,canada ,cu/oms                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,numb]3 ,,it-#cfa;,r#c
,date3 ,febru>y #ab1 #aiif
,subject3 ,9come ,tax ,act--,exemp;n ,f
  ,"p ,,xiii ,tax on ,9t]e/ ,pay;ts
  6,non-,resid5ts
,ref];e3 ,subp>agraph #bab7#a77b77;vii7
  7al subsec;n #bab7#c7 (! ,9come ,tax
  ,act1 & sec;n #hjf.b & subsec;n
  #fbjh7#a7 (! ,9come ,tax ,regul,ns7

  ,9t]pret,n bullet9s 7,,it's7 provide
,rev5ue ,canada's te*nical 9t]pret,ns (
9come tax law4 ,due 6_! te*nical nature1
,,it's >e us$ prim>ily 0de"p;tal /aff1
tax speciali/s1 & o!r 9dividuals :o h an
9t]e/ 9 tax matt]s4 ,= ^? r1d]s :o pref]
a less te*nical explan,n (! law1 !
,de"p;t (f]s o!r public,ns1 s* z tax
guides & pamphlets4
                                      #a
             ,,it-#cfa;,r#c          a#a
  ,:ile ! ,,it's d n h ! =ce ( law1 !y c
g5],y 2 reli$ ^u z reflect+ ! ,de"p;t's
9t]pret,n (! law 6be appli$ on a 3si/5t
basis 0de"p;tal /aff4 ,9 cases ": an
,,it has n yet be5 revis$ 6reflect
legislative *anges1 r1d]s %d ref] 6!
am5d$ legisl,n & xs e6ective date4
,simil>ly1 c\rt deci.ns subsequ5t 6!
date (! ,,it %d 2 3sid]$ :5 det]m9+ !
relevancy (! -;ts 9 ! ,,it4
  ,an 9t]pret,n describ$ 9 an ,,it
applies z (! date ! ,,it is publi%$1
un.s o!rwise specifi$4 ,:5 "! is a *ange
9 a previ\s 9t]pret,n &! *ange is
b5eficial 6taxpay]s1 x is usu,y e6ective
= all future assess;ts & reassess;ts4
,if ! *ange is n fav\ra# 6taxpay]s1 x w
norm,y 2 e6ective =! curr5t & subsequ5t
tax,n ye>s or = transac;ns 5t]$ 96af !
date (! ,,it4
  ,a *ange 9 a de"p;tal 9t]pret,n may al
2 ann\nc$ 9 ! ,9come ,tax ,te*nical
,news4
                                      #b
             ,,it-#cfa;,r#c          b#a
  ,if y h any -;ts reg>d+ matt]s 4cuss$
9 ? ,,it1 pl1se s5d !m to3

  ,director1 ,busi;s & ,public,ns
    ,divi.n
  ,9come ,tax ,rul+s ,directorate
  ,policy & ,legisl,n ,bran*
  ,rev5ue ,canada
  ,ottawa ,,on ,k#a;,a #j;,l#e
  
  ,9t]pret,n bullet9s c 2 f.d on !
,rev5ue ,canada ,9t]net site at3
_+www.rc.gc.ca_:

                 ,3t5ts
    
,applic,n
,summ>y
,4cus.n & ,9t]pret,n
  ,g5]al 7p>agraphs #a-i7
  ,*anges 9 ,t]ms ( ,debt ,oblig,ns
    7p>agraphs #aj-ad7
  ,ev5ts ( ,failure or ,default
    7p>agraphs #ae-ah7                #c
             ,,it-#cfa;,r#c          c#a
  ,"pn]%ips & ,non-,resid5t ,borr[]s
    7p>agraph #ai7
,explan,n ( ,*anges

               ,applic,n
    
  ,? bullet9 c.els & replaces ,9t]pret,n
,bullet9 ,,it-#cfa;,r#b1 dat$ ,june #af1
#aihi4

                ,summ>y
    
  ,! purpose (! exemp;n f ,"p ,,xiii tax
provid$ "u subp>agraph #bab7#a77b77;vii7
is 6make x easi] = ,canadian borr[]s
6obta9 m$ium 6l;g t]m debt f9anc+
abroad4
  ,? bullet9 4cusses subp>agraph
#bab7#a77b77;vii7 &! 3di;ns 9 : ,"p
,,xiii tax is n paya# 0a non-resid5t
p]son on 9t]e/1 9clud+ -p.d 9t]e/1 rcvd
f a corpor,n resid5t 9 ,canada4 ,=a
4cus.n (! exemp;n f ,"p ,,xiii tax on
9t]e/ paya# 9 a =eign curr5cy1 see    #d
             ,,it-#cfa;,r#c          d#a
! curr5t v].n ( ,,it-#cfj1 ,9t]e/ ,paya#
9 a ,=eign ,curr5cy4

