Income Tax Regulations

5905 (1) Where at any time, other than in the course of a transaction to which subsection (2) or (5) applies, a corporation resident in Canada or a foreign affiliate of such a corporation acquires in any manner whatever shares of the capital stock of another corporation that was a foreign affiliate of the corporation immediately before that time (in this subsection referred to as the “acquired affiliate”) and as a result thereof the surplus entitlement percentage of the corporation in respect of the acquired affiliate increases, for the purposes of this Part, the exempt surplus or exempt deficit, the taxable surplus or taxable deficit and the underlying foreign tax, in respect of the corporation, of the acquired affiliate and of each other foreign affiliate of the corporation in which the acquired affiliate has an equity percentage (in this subsection referred to as the “other affiliate”), other than an acquired affiliate or other affiliate in respect of which subsection (8) applies, shall at that time be reduced to the proportion of the amount thereof otherwise determined that

• (a) the surplus entitlement percentage immediately before that time of the corporation in respect of the acquired affiliate or the other affiliate, as the case may be, determined on the assumption that the taxation year of the acquired affiliate or the other affiliate, as the case may be, that otherwise would have included that time had ended immediately before that time,

is of

• (b) the surplus entitlement percentage immediately after that time of the corporation in respect of the acquired affiliate or the other affiliate, as the case may be, determined on the assumption that the taxation year of the acquired affiliate or the other affiliate, as the case may be, that otherwise would have included that time had ended immediately after that time,

and, for the purposes of the definitions exempt deficit, exempt surplus, taxable deficit, taxable surplus and underlying foreign tax in subsection 5907(1), those reduced amounts are referred to as the opening exempt deficit, opening exempt surplus, opening taxable deficit, opening taxable surplus and opening underlying foreign tax, as the case may be, of each of those affiliates in respect of the corporation.

(2) Where at any time a foreign affiliate of a corporation resident in Canada redeems, acquires or cancels in any manner whatever (otherwise than by way of a winding-up) any of the shares of any class of its capital stock (other than shares redeemed or cancelled that the affiliate had previously purchased or acquired and that were held by it until that time and in respect of which an adjustment has previously been made under this subsection or subsection (1) as it read prior to November 13, 1981), the following rules apply:

• (a) where, by virtue of an election made by the corporation under subsection 93(1) of the Act, a dividend is deemed to have been received on one or more of the shares of the foreign affiliate that were disposed of by the corporation or another foreign affiliate of the corporation (in this paragraph referred to as the “transferor”) by virtue of the redemption, acquisition or cancellation of such share or shares by the foreign affiliate, for the purposes of the adjustment required by paragraph (b),

  • (i) immediately before that time there is included under subparagraph (v) of the description of B in the definition exempt surplus in subsection 5907(1) in computing the affiliate’s exempt surplus or exempt deficit, as the case may be, in respect of the corporation an amount equal to the product obtained when the specified adjustment factor in respect of the disposition is multiplied by the total of all amounts each of which is the portion of any such dividend that is prescribed by paragraph 5900(1)(a) to have been paid out of the exempt surplus of the affiliate,

  • (ii) immediately before that time there is included under subparagraph (v) of the description of B in the definition taxable surplus in subsection 5907(1) in computing the affiliate’s taxable surplus or taxable deficit, as the case may be, in respect of the corporation an amount equal to the product obtained when the specified adjustment factor in respect of the disposition is multiplied by the total of all amounts each of which is the portion of any such dividend that is prescribed by paragraph 5900(1)(b) to have been paid out of the taxable surplus of the affiliate, and

  • (iii) immediately before that time there shall be deducted from the amount, if any, otherwise determined to be the underlying foreign tax of the affiliate in respect of the corporation an amount equal to the product obtained when the specified adjustment factor in respect of the disposition is multiplied by the aggregate of all amounts each of which is the amount prescribed by paragraph 5900(1)(d) to be the foreign tax applicable to such portion of any such dividend as is prescribed by paragraph 5900(1)(b) to have been paid out of the taxable surplus of the affiliate,

  and, for the purposes of subparagraphs (i) to (iii), the specified adjustment factor in respect of the disposition is the amount equal to the quotient obtained when,

