This article summarizes the upstream loan rules, and explores the impact of the upstream loan rules in several situations involving dispositions of the shares of the creditor foreign affiliate. In general, under the current rules anomalous results can be avoided with certainty only by causing the parent Canadian company to actually repay its outstanding upstream loans borrowed from any creditor foreign affiliates. This may not always be possible or practical. The repayment requirement is arguably too strict and warrants reconsideration.
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