          ,4cus.n & ,9t]pret,n
    
         ,g5]al 7p>agaphs #a-i7
    
#a4 ,subp>agraph #bab7#a77b77;vii7
  provides t ,"p ,,xiii tax is n paya#
  0a non-resid5t p]son on 9t]e/ 79clud+
  -p.d 9t]e/7 rcvd f a corpor,n resid5t
  9 ,canada 7see ! curr5t v].n (
  ,,it-#cia1 ,/atus ( ,corpor,ns1 =a
  4cus.n (a ,canadian resid5t corpor,n7
  if all (! foll[+ 3di;ns >e met3
  7a7 ,! non-resid5t m/ 2 d1l+ at >m's
    l5g? 7see ! curr5t v].n ( ,,it-#dai1
    ,m1n+ ( ,>m's ,l5g?7 )! corpor,n4
    ,subp>agraph #bab7#a77b77;vii7 c1ses
    6apply if ! non-resid5t &! corpor,n
    c1se 6d1l ) ea* o!r at >m's l5g?4
    ,if subp>agraph #bab7#a77b77;vii7
    does n 9iti,y apply 2c ! non-resid5t
    &! corpor,n d n d1l ) ea* o!r     #e
             ,,it-#cfa;,r#c          e#a
    at >m's l5g?1 x w apply :5 !y 2g9
    6d1l ) ea* o!r at >m's
--------------------------------------#b
    l5g? & all ! o!r 3di;ns 9 t
    subp>agraph >e & 3t9ue 6be met4 ,if
    an ev5t o3urs : results 9
    subp>agraph #bab7#a77b77;vii7 c1s+
    or -m5c+ 6apply1 9 respect (! 9t]e/
    paya#1 t provi.n w c1se or -m;e
    6apply1 z ! case may be1 at ! "t (!
    *ange4
  7b7 ,! 9t]e/ m/ h be5 rcvd 9 3nec;n )
    an oblig,n ": ! evid;e ( 9debt$;s 0
    issu$ 0! corpor,n af ,june #bc1
    #aige4
  7c7 ,on an oblig,n1 ..o!r ?an a
    prescrib$ .oblig,n1
    7;i7 issu$ or ext5d$ af ,febru>y
      #be1 #aihf 7o!r ?an "o issu$ or
      ext5d$ pursuant 6an agree;t 9
      writ+ 5t]$ 96on or 2f t date71 or
    7;ii7 "u : ! t]ms & 3di;ns relat+ 6!
      -put,n ( 9t]e/ paya# "!on >e *ang$
      at any "t pursuant 6an          #f
             ,,it-#cfa;,r#c          a#b
      agree;t made af ,febru>y #be1
      #aihf1
    
    no por;n (! 9t]e/ may 2 3t+5t or
    dep5d5t ^u ! use ( or produc;n f
    prop]ty 9 ,canada1 or 2 -put$
    0ref];e 6rev5ue1 pr(it1 ca% fl[1
    -mod;y price or any simil> crit]ion
    or 0ref];e 6divid5ds pd or paya#
    6%>ehold]s ( any class ( %>es (!
    capital /ock (a corpor,n4
  
    ,=! purposes ( p>agraph #bab7#a77b71
    a 8prescrib$ oblig,n10 is def9$ "u
    sec;n #hjf.b (! ,regul,ns1 z an
    9dex$ debt oblig,n ": no am.t is
    paya#1 7o!r ?an an am.t det]m9$
    0ref];e 6a *ange 9 ! pur*as+ p[] (
    m"oy71 : is 3t+5t or dep5d5t on !
    use or produc;n ( prop]ty 9 ,canada1
    or -put$ 0ref];e 6rev5ue1 pr(its1
    ca% fl[1 or -mod;y prices 7or o!r
    simil> crit]ia71 or -put$ 0ref];e
    6divid5ds 6%>ehold]s ( any        #g
             ,,it-#cfa;,r#c          b#b
    class ( capital /ock (a corpor,n4
    ,an 89dex$ debt oblig,n0 is def9$ 9
    subsec;n #bdh7#a74 ,! def9i;n (
    prescrib$ oblig,n applies 6debt
    oblig,ns issu$ af ,octob] #af1
    #aiia4
  7d7 ,on an oblig,n 5t]$ 96af ,novemb]
    #ab1 #aiha1 & 2f ,febru>y #bf1
    #aihf1 o!r ?an "o 5t]$ 96pursuant 6a
    -mit;t 9 writ+ made on or 2f
    ,novemb] #ab1 #aiha1 no por;n (!
    9t]e/ may 2 3t+5t ^u ! use ( or
    produc;n f prop]ty 9 ,canada4
  7e7 ,"u ! t]ms (! oblig,n or any
    agree;t relat+ "!to ! corpor,n may
    n1 "u any circum/.es1 2 oblig$ 6pay
    m ?an #be p]c5t (! pr9cipal am.t "!(
    )9 #e ye>s (! date ( xs issue except
    9 ! ev5t3
    7;i7 (a failure or default "u ! sd
      t]ms or agree;t2
    7;ii7 ! t]ms (! oblig,n or any
      agree;t relat+ "!to 2come unlaw;l
      or >e *ang$ 0virtue (           #h
             ,,it-#cfa;,r#c          c#b
      legisl,n or 0a c\rt1 /atutory bo>d
      or -mis.n2
    7;iii7 ! non-resid5t p]son ex]cises
      a "r "u ! t]ms (! oblig,n or any
      agree;t relat+ "!to 63v]t !
      oblig,n 9to1 or ex*ange ! oblig,n
      =1 a secur;y prescrib$ 7see 2l =
      def9i;n ( prescrib$ secur;y7 = ?
      purpose1 0subsec;n #fbjh7#a7 (!
      regul,ns2 or
    7;iv7 if ! non-resid5t p]son's d1?
      7applica# 6am.ts pd or cr$it$ af
      #aiia74
    
