In 2013-0510551R3, a Canadian company (Canco) held a 50% interest in a foreign company (JV Co) indirectly through Canco’s wholly-owned Luxembourg financing affiliate (Finco).  Canco subscribed for preferred shares of Finco; Finco in turn lent funds to JV Co.  The other (unrelated) shareholder of JV Co lent an equivalent amount to JV Co.  The CRA ruled that Canco would not be subject to the upstream loan rule in s. 90(6) in respect of Finco’s loan to JV Co, “provided that” JV Co dealt at arm’s length with Canco in fact.  Although the ruling was conditional, for all practical purposes the CRA accepted that JV Co dealt at arm’s length with Canco based on several pages of representations describing the corporate governance of JV Co (see paragraphs 13-20).