CRA proposed an inclusion in Canco’s income under s. 247(2) of the difference between an arm’s length price for goods sold by Canco to a sister U.S. LLC (“Sisterco LLC”) and the consideration paid, and also proposed a secondary adjustment under s. 247(12) on the basis that a resulting benefit conferred on Sisterco LLC was deemed to be a dividend that was paid by Canco that was subject to a Pt. XIII remittance obligation.
The Directorate agreed that s. 247(12) deemed the adjustment to be a dividend and that, by virtue of the definition of taxable dividend in ss. 248(1) and 89(1), it also was a taxable dividend.