In 2013-0482991E5, the CRA was asked to consider a situation where a Canadian subsidiary (Canco) of a foreign parent (Parent) had lent funds to a foreign company in the group (Debtco). Canco owed Parent a like amount. Rather than Debtco repaying Canco and Canco repaying Parent, Canco simply assigned to Parent the debt owed by Debtco. The CRA confirmed its view that this assignment would not constitute “repayment” of the debt by Debtco for purposes of s. 15(2.6). Accordingly, if the debt remained owing by Debtco for more than one year after the end of the taxation year of Canco in which the loan was made, the loan would be deemed to be a dividend paid by Canco under s. 15(2) and s. 214(3)(a) – triggering Canadian withholding tax (see page 4). Furthermore, if the loan owed by Debtco were instead “novated” to avoid this withholding tax, the CRA would consider applying the general anti-avoidance rule in s. 245 (see page 5).