In 2013-0491061R3, the CRA ruled that a Canadian company’s repayment of upstream loans, followed by the sale of an entire foreign affiliate group to the foreign parent company, would be considered a bona fide repayment and not part of any series of loans and repayments – notwithstanding that shortly after the sale the Canadian company would re-borrow precisely the same amount. The facts considered were quite complex. In short, the existing group involved a foreign parent company (Parent) with companies in Canada and many foreign affiliates (FAs) under Canada. Existing loans (Upstream Loans) were in place from one FA to a Canadian company in the group (Canco). The group proposed the following: (1) Canco would repay the Upstream Loans from the FA, (2) the Canadian companies would restructure their share ownership of the FAs under Canada, and (3) the Canadian companies would sell (to Parent) the FAs out from under Canada at fair market value for cash. In addition, following the sale in step (3), Canco would re-borrow from the same foreign entity precisely the same amount as it repaid in step (1), but at this point the foreign entity would no longer be a FA. The CRA ruled that none of the restructure transactions in step (2) would trigger the “foreign affiliate dumping” (deemed dividend) rule in 212.3(2), by virtue of the corporate reorganization exceptions found in s. 212.3(18). Furthermore, the CRA said that Canco’s repayment of the Upstream Loans in step (1) and the re-borrowing of the same amount following the sale in step (3) would not be considered a “series of loans…and repayments”. Accordingly, the Upstream Loans would be considered fully repaid by Canco within the two-year period allowed under s. 90(8)(a).