign corporation) representing all or substantially all of the fair market value of all such properties owned by each predecessor foreign corporation immediately before the merger or combination, then

(e) if a non-resident corporation (in this paragraph referred to as the “original corporation”) governed by the laws of a foreign jurisdiction is divided under those laws into two or more non-resident corporations and, as a consequence of the division, a shareholder of the original corporation acquires at any time one or more shares of another corporation (in this paragraph referred to as the “new corporation”), the original corporation is deemed at that time to have conferred a benefit on the shareholder equal to the value at that time of the shares of the new corporation acquired by the shareholder except to the extent that any of subp ...[+++]aragraphs (1)(a.1)(i) to (iii) and paragraph (1)(b) applies to the acquisition of the shares.

These rules apply where a corporation that is resident in Canada, which I am calling ``CanCo,'' and that is controlled by a non-resident corporation, which I am calling ``Parent,'' makes an investment — and that is a defined term — in a corporation not resident in Canada that is a foreign affiliate of CanCo, which is to say that is, or immediately after the investment is, a company in which CanCo has at least a 10 per cent-plus direct or indirect interest. You need a foreign-controlled CanCo that makes an investment in a foreign affiliate.