    ,) respect to 7;iii7 abv1 9 ! case
    (a deb5ture : is 3v]ti# at ! op;n (!
    l5d] 96%>es : >e 8prescrib$
    securities10 ! fact t ! borr[]1 cd1
    at xs op;n1 *oose 6pay ca% 6a l5d] t
    ex]cis$ xs "r 6ex*ange ! oblig,n =
    s* %>es wd n1 9 xf1 cause d5ial (!
    relief provid$ 0clause
    #bab7#a77b77;vii77,e74 ,h["e1 !
    exemp;n is n availa# "u an        #i
             ,,it-#cfa;,r#c          d#b
    >range;t ": ! borr[] cd1 9 any
    circum/.es1 2 obligat$ 6pay ca% 2c
    (! ex]cise ( an ex*ange "r 0! l5d]4
    ,9 g5]al t]ms1 a 8prescrib$ secur;y0
    = ? purpose is def9$ z3
    --a %>e (! capital /ock (! corpor,n
      t issu$ ! debt oblig,n un.s !
      corpor,n or a 8specifi$ p]son0 7a
      p]son ) :om ! corpor,n or a
      %>ehold] (! corpor,n does n d1l at
      >m's l5g?7 is or may 2 requir$ to1
      or1 c 2 r1sonably 2 expect$
      6redeem1 acquire or c.el ! %>e or
      reduce xs pd-up capital1 )9 #e
      ye>s (! date ( issue (! debt
      oblig,n2 or
    --a "r or w>rant 6acquire a %>e (!
      capital /ock (! corpor,n (! debt
      oblig,n t wd 2 a prescrib$ secur;y
      if issu$4
    
    ,"u ? provi.n1 all ! 3sid],n
    receiva# ^u 3v].n or ex*ange has 6be
    a %>e or w>rant z describ$       #aj
             ,,it-#cfa;,r#c          e#b
    abv4 ,an excep;n is made = 3sid],n
    rcvd 9 lieu (a frac;n (a %>e4
  
  ,) respect to 7e7 abv1 ": ! oblig,n is
  "o (a numb] ( oblig,ns : >e id5tical 9
  _! t]ms & 3/itute a s+le issue1 !
  pr9cipal am.t is ! total pr9cipal
  am.ts ( all ( !m4

  ,subp>agraph #bab7#a77b77;vii7 only
  applies 69t]e/ : is 8paya#0 0a
  corpor,n resid5t 9 ,canada & "!=e wd n
  g5],y apply 6prepd 9t]e/4 ,= ?
  purpose1 8paya#0 is 3sid]$ 6m1n a3ru$
  & [+4
#b4 ,g5],y1 an oblig,n 9cludes bonds1
  deb5tures1 notes1 mortgages1 gu>ante$
  9ve/;t c]tificates1 & o!r debt
  oblig,ns hav+ a fix$ t]m 6matur;y ( n
  less ?an #e ye>s4 ,an oblig,n paya# on
  dem& fails to
--------------------------------------#c
  qualify z does "o : is 3v]ti# 7:e!r
  96ano!r oblig,n or 9 any o!r       #aa
             ,,it-#cfa;,r#c          a#c
  mann]1 o!r ?an z not$ 9 p>agraph
  #a7e77;iii7 abv7 )9 #e ye>s ( xs
  issue4

  ,subsec;n #bab7#c7 provides t1 =!
  purposes (! subp>agraph
  #bab7#a77b77;vii7 exemp;n1 a debt
  oblig,n issu$ af ,june #aiic 0a
  corpor,n resid5t 9 ,canada 9 f9ancial
  di6iculty 6replace an oblig,n :
  qualifies =! exemp;n w 2 tr1t$ z hav+
  be5 issu$ at ! same "t z ! =m]
  oblig,n4

  ,subsec;n #bab7#c7 only applies if3
  --! 9t]e/ on ! =m] oblig,n 0 exempt f
    ,"p ,,xiii tax "u subp>agraph
    #bab7#a77b77;vii7 7or wd 2 if !
    p]son 6:om t 9t]e/ 0 pd or cr$it$ 0
    a non-resid5t72 &
  --! proce$s f ! issu.e (! replace;t
    oblig,n c r1sonably 2 reg>d$ z hav+
    be5 us$ 0! issu+ corpor,n 7or a
    ,canadian resid5t corpor,n ) :   #ab
             ,,it-#cfa;,r#c          b#c
    x does n d1l at >m's l5g?7 9 f9anc+
    xs active busi;s c>ri$ on 9 ,canada
    2f ! replace;t oblig,n 0 issu$4
  