  • (iv) where the transferor is the corporation, 100 per cent, and

  • (v) where the transferor is another foreign affiliate of the corporation, the surplus entitlement percentage of the corporation in respect of the transferor immediately before the disposition,

  is divided by

  • (vi) the surplus entitlement percentage of the corporation in respect of the foreign affiliate immediately before the disposition;

• (b) the exempt surplus or exempt deficit, the taxable surplus or taxable deficit and the underlying foreign tax, in respect of the corporation, of the affiliate and of each other foreign affiliate of the corporation in which the affiliate has an equity percentage (in this subsection referred to as the “other affiliate”) shall at that time be adjusted to the proportion of the amount thereof otherwise determined that

  • (i) the surplus entitlement percentage immediately before that time of the corporation in respect of the affiliate or the other affiliate, as the case may be, determined on the assumption that the taxation year of the affiliate or the other affiliate, as the case may be, that otherwise would have included that time had ended immediately before that time,

  is of

  • (ii) the surplus entitlement percentage immediately after that time of the corporation in respect of the affiliate or the other affiliate, as the case may be, determined on the assumption that the taxation year of the affiliate or the other affiliate, as the case may be, that otherwise would have included that time had ended immediately after that time; and

• (c) for the purposes of the definitions exempt deficit, exempt surplus, taxable deficit, taxable surplus and underlying foreign tax in subsection 5907(1), the amounts determined under paragraph (b) are referred to as the opening exempt deficit, opening exempt surplus, opening taxable deficit, opening taxable surplus and opening underlying foreign tax, as the case may be, of the affiliate and each other affiliate in respect of the corporation resident in Canada.

(3) Where at any time a foreign affiliate of a corporation resident in Canada has been formed as a result of a foreign merger (within the meaning assigned by subsection 87(8.1) of the Act) of two or more corporations (each of which in this subsection and subsection (4) is referred to as a “predecessor corporation”), for the purposes of this Part, the following rules apply:

• (a) in respect of the foreign affiliate,

  • (i) its opening exempt surplus in respect of the corporation shall be the amount, if any, by which the aggregate of all amounts each of which is the exempt surplus of a predecessor corporation that was a foreign affiliate of the corporation immediately before the merger exceeds the aggregate of all amounts each of which is the exempt deficit of a predecessor corporation that was a foreign affiliate of the corporation immediately before the merger,

  • (ii) its opening exempt deficit in respect of the corporation shall be the amount, if any, by which the aggregate of all amounts each of which is the exempt deficit of a predecessor corporation that was a foreign affiliate of the corporation immediately before the merger exceeds the aggregate of all amounts each of which is the exempt surplus of a predecessor corporation that was a foreign affiliate of the corporation immediately before the merger,

  • (iii) its opening taxable surplus in respect of the corporation shall be the amount, if any, by which the aggregate of all amounts each of which is the taxable surplus of a predecessor corporation that was a foreign affiliate of the corporation immediately before the merger exceeds the aggregate of all amounts each of which is the taxable deficit of a predecessor corporation that was a foreign affiliate of the corporation immediately before the merger,

  • (iv) its opening taxable deficit in respect of the corporation shall be the amount, if any, by which the aggregate of all amounts each of which is the taxable deficit of a predecessor corporation that was a foreign affiliate of the corporation immediately before the merger exceeds the aggregate of all amounts each of which is the taxable surplus of a predecessor corporation that was a foreign affiliate of the corporation immediately before the merger, and

  • (v) its opening underlying foreign tax in respect of the corporation shall be the aggregate of all amounts each of which is the underlying foreign tax of a predecessor corporation that was a foreign affiliate of the corporation immediately before the merger; and

• (b) in respect of any other foreign affiliate of the corporation, other than a predecessor corporation, in which a predecessor corporation had an equity percentage immediately before the merger, the exempt surplus or exempt deficit, the taxable surplus or taxable deficit and the underlying foreign tax of the other affiliate in respect of the corporation shall at that time be adjusted to the proportion of the amount thereof otherwise determined that

  • (i) the surplus entitlement percentage immediately before that time of the corporation in respect of the other affiliate, determined on the assumption that the taxation year of the other affiliate that otherwise would have included that time had ended immediately before that time,

  is of

  • (ii) the surplus entitlement percentage immediately after that time of the corporation in respect of the other affiliate, determined on the assumption that the taxation year of the other affiliate that otherwise would have included that time had ended immediately after that time,

  and, for the purposes of the definitions exempt deficit, exempt surplus, taxable deficit, taxable surplus and underlying foreign tax in subsection 5907(1), the adjusted amounts are referred to as the opening exempt deficit, opening exempt surplus, opening taxable deficit, opening taxable surplus and opening underlying foreign tax, as the case may be, of the other affiliate in respect of the corporation resident in Canada.

