A non-resident corporation (Parent2) which, through a wholly-owned non-resident subsidiary, was the sole shareholder of a corporation resident in Canada (“CRIC”), received various unsecured loans from the CRIC, which bore interest at a floating rate equal to the prescribed rate under Reg. 4301(b.1), payable not less than annually. A timely joint election under s. 15(2.11) was timely filed by the CRIC and Parent2 for each of these loans to qualify as a “pertinent loan or indebtedness” (PLOIs) for the purposes of ss. 15(2) and 17.1(1). Could ss. 17.1 and 247 both be applied to these facts without being considered as be in conflict, notwithstanding that the arm’s length rate determined in the context of s. 247(2) might be higher, lower or equivalent to the Reg. 4301(b.1) rate? The Directorate responded:
Subsection 247(2) can apply to debts owing by a non-resident person to a Canadian resident corporation with which the non-resident person does not deal at arm’s length, to which subsection 17.1(1) applies. More specifically, we submit that the principle of statutory interpretation according to which a specific provision in a statute precludes the application of a general provision in that statute, commonly known as the rule of implied exception, does not apply with respect to sections 17.1 and 247 because there is no conflict between those two provisions and they do not interfere with their policy objectives. In short … subsection 247(2), which was broadly worded to embody the arm’s length principle, was meant to apply to all cross-border transactions, arrangements or events, including financial transactions, between non-arm’s length persons or partnerships, unless a specific exclusion applies. [See] … 2017-0691071C6 … .