Income Tax Regulations

404 (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income that is deemed to have been earned by a bank in a taxation year in a province in which it had a permanent establishment is 1/3 of the total of

• (a) the proportion of its taxable income for the year that the total of the salaries and wages paid in the year by the bank to employees of its permanent establishment in the province is of the total of all salaries and wages paid in the year by the bank; and

• (b) twice the proportion of its taxable income for the year that the total amount of loans and deposits of its permanent establishment in the province for the year is of the total amount of all loans and deposits of the bank for the year.

(2) For the purposes of subsection (1), the amount of loans for a taxation year is 1/12 of the total of the amounts outstanding, on the loans made by the bank, at the close of business on the last day of each month in the year.

(3) For the purposes of subsection (1), the amount of deposits for a taxation year is 1/12 of the total of the amounts on deposit with the bank at the close of business on the last day of each month in the year.

(4) For the purposes of subsections (2) and (3), loans and deposits do not include bonds, stocks, debentures, items in transit and deposits in favour of Her Majesty in right of Canada.