  ,=a 4cus.n (! ,de"p;t's views on
  f9ancial di6iculty1 see ! curr5t v].ns
  ( ,,it-#ejg1 ,small ,busi;s ,develop;t
  ,bonds & ,small ,busi;s ,bonds1 &
  ,,it-#ebg1 ,4tress ,pref]r$ ,%>es4
#c4 ,if "! is a writt5 agree;t : sets \3
  --! sell+ price (a prop]ty2
  --! unpd bal.e [+ 0! pur*as]2 &
  --! t]ms ( pay;t1
  
  ! agree;t w repres5t an evid;e (
  9debt$;s issu$ =! oblig,n 6pay ! bal.e
  [+4 ,! 9t]e/ pd pursuant 6! t]ms (!
  agree;t w 2 exempt "u subp>agraph
  #bab7#a77b77;vii7 provid$ all ! o!r
  3di;ns 9 ! provi.n >e met4
#d4 ,an oblig,n w n mature 8)9 #e ye>s
  (! date ( xs issue0 if x matures on or
  af ! fif? anniv]s>y (! date ( xs
  issue4 ,?us an oblig,n issu$ on    #ac
             ,,it-#cfa;,r#c          c#c
  ,july #a1 #aiie1 w n mature )9 #e ye>s
  if xs date ( matur;y is ,july #a1
  #bjjj1 or lat]4 ,if "! is a delay 2t !
  date appe>+ on ! bonds &! date ! bonds
  >e tak5 up 0! l5d]1 ! date appe>+ on !
  bonds is 3sid]$ 6be ! date ( issue (!
  evid;e ( 9debt$;s1 provid$ ! delay is
  r1sonably attributa# 6m>ket+ ! bonds4
#e4 ,an oblig,n : o!rwise qualifies "u
  subp>agraph #bab7#a77b77;vii7 is n
  4qualifi$ only =! r1son t x 0 acquir$
  dur+ a p]iod 9 : ! l5d] 0 a ,canadian
  resid5t4
#f4 ,if ! issu] ( bonds1 deb5tures or
  gu>ante$ 9ve/;t c]tificates habitu,y
  redeems or 3v]ts !m 6new evid;es (
  9debt$;s )9 #e ye>s ( _! date ( issue
  at ! reque/ (! l5d]1 s* a practice or
  policy 3/itutes "p (! agree;t relat$
  6! orig9al debt oblig,ns &! 9t]e/ on
  s* oblig,ns wd n qualify =! exemp;n "u
  subp>agraph #bab7#a77b77;vii74
#g4 ,g5],y1 an oblig,n : o!rwise
  qualifies "u subp>agraph           #ad
             ,,it-#cfa;,r#c          d#c
  #bab7#a77b77;vii7 is n 4qualifi$ only
  2c repay;t is p]mitt$1 at ! issu]'s
  4cre;n1 ( m ?an #be p]c5t (! pr9cipal
  am.t )9 #e ye>s (! date ( xs issue2 t
  is1 "! is no oblig,n on ! "p (! issu]
  6make ! pay;t4 ,on ! o!r h&1 ": "! is
  a provi.n = repay;t (! oblig,n 7or at
  l1/ ( an am.t 9 excess ( #be p]c5t (
  xs pr9cipal am.t7 on ! d1? (a p]son1
  o!r ?an ! non-resid5t l5d] 7see
  p>agraph #af 2l71 ! oblig,n fails
  6qualify =! exemp;n4 ,if ! oblig,n is
  9 =eign funds1 any fluctu,n 9 !
  ,canadian doll> relative 6! "picul>
  =eign curr5cy is n a factor 9 det]m9+
  at a "picul> "t :e!r ! ,canadian
  borr[] is oblig$ 6pay m ?an #be p]c5t
  (! pr9cipal am.t (! loan4 ,9 a4i;n1 if
  "! is a provi.n 9 ! agree;t requir+ !
  borr[] 6pay an a4i;nal am.t 6! non-
  resid5t l5d] 9 ! ev5t t "! >e *anges
  6,canadian )hold+ laws =! pay;ts on !
  debt1 ! require;t w n1 0xf1 4qualify
  pay;ts : o!rwise qualify =!        #ae
             ,,it-#cfa;,r#c          e#c
  exemp;n4 ,note t ! sub/.e (! transac;n
  _c 2 s* t ! debtor may e6ectively 2
  oblig$ 6repay m ?an #be@3p (! debt )9
  #e ye>s (! issue date (! oblig,n4
#h4 ,if a borr[] is requir$ 6make
  deposits 9 excess ( #be p]c5t (! total
  pr9cipal am.t )9 #e ye>s 6a s9k+ fund
  3troll$ 0! borr[]1 x is n 3sid]$ t "!
  is an 8oblig,n 6pay m ?an #be p]c5t (!
  pr9cipal am.t0 provid$ ! borr[] is n
  oblig$ "u ! t]ms (! oblig,n 6redeem m
  ?an ! #be p]c5t )9 ! #e-ye> p]iod4
  ,h["e1 "! may 2 an 8oblig,n 6pay m ?an
  #be p]c5t (! pr9cipal am.t0 if !
  borr[] is requir$ 6irrevocably place m
  ?an #be p]c5t (! pr9cipal am.t ) an
  9dep5d5t tru/ee or ?ird "py )9 ! #e-
  ye> p]iod1 not)/&+ any limit,n plac$
  on pay;ts : ! tru/ee or ?ird "py may
  make 6! l5d]4 ,if "u ! t]ms (!
  oblig,n1 "! is a require;t t am.ts 2
  3tribut$ 0! borr[] 6a s9k+ fund or ca%
  collat]al a3.t 9 ! ev5t (a 3t+5cy 2y !
  3trol (! l5d]1 s* a require;t w    #af
             ,,it-#cfa;,r#c          f#c
  n o!rwise 4qualify ! 9t]e/ paya# on !
  oblig,n f ! exemp;n4 ,= example1 if an
  oblig,n is secur$ 0a build+ z
  collat]al & 9sur.e or expropri,n
  proce$s on ! de/ruc;n (! build+ >e n
  us$ 6rebuild ! build+1 a require;t 9 !
  t]ms (! oblig,n t ! funds 2 set aside
  z collat]al =! oblig,n w n1 0xf1
  result 9 ! loss (! exemp;n4
#i4 ,f9ancial l1ses >e n oblig,ns t meet
  ! require;ts ( subp>agraph
  #bab7#a77b77;vii7 s9ce pay;ts ( 8r5t0
  6! l5d]-lessor "u ! 8l1se0 >e n 3sid]$
  6be bl5d$ pay;ts ( pr9cipal & 9t]e/
--------------------------------------#d
  &1 z s*1 ! purport$ 9t]e/ is n exempt
  f tax "u ,"p ,,xiii4

