In BlackBerry Limited v The King (2024 TCC 123; under appeal to the Federal Court of Appeal), the Tax Court of Canada found that the payments made by BlackBerry Limited (“BlackBerry Canada”) to its US affiliates for research and development (“R&D”) services were not foreign accrual property income (“FAPI”) under section 95 of the Income Tax Act (Canada).
There are three issues in this case:
- Whether the US $17.1 million earned by the US affiliates from R&D services rendered to BlackBerry Canada is FAPI under paragraph 95(2)(b);
- If so, whether the exceptions under paragraph 95(3)(b) or (d) apply; and
- If the amount is FAPI and the exceptions do not apply, whether any foreign accrual tax (“FAT”) can be deducted against FAPI under subsection 91(4).