The investment entity effective tax rate in a territory for an accounting period is determined by taking the following steps—
Step 1
Determine the adjusted profits made by each of the investment entities in the territory, as determined under Chapter 4 and adjusted under section 223.
Step 2
Subtract the sum of the losses of those investment entities that made a loss in that period from the sum of the profits of those investment entities that made a profit in that period.
Step 3
If the result of Step 2 is nil or less, the investment entity effective tax rate is to be treated as 15%. Otherwise, proceed to Step 4.
Step 4
Determine the covered tax balance of each such investment entity in accordance with Chapter 5.
Step 5
Adjust the amounts determined in Step 4 in accordance with section 223 (to the extent applicable).
Step 6
Add together the amounts determined in Step 5 that are adjusted positive covered tax balances.
Step 7
Add together the amounts determined in Step 5 that are adjusted negative covered tax balances.
Step 8
Subtract the result of Step 7 from the result of Step 6.
Step 9
Divide the result of Step 8 by the result of Step 1. This is the investment entity effective tax rate.