        ,*anges 9 ,t]ms ( ,debt
      ,oblig,ns 7p>agraphs #aj-ad7
    
#aj4 ,if ! t]ms (! orig9al issue ( an
  oblig,n p]mitt$ ^? t]ms 6be alt]$1 any
  alt],n 9 a3ord.e "!) is n 3sid]$   #ag
             ,,it-#cfa;,r#c          a#d
  6result 9 a new oblig,n4 ,= example1
  if an agree;t provides = curr5cy
  3v].ns )a simultane\s adju/;t (! 9t]e/
  rate 6a3ord )a "picul> curr5cy &!
  curr5cy is 9 fact *ang$1 s* a
  transac;n wd n 2 reg>d$ z a repay;t (!
  loan &! reissue (a new loan &!
  provi.ns ( subp>agraph
  #bab7#a77b77;vii7 wd 3t9ue 6apply4
#aa4 ,x is n ord9>ily 3sid]$ t a new
  8evid;e ( 9debt$;s0 is cr1t$ ":1 ev5
  ?\< n provid$ = "u ! t]ms (! orig9al
  oblig,n1 ! oblig,n is am5d$ 6all[ !
  borr[] 63v]t f "o curr5cy 6ano!r1
  provid$ t ! l5d]'s o!r "rs & oblig,ns
  "u ! am5d$ 3tract rema9 ! same4
#ab4 ,x is a "q ( fact :e!r or n a
  "picul> oblig,n : qualifies )9
  subp>agraph #bab7#a77b77;vii7 9
  respect ( "o non-resid5t qualifies 9 !
  h&s (a second non-resid5t :o
  subsequ5tly acquires x4 ,if x is !
  same oblig,n &! second hold] is at
  >m's l5g? )! ,canadian issu]1 x    #ah
             ,,it-#cfa;,r#c          b#d
  w norm,y 3t9ue 6qualify4 ,if !
  acquisi;n 0! second hold] has ! e6ect
  ( replac+ ! orig9al oblig,n 0a new
  oblig,n1 ! new oblig,n m/ 2 re-te/$
  ag/ ! provi.ns ( subp>agraph
  #bab7#a77b77;vii7 6det]m9e ! /atus (!
  9t]e/ pd on x4
#ac4 ,:e!r a new evid;e ( 9debt$;s is
  issu$ on ! assump;n (a debt 0a
  corpor,n resid5t 9 ,canada f ! orig9al
  debtor corpor,n resid5t 9 ,canada
  dep5ds on ! "*iz,n (! assump;n
  agree;t4 ,un.s "! is a nov,n 7": !
  liabil;y (! orig9al debtor is tot,y
  4*>g$71 a new evid;e ( 9debt$;s is n
  3sid]$ 6be issu$ 0! new debtor 2c !
  debt rema9s t (! orig9al debtor &!
  evid;e ( 9debt$;s is t : is issu$ 0!
  =m] debtor4 ,acly1 ": ! assump;n (a
  debt does n take ! =m (a nov,n &! new
  debtor d1ls at >m's l5g? )! non-
  resid5t cr$itor1 ! provi.ns (
  subp>agraph #bab7#a77b77;vii7 wd 3t9ue
  6apply4 ,see ! curr5t v].n (       #ai
             ,,it-#cfa;,r#c          c#d
  ,,it-#dgd1 ,amalgam,ns ( ,canadian
  ,corpor,ns1 = -;ts on 9debt$;s foll[+
  an amalgam,n or m]g] ( two or m
  corpor,ns4
#ad4 ,if an oblig,n is renegotiat$
  o!rwise ?an z provid$ = 9 ! t]ms (!
  orig9al oblig,n1 x is a "q ( fact :e!r
  a new oblig,n has be5 cr1t$4

