Subsection 5903.1(1)
Administrative Policy
21 April 2015 Memorandum 2014-0560811I7 - FACL carryback Surplus & PAS election
In 2010, CFA paid the "2010 Dividend" to its 100% parent ("Canco"). On audit, CRA identified that CFA had realized a capital gain (giving rise to foreign accrual property income). Canco designated a portion of a foreign accrual capital loss arising from a disposition in 2011 to be carried back to 2010.
CRA noted that there was "some uncertainty with respect to the application of the Act and the Regulations to the carryback of a FACL incurred by a foreign affiliate in a taxation year that ends after August 19, 2011 to one of its taxation years that end before August 20, 2011," it went on to state (after referencing the Finance Explanatory Notes) that "it is the CRA's current practice to generally not challenge FACL carrybacks that straddle August 19, 2011, provided there is no double use of any such loss."
See summaries under Reg. 5901(2)(b) and Reg. 5907(1) – net earnings.