(4) For the purposes of paragraph (3)(a), the exempt surplus, exempt deficit, taxable surplus, taxable deficit and underlying foreign tax of each predecessor corporation immediately before the foreign merger shall be deemed to be the proportion of the amount thereof otherwise determined that

• (a) the surplus entitlement percentage of the corporation resident in Canada immediately before the merger in respect of the predecessor corporation, determined on the assumption that the taxation year of the predecessor corporation that otherwise would have included the time of the merger had ended immediately before that time,

is of

• (b) the percentage that would be the surplus entitlement percentage of the corporation resident in Canada immediately after the merger in respect of the foreign affiliate of the corporation formed as a result of the merger if the net surplus of such foreign affiliate were the aggregate of all amounts, each of which is the net surplus of a predecessor corporation immediately before the merger.

(5) Where at any time

• (a) there is a disposition by a corporation resident in Canada (in this subsection referred to as the “predecessor corporation”) of any of the shares owned by it of the capital stock of a particular foreign affiliate of it to a taxable Canadian corporation with which the predecessor corporation was not dealing at arm’s length (in this subsection referred to as the “acquiring corporation”),

• (b) there is an amalgamation, to which section 87 of the Act applies, of two or more corporations (each of which in this subsection is referred to as a “predecessor corporation”) to form a new corporation (in this subsection referred to as the “acquiring corporation”) as a result of which shares of the capital stock of a particular foreign affiliate of a predecessor corporation become the property of the acquiring corporation, or

• (c) there is a winding-up, to which subsection 88(1) of the Act applies, of a corporation (in this subsection referred to as the “predecessor corporation”) into another corporation (in this subsection referred to as the “acquiring corporation”) as a result of which shares of the capital stock of a particular foreign affiliate of the predecessor corporation become the property of the acquiring corporation,

the following rules apply for the purposes of this Part in respect of the particular affiliate and each other foreign affiliate of the predecessor corporation in which the particular affiliate has an equity percentage:

• (d) its opening exempt surplus in respect of the acquiring corporation shall be the amount, if any, by which the aggregate of its exempt surplus in respect of each predecessor corporation and in respect of the acquiring corporation immediately before any of the transactions referred to in paragraph (a), (b) or (c) exceeds the aggregate of its exempt deficit in respect of each predecessor corporation and in respect of the acquiring corporation immediately before any of the transactions referred to in paragraph (a), (b) or (c);

• (e) its opening exempt deficit in respect of the acquiring corporation shall be the amount, if any, by which the aggregate of its exempt deficit in respect of each predecessor corporation and in respect of the acquiring corporation immediately before any of the transactions referred to in paragraph (a), (b) or (c) exceeds the aggregate of its exempt surplus in respect of each predecessor corporation and in respect of the acquiring corporation immediately before any of the transactions referred to in paragraph (a), (b) or (c);

• (f) its opening taxable surplus in respect of the acquiring corporation shall be the amount, if any, by which the aggregate of its taxable surplus in respect of each predecessor corporation and in respect of the acquiring corporation immediately before any of the transactions referred to in paragraph (a), (b) or (c) exceeds the aggregate of its taxable deficit in respect of each predecessor corporation and in respect of the acquiring corporation immediately before any of the transactions referred to in paragraph (a), (b) or (c);

• (g) its opening taxable deficit in respect of the acquiring corporation shall be the amount, if any, by which the aggregate of its taxable deficit in respect of each predecessor corporation and in respect of the acquiring corporation immediately before any of the transactions referred to in paragraph (a), (b) or (c) exceeds the aggregate of its taxable surplus in respect of each predecessor corporation and in respect of the acquiring corporation immediately before any of the transactions referred to in paragraph (a), (b) or (c); and

• (h) its opening underlying foreign tax in respect of the acquiring corporation shall be the aggregate of its underlying foreign tax in respect of each predecessor corporation and in respect of the acquiring corporation immediately before any of the transactions referred to in paragraph (a), (b) or (c).