     ,ev5ts ( ,failure or ,default
           7p>agraphs #ae-ah7
    
#ae4 ,an 8ev5t ( failure or default0 "u
  ! t]ms (a loan agree;t is "o t has
  -m]cial r1l;y1 is 2y ! 3trol (! l5d] &
  is "!=e n 3triv$4 ,s* an ev5t t o3urs
  z a 3sequ;e ( an act 0a p]son or
  p]sons :o >e n a "py 6! loan agree;t
  is usu,y n 3sid]$ a failure or default
  "u ! t]ms (! loan agree;t4 ,9 9t]pret+
  ! phrase 8ev5t (a failure or default
  "u ! sd t]ms ( agree;t10 x is
  recogniz$ t l5d]s ne$ 6protect _!
  loans &1 9 ? reg>d1 wd 9clude      #bj
             ,,it-#cfa;,r#c          d#d
  any ev5t : places "o (! "pies 9 br1*
  (! "utak+ or gu>antees giv5 9 !
  agree;t4 ,usu,y1 if ! borr[] fails
  6meet ! repay;t program or "utakes
  ac;ns : mat]i,y 9cr1se ! l5d]'s risk1
  ! l5d] may dem& repay;t 9 full4

  ,"s examples t may 3/itute an ev5t (
  failure or default1 if specifi$ z s* 9
  ! loan agree;t1 >e3
  --a br1* or non-compli.e ) cr$it
    cov5ants 9 ! loan agree;t2
  --failure 6a*ieve or ma9ta9 c]ta9
    f9ancial ratios z requir$ "u ! loan
    agree;t2 &
  --a *ange ( 3trol (! borr[]4
#af4 ,= am.ts pd or cr$it$ af #aiia1
  9t]e/ paya# on an oblig,n is n
  4qualifi$ f ! exemp;n solely 2c (!
  require;t 6repay m ?an #be p]c5t (!
  pr9cipal am.t (! oblig,n1 )9 #e ye>s
  (! issue date1 on ! d1? (! non-resid5t
  l5d]4 ,? excep;n does n apply 69t]e/
  paya# on an oblig,n if ! t]ms (!   #ba
             ,,it-#cfa;,r#c          e#d
  oblig,n require repay;t ( m ?an #be
  p]c5t (! pr9cipal am.t (! oblig,n )9
  #e ye>s (! issue date1 on ! d1? (a
  p]son1 o!r ?an ! non-resid5t l5d]1
  assum+ t ? ev5t is n 8an ev5t (
  default or failure0 "u ! t]ms (!
  oblig,n4
#ag4 ,9 ! case ":1 "u ! t]ms (! oblig,n1
  a non-resid5t l5d] may require t !
  9sur.e proce$s result+ f ! de/ruc;n or
  loss ( prop]ty : is held z secur;y =!
  oblig,n1 2 us$ 6repay ! oblig,n & "!
  is a possibil;y t s* a pay;t wd result
  9 repay;t ( m ?an #be p]c5t (!
  pr9cipal am.t (! oblig,n )9 ! #e-ye>
  p]iod1 ! 9t]e/ pay;ts on ! oblig,n wd
  n qualify =! exemp;n4 ,x is a "q (
  fact :e!r ! non-resid5t l5d] has ! "r
  6require t s* 9sur.e proce$s 2 us$
  6repay ! oblig,n4 ,! 9t]e/ pay;ts1
  h["e1 wd n 2 4qualifi$ f ! exemp;n if1
  "u ! t]ms (! oblig,n1 ! corpor,n wd 2
  requir$ 6deposit ! 9sur.e proce$s ) an
  9dep5d5t ?ird "py =! repair or     #bb
             ,,it-#cfa;,r#c          f#d
  recon/ruc;n (! prop]ty &! non-resid5t
  l5d] wd n 2 5titl$ 6require t !
  proce$s 2 us$ 6repay m ?an #be p]c5t
  (! oblig,n )9 ! #e-ye> p]iod4
--------------------------------------#e
  ,9 a4i;n1 if ! loss or de/ruc;n (!
  prop]ty is def9$ z an ev5t ( default
  or failure "u ! t]ms (! oblig,n1 & 2c
  (! o3urr;e ( s* an ev5t1 ! borr[] wd 2
  requir$ 0! t]ms (! oblig,n 6use !
  9sur.e proce$s 6repay m ?an #be@3p (!
  pr9cipal am.t (! oblig,n )9 #e ye>s (!
  issue date1 ! require;t "u ! t]ms (!
  oblig,n =! repay;t wd n1 0xf1 4qualify
  ! 9t]e/ pay;ts on ! oblig,n f !
  exemp;n4
#ah4 ,9 ! ev5t (a failure or default 0!
  borr[]1 am.ts pd 0a gu>antor resid5t 9
  ,canada 9 satisfac;n ( 9t]e/ [$ 0!
  borr[] "u ! oblig,n >e n subject 6,"p
  ,,xiii tax if ! pay;ts1 _h !y be5 pd
  0! orig9al resid5t borr[]1 wd h be5
  exempt "u subp>agraph
  #bab7#a77b77;vii74 ,if an          #bc
             ,,it-#cfa;,r#c          a#e
  oblig,n [+ 6a non-resid5t l5d] is 9
  default &! non-resid5t l5d]1 9/1d (
  dem&+ repay;t (! loan1 requires t !
  dem& = pay;t w 2 def]r$ z l;g z c]ta9
  f9ancial 3di;ns >e met 0! corpor,n1 !
  9t]e/ pay;ts on ! oblig,n1 if !y 7
  exempt f )hold+ tax "u subp>agraph
  #bab7#a77b77;vii7 2f ! default1 w
  3t9ue 6be exempt z l;g z all !
  require;ts ( t subp>agraph >e met &a
  new oblig,n has n be5 cr1t$4

