On October 24, 2012, Finance released a huge package of technical amendments, many of which have been outstanding for years (see http://www.fin.gc.ca/n12/12-129-eng.asp).  The package also included a revised set of rules pertaining to “upstream loans” made by foreign affiliates of Canadian companies.  These anti-avoidance rules are designed to prevent a foreign affiliate of a Canadian company (Canco) from “making synthetic dividend distributions” – i.e., in the form of loans or other indebtedness – in cases where dividends otherwise paid to Canco could not be fully offset by deductions available to Canco in respect of underlying exempt surplus or other tax-free surplus balances.  In addition to other changes, this latest Finance release includes an extended transition period to August 19, 2016 for loans and indebtedness existing on August 19, 2011 (the date the draft rules were first released).  In addition, a new transitional rule is also provided that sets-off certain foreign exchange gains (or losses) of Canco on the repayment of a debt owing to a foreign affiliate against the related foreign exchange losses (or gains) of that foreign affiliate.  For a short summary of the revised upstream loan rules, see Upstream Loan Rules