7 February 1994 External T.I. 9309865 F - 6363-1 Foreign Affiliates / Cross-shareholdings / Surplus -- summary under Subsection 5902(2)

Where a corporation resident in Canada owns 95% of the common shares of FA1 which, in turn, owns 100% of the common shares of FA2 which, in turn, owns 5% of the commons shares of FA1, and the Canadian corporation disposes of its shares of FA1 to a third party and elects under s. 93(1), FA2 will be the particular foreign affiliate for the purposes of Regulation 5902(2)(a).