       ,"pn]%ips & ,non-,resid5t
        ,borr[]s 7p>agraph #ai7
    
#ai4 ,9t]e/ pd 6a non-resid5t "u an
  oblig,n t o!rwise satisfies !
  require;ts ( subp>agraph
  #bab7#a77b77;vii7 is n 4qualifi$ f !
  exemp;n ": ! borr[] is a "pn]%ip all !
  memb]s ( : d1l at >m's l5g? )! l5d] &
  >e corpor,ns resid5t 9 ,canada1 non-
  resid5t corpor,ns ^: busi;s is c>ri$
  on pr9cip,y 9 ,canada1 or a        #bd
             ,,it-#cfa;,r#c          b#e
  -b9,n ( bo?4 ,h["e1 ) respect 6! non-
  resid5t corporate borr[]s1 subsec;n
  #bab7#ac.b7 provides t ! exemp;n w
  apply 6! ext5t t ! 9t]e/ is deducti# 9
  -put+ ! non-resid5t corpor,ns' taxa#
  9come e>n$ 9 ,canada4
--------------------------------------#f
          ,explan,n ( ,*anges
    
               ,9troduc;n
    
  ,! purpose (! ,explan,n ( ,*anges is
6give ! r1sons =! revi.ns 6an 9t]pret,n
bullet94 ,x \tl9es revi.ns t we h made z
a result ( *anges 6! law1 z well z
*anges reflect+ new or revis$ de"p;tal
9t]pret,ns4

                ,ov]view
    
  ,9t]pret,n bullet9 ,,it-#cfa;,r#c
expla9s ! rules 9 subp>agraph
#bab7#a77b77;vii7 t all[ = an exemp;n f
,"p ,,xiii )hold+ tax on 9t]e/       #be
             ,,it-#cfa;,r#c          a#f
paya# 0a corpor,n resid5t 9 ,canada 6a
non-resid5t l5d]4
  ,! revi.n 6,,it-#cfa;,r#b 0 "utak5
6reflect am5d;ts 6! ,9come ,tax ,act
5act$ 9 ,s4,c4 #aiid1 c4 #g 7=m]ly ,bill
;,c-#ae71 & ,s4,c4 #aiid1 c4 #ba 7=m]ly
,bill ;,c-#bg74 ,x al reflects ! a4i;n (
subsec;n #fbjh7#a7 6! ,9come ,tax
,regul,ns promulgat$ 9 #aiij 0,p4,c4
#aiij-hed1 ,,sor/#ij-bhe1 & sec;n #hjf.b
6! ,regul,ns promulgat$ 9 #aiic 0,p4,c4
#aiic-acca1 ,,sor/#ic-cde4
  ,! -;ts 9 ? bullet9 >e n a6ect$ 0any
draft legisl,n rel1s$ 2f ,octob] #ab1
#aiie4