(6) For the purposes of subsection (5), the following rules apply:

• (a) where paragraph (5)(a) is applicable and the predecessor corporation is, by virtue of an election made under subsection 93(1) of the Act, deemed to have received a dividend on one or more of the shares of the particular affiliate disposed of in the transaction, for the purposes of the adjustment required by paragraph (b),

  • (i) immediately before the time of the transaction there shall be included under subparagraph (v) of the description of B in the definition exempt surplus in subsection 5907(1) in computing the particular affiliate’s exempt surplus or exempt deficit, as the case may be, in respect of the predecessor corporation an amount equal to the quotient obtained when

    • (A) such portion of the dividend as is prescribed by paragraph 5900(1)(a) to have been paid out of the exempt surplus of the particular affiliate

    is divided by

    • (B) the surplus entitlement percentage of the predecessor corporation in respect of the particular affiliate immediately before the disposition, determined on the assumption that the shares disposed of by the predecessor corporation were the only shares owned by it immediately before the time of the transaction,

  • (ii) immediately before the time of the transaction there shall be included under subparagraph (v) of the description of B in the definition taxable surplus in subsection 5907(1) in computing the particular affiliate’s taxable surplus or taxable deficit, as the case may be, in respect of the predecessor corporation an amount equal to the quotient obtained when

    • (A) such portion of the dividend as is prescribed by paragraph 5900(1)(b) to have been paid out of the taxable surplus of the particular affiliate

    is divided by

    • (B) the surplus entitlement percentage referred to in clause (i)(B), and

  • (iii) immediately before the time of the transaction there shall be deducted from the amount, if any, otherwise determined to be the underlying foreign tax of the particular affiliate in respect of the predecessor corporation an amount equal to the quotient obtained when

    • (A) the amount prescribed by paragraph 5900(1)(d) to be the foreign tax applicable to such portion of the dividend as is prescribed by paragraph 5900(1)(b) to have been paid out of the taxable surplus of the particular affiliate

    is divided by

    • (B) the surplus entitlement percentage referred to in clause (i)(B); and

• (b) the exempt surplus, exempt deficit, taxable surplus, taxable deficit and underlying foreign tax of an affiliate in respect of a predecessor corporation (within the meaning assigned by subsection (5)) and the acquiring corporation (within the meaning assigned by subsection (5)) shall be deemed to be the proportion of the amount thereof otherwise determined that

  • (i) the surplus entitlement percentage immediately before the time of the latest of the transactions referred to in paragraph (5)(a), (b) or (c) of the predecessor corporation or the acquiring corporation, as the case may be, in respect of the affiliate, determined on the assumption

    • (A) that the taxation year of the affiliate that otherwise would have included that time had ended immediately before that time, and

    • (B) where the transaction is one referred to in paragraph (5)(a), that the shares referred to therein were the only shares owned by the predecessor corporation immediately before that time,

  is of

  • (ii) the surplus entitlement percentage immediately after the time of the latest of the transactions referred to in paragraph (5)(a), (b) or (c) of the acquiring corporation in respect of the affiliate, determined on the assumption that the taxation year of the affiliate that otherwise would have included that time had ended immediately after that time.

(7) Where at any time there has been a dissolution of a foreign affiliate (in this subsection referred to as the “dissolved affiliate”) of a corporation resident in Canada and paragraph 95(2)(e.1) of the Act is applicable in respect of the dissolution, each other foreign affiliate of the corporation that had a direct equity percentage in the dissolved affiliate immediately before that time shall, for the purposes of computing its exempt surplus or exempt deficit, taxable surplus or taxable deficit and underlying foreign tax in respect of the corporation, be deemed to have received dividends immediately before that time the aggregate of which is equal to the amount it might reasonably have expected to receive if the dissolved affiliate had, immediately before that time, paid dividends the aggregate of which on all shares of its capital stock was equal to the amount of its net surplus in respect of the corporation immediately before that time, determined on the assumption that the taxation year of the dissolved affiliate that otherwise would have included that time had ended immediately before that time.

