9 March 2011 External T.I. 2003-0017231E5 - Application of section 17 -- summary under Subsection 17(1)

The phrase "owes an amount" in s. 17(1) is not limited to money that is loaned, and includes unpaid consideration, amounts owing to a corporation in Canada, accrued liabilities in its favour and unpaid dividends. In determining how long an amount has remained outstanding, the relevant period commences when the amount becomes owing to the corporation resident in Canada. For example, if a foreign corporation transfers a loan to a Canadian corporation, s. 17(1) does not apply if the loan is repaid less than 12 months later, even if the loan was outstanding for more than a year.