      ,legislative & ,o!r ,*anges
    
  ,p>agraph #a7a7 (! bullet9 is revis$
6fur!r 4cuss ! ,de"p;t's 9t]pret,n (!
require;t t ! non-resid5t l5d] m/ 2 d1l+
at >m's l5g? )! corpor,n 9 ord] =! 9t]e/
pay;ts 6qualify =! exemp;n4
                                     #bf
             ,,it-#cfa;,r#c          b#f
  ,p>agraph #a7c7 (! bullet9 is *ang$
6reflect ! a4i;n ( sec;n #hjf.b 6!
,9come ,tax ,regul,ns1 : relates 6!
def9i;n ( 8prescrib$ oblig,n0 =!
purposes ( p>agraph #bab7#a77b74
  ,p>agraph #a7e7 (! bullet9 is exp&$
64cuss ! a4i;n ( clause
#bab7#a77b77;vii77,f71 applica# 6am.ts
pd or cr$it$ af #aiia1 reg>d+ ! d1? (a
non-resid5t l5d]4 ,bullet 7;i7 (
p>agraph #a7e7 reflects an am5d;t
6clause #bab7#a77b77;vii77,c71 applica#
6am.ts pd or cr$it$ af #aihf1 9 : 8t]ms
or agree;t0 replac$ 8t]ms (! agree;t40
,bullet 7;iii7 ( p>agraph #a7e7 has be5
replac$ due 6! passage ( subsec;n
#fbjh7#a7 (! ,regul,ns 9 #aiij4
,p>agraph #a7e7 cl>ifies ! ,de"p;t's
view reg>d+ 3v]ti# oblig,ns & al
reflects ! def9i;n ( 8prescrib$ secur;y0
9 subsec;n #fbjh7#a71 : applies af
,decemb] #ai1 #aihf4
  ,! po/am# 6p>agraph #a has be5 *ang$
6cl>ify ! ,de"p;t's posi;n t         #bg
             ,,it-#cfa;,r#c          c#f
subp>agraph #bab7#a77b77;vii7 does n
g5],y apply 6prepd 9t]e/4
  ,p>agraph #b is exp&$ 64cuss subsec;n
#bab7#c71 : relates 6replace;t oblig,ns
issu$ af ,june #aiic4
  ,p>agraph #g is revis$ 6reflect !
a4i;n ( clause #bab7#a77b77;vii77,f7 :
provides t 9t]e/ is n 4qualifi$ f !
exemp;n solely 2c ! borr[] may 2 requir$
6make an e>ly repay;t z a 3sequ;e (! d1?
(! l5d]4 ,9 a4i;n1 ! ,de"p;t's views >e
4cuss$ reg>d+ a situ,n ":1 "u ! t]ms (!
oblig,n1 ! non-resid5t l5d] requires t !
corpor,n pays an a4i;nal am.t if "! is a
*ange 6,canadian )hold+ tax laws s* t !
9t]e/ paya# 6! non-resid5t l5d] on !
oblig,n no l;g] qualifies =! exemp;n f
)hold+ tax4
  ,p>agraph #h is exp&$ 64cuss :e!r !
exemp;n applies 9 a situ,n ":1 9 ! ev5t
(a 3t+5cy 2y ! 3trol (! l5d]1 "! is a
require;t "u ! t]ms (! oblig,n t am.ts 2
3tribut$ 0! borr[] 6a s9k+ fund4
                                     #bh
             ,,it-#cfa;,r#c          d#f
  ,p>agraph #ae1 : relates 6! m1n+ ( 8an
ev5t ( failure or default10 is exp&$
6provide a4i;nal -;ts on ! ,de"p;t's
posi;n t an ev5t ( failure or default
has 6h -m]cial r1l;y1 is 2y ! 3trol (!
l5d]1 & is "!=e n 3triv$4 ,9 a4i;n1 a
*ange ( 3trol (! borr[]1 : may 3/itute
an ev5t ( failure or default1 is 4cuss$4
  ,p>agraph #af is *ang$ 6reflect !
a4i;n ( clause #bab7#a77b77;vii77,f71 9
: 9t]e/ paya# on an oblig,n is n
4qualifi$ f ! exemp;n solely 2c (!
require;t 6repay m ?an #be p]c5t (!
pr9cipal am.t (! oblig,n1 )9 #e ye>s (!
issue date1 on ! d1? (! non-resid5t
l5d]4
  ,p>agraph #ag expla9s ! ,de"p;t's
posi;n reg>d+ ! exemp;n ": a non-resid5t
l5d] requires t ! 9sur.e proce$s 2 us$
6repay ! oblig,n & "! is a possibil;y t
s* a pay;t wd result 9 repay;t ( m ?an
#be p]c5t (! pr9cipal am.t (! oblig,n )9
! #e-ye> p]iod4
                                     #bi
             ,,it-#cfa;,r#c          e#f
  ,p>agraph #ah is exp&$ 6cl>ify !
,de"p;t's views on :e!r ! exemp;n /
applies 69t]e/ pay;ts made foll[+ !
default ( an oblig,n4
  ,we h made a numb] ( o!r *anges
6improve ! ov]all cl>;y & r1dabil;y (!
bullet94
















                                     #cj