2006 Ruling 2006-0211781R3 - Withholding Tax Exemption -- summary under Subparagraph 212(1)(b)(vii)

Non-resident term lenders make a loan to a wholly-owned subsidiary ("Finco") of the general partner of a Canadian limited partnership that is a subsidiary partnership (through an intermediate unit trust) of an income fund. Finco on-lends on similar terms to the limited partnership. Events of default include a delisting of units of the income fund, and the partnership ceasing to be a direct or indirect subsidiary of the income fund. Ruling that interest paid on the loan to Finco by arm's length lenders is exempt from withholding.