Corporation B, in managing a lumberyard owned by Corporation A, grades and cuts logs and arranges for the sale or chipping of the log residues. CRA stated:
Corporation B's activities are limited to the provision of services on behalf of others as a subcontractor and … the profits earned by Corporation B are not manufacturing and processing profits in Canada. ….
However … it is possible that the subcontracting costs paid by Corporation A to Corporation B could be included in the "cost of manufacturing and processing labour" as defined in [Reg.] 5202 … .