(8) Where at any time a dividend is, by virtue of an election made by a corporation under subsection 93(1) of the Act, deemed to have been received on one or more shares of a class of the capital stock of a particular foreign affiliate of the corporation disposed of to the corporation or another foreign affiliate of the corporation, the following rules apply:

• (a) for the purposes of the adjustment required by paragraph (b),

  • (i) immediately before that time there shall be included under subparagraph (v) of the description of B in the definition exempt surplus in subsection 5907(1) in computing the particular affiliate’s exempt surplus or exempt deficit, as the case may be, in respect of the corporation an amount equal to the product obtained when the specified adjustment factor in respect of the disposition is multiplied by the total of all amounts each of which is the portion of any such dividend that is prescribed by paragraph 5900(1)(a) to have been paid out of the exempt surplus of the particular affiliate,

  • (ii) immediately before that time there shall be included under subparagraph (v) of the description of B in the definition taxable surplus in subsection 5907(1) in computing the particular affiliate’s taxable surplus or taxable deficit, as the case may be, in respect of the corporation an amount equal to the product obtained when the specified adjustment factor in respect of the disposition is multiplied by the total of all amounts each of which is the portion of any such dividend that is prescribed by paragraph 5900(1)(b) to have been paid out of the taxable surplus of the particular affiliate, and

  • (iii) immediately before that time there shall be deducted from the amount, if any, otherwise determined to be the underlying foreign tax of the particular affiliate in respect of the corporation an amount equal to the product obtained when the specified adjustment factor in respect of the disposition is multiplied by the aggregate of all amounts each of which is the amount prescribed by paragraph 5900(1)(d) to be the foreign tax applicable to such portion of any such dividend as is prescribed by paragraph 5900(1)(b) to have been paid out of the taxable surplus of the particular affiliate,

  and, for the purposes of subparagraphs (i) to (iii), the specified adjustment factor in respect of the disposition is the amount equal to the quotient obtained when

  • (iv) where the person disposing of the shares is the corporation, 100 per cent, and

  • (v) where the person disposing of the shares is another foreign affiliate of the corporation, the surplus entitlement percentage of the corporation in respect of that affiliate immediately before the disposition,

  is divided by

  • (vi) the surplus entitlement percentage of the corporation in respect of the particular foreign affiliate immediately before the disposition;

• (b) the exempt surplus or exempt deficit, the taxable surplus or taxable deficit and the underlying foreign tax in respect of the corporation of the particular affiliate and of each other foreign affiliate of the corporation in which the particular affiliate has an equity percentage (in this subsection referred to as the “other affiliate”) shall at that time be adjusted to the proportion of the amount thereof otherwise determined that

  • (i) the surplus entitlement percentage immediately before that time of the corporation in respect of the particular affiliate or the other affiliate, as the case may be, determined on the assumption that the taxation year of the particular affiliate or the other affiliate, as the case may be, that otherwise would have included that time had ended immediately before that time,

  is of

  • (ii) the surplus entitlement percentage immediately after that time of the corporation in respect of the particular affiliate or the other affiliate, as the case may be, determined on the assumption that the taxation year of the particular affiliate or the other affiliate, as the case may be, that otherwise would have included that time had ended immediately after that time; and

• (c) for the purposes of the definitions exempt deficit, exempt surplus, taxable deficit, taxable surplus and underlying foreign tax in subsection 5907(1), the amounts determined under paragraph (b) are referred to as the opening exempt deficit, opening exempt surplus, opening taxable deficit, opening taxable surplus and opening underlying foreign tax, as the case may be, of the particular affiliate and each other affiliate in respect of the corporation resident in Canada.

(9) Where at any time a foreign affiliate of a corporation resident in Canada (in this subsection referred to as the “issuing affiliate”) issues shares of a class of its capital stock to a person other than the corporation or another foreign affiliate of the corporation and as a result thereof the surplus entitlement percentage of the corporation in respect of the issuing affiliate decreases, for the purposes of this Part, the exempt surplus or exempt deficit, the taxable surplus or taxable deficit and the underlying foreign tax, in respect of the corporation, of the issuing affiliate and of each other foreign affiliate of the corporation in which the issuing affiliate has an equity percentage (in this subsection referred to as the “other affiliate”) shall at that time be increased to the proportion of the amount thereof otherwise determined that

• (a) the surplus entitlement percentage immediately before that time of the corporation in respect of the issuing affiliate or the other affiliate, as the case may be, determined on the assumption that the taxation year of the issuing affiliate or the other affiliate, as the case may be, that otherwise would have included that time had ended immediately before that time,

is of

• (b) the surplus entitlement percentage immediately after that time of the corporation in respect of the issuing affiliate or other affiliate, as the case may be, determined on the assumption that the taxation year of the issuing affiliate or the other affiliate, as the case may be, that otherwise would have included that time had ended immediately after that time,

and, for the purposes of the definitions exempt deficit, exempt surplus, taxable deficit, taxable surplus and underlying foreign tax in subsection 5907(1), those increased amounts are referred to as the opening exempt deficit, opening exempt surplus, opening taxable deficit, opening taxable surplus and opening underlying foreign tax, as the case may be, of each of those affiliates in respect of the corporation resident in Canada.

(10) For the purposes of this section, the surplus entitlement at any time of a share owned by a corporation resident in Canada of the capital stock of a foreign affiliate of the corporation in respect of a particular foreign affiliate of the corporation is the portion of

• (a) the amount that would have been received on the share if the foreign affiliate had at that time paid dividends the aggregate of which on all shares of its capital stock was equal to the amount that would be its net surplus in respect of the corporation at that time assuming that

  • (i) each other foreign affiliate of the corporation in which the foreign affiliate had an equity percentage had immediately before that time paid a dividend equal to its net surplus in respect of the corporation immediately before the dividend was paid, and

  • (ii) any dividend referred to in subparagraph (i) that would be received by another foreign affiliate was received by such other foreign affiliate immediately before any such dividend that it would have paid,

that may reasonably be considered to relate to

• (b) the amount that would be the net surplus of the particular affiliate in respect of the corporation at that time assuming that

  • (i) each other foreign affiliate of the corporation in which the particular affiliate had an equity percentage had immediately before that time paid a dividend equal to its net surplus in respect of the corporation immediately before the dividend was paid, and

  • (ii) any dividend referred to in subparagraph (i) that would be received by another foreign affiliate was received by such other foreign affiliate immediately before any such dividend that it would have paid.

(11) For the purposes of subsection (10),

• (a) in determining the net surplus of, or the amount of a dividend received by, a particular foreign affiliate of a taxpayer resident in Canada in which any other foreign affiliate of the taxpayer has an equity percentage, no amount shall be included in respect of any distribution that would be received by the particular affiliate from such other affiliate; and

• (b) if any foreign affiliate of a corporation resident in Canada has issued shares of more than one class of its capital stock, the amount that would be paid as a dividend on the shares of any class is such portion of its net surplus as, in the circumstances, it might reasonably be expected to have paid on all the shares of that class.

(12) Notwithstanding any other provision of this Part, for the purposes of determining under subsection (10) the net surplus of a foreign affiliate of a corporation resident in Canada in respect of the corporation at any time in a taxation year of the affiliate that would otherwise have included that time (in this subsection referred to as the “normal year”), the exempt earnings or loss and the taxable earnings or loss required to be included in computing the net surplus in respect of any taxation year of the affiliate that is assumed for the purposes of a provision of this section to have ended at that time shall be deemed to be that proportion of such amounts determined for the normal year that the number of days in the taxation year assumed to have ended at that time is of the number of days in the normal year.

(13) For the purposes of the definition surplus entitlement percentage in subsection 95(1) of the Act and of this Part, the surplus entitlement percentage at any time of a corporation resident in Canada in respect of a particular foreign affiliate of the corporation is,

• (a) where the particular affiliate and each corporation that is relevant to the determination of the corporation’s equity percentage in the particular affiliate have only one class of issued shares at that time, the percentage that is the corporation’s equity percentage in the particular affiliate at that time, and

• (b) in any other case, the proportion of 100 that

  • (i) the aggregate of all amounts, each of which is the surplus entitlement at that time of a share owned by the corporation of the capital stock of a foreign affiliate of the corporation in respect of the particular foreign affiliate of the corporation

  is of

  • (ii) the amount determined under paragraph (10)(b) to be the net surplus of the particular affiliate in respect of the corporation at that time,

  except that where the amount determined under subparagraph (ii) is nil, the percentage determined under this paragraph shall be the corporation’s equity percentage in the particular affiliate at that time,

and, for the purposes of this subsection, equity percentage has the meaning that would be assigned by subsection 95(4) of the Act if the reference in paragraph (b) of the definition equity percentage in that subsection to “any corporation” were read as a reference to “any corporation other than a corporation resident in Canada”.