• B.C. Government Tables Comprehensive LNG Tax Legislation
  • December 15, 2014 | Authors: TJ Kang; Brian O'Neill; Monika A. Sawicka
  • Law Firm: McCarthy Tétrault LLP - Vancouver Office
  • On October 21, 2014, British Columbia Finance Minister Michael de Jong announced Bill 6 - 2014, the Liquefied Natural Gas Income Tax Act (the “Act”), which proposes an income tax, effective for taxation years beginning on or after January 1, 2017, payable on net income from liquefaction activities at or in respect of a liquefied natural gas (“LNG”) facility in B.C.

    Shortly following the announcement of the Act, McCarthy Tétrault’s LNG Team provided preliminary comments on its key highlights - see British Columbia Government Tables LNG Tax Legislation.[1] In this article, we provide a more detailed review and commentary of the Act. Our LNG Team would be happy to discuss the Act with you and how it may impact you in making LNG business and investment decisions in B.C.

    The Act contained in Bill 6 is the first draft of the proposed legislation. This draft has only received First Reading in the Legislature and will need to go through several additional stages of the legislative process prior to being enacted as law. Accordingly, certain aspects of the Act may change prior to enactment. We will update our Canadian Energy Law Blog[2] with developments in this regard as they arise in the coming months.

    Highlights

    The Act proposes a two-tiered tax regime which will apply for taxation years beginning on or after January 1, 2017. The first tier, a 1.5% tax, will apply to net operating income from liquefaction activities carried out at or in respect of a particular LNG facility located in B.C. during the period when net operating losses and amounts in respect of capital investment for the particular facility remain available to be deducted. The second tier, a 3.5% tax (increasing to 5% for taxation years beginning on or after January 1, 2037), will apply to such income after net operating losses and amounts in respect of capital investment have been fully deducted. However, any tax paid at the lower 1.5% rate will be added to a tax pool and creditable against tax payable at the higher rate. In most cases, therefore, the 1.5% tax will essentially be a prepayment of a portion of the higher rate tax eventually payable.

    As compared to the 2014 provincial budget announcement, some key changes have been made. Significantly, the higher rate of tax is now proposed to be 3.5%, increasing to 5% in 2037, as opposed to 7% which had been originally proposed. In addition, a newly proposed natural gas tax credit will be available to qualifying corporations - namely, corporations that are taxpayers under the Act and have a permanent establishment in B.C. - in order to offset regular corporate income taxes arising under the Income Tax Act (B.C.). The credit is intended to incentivize corporations to maintain a permanent establishment in B.C. with a view to attracting new corporate income tax revenue to B.C. These changes have been justified based on declines in world market LNG pricing levels, anticipated competition for LNG supply, and higher than expected construction costs for B.C. LNG developments.

    The Act has also clarified a number of important details, such as what types of costs are included or excluded in the capital investment account (and thus available to deduct), whether costs of financing (including interest) will be deductible (the answer is no), and how transactions between non-arm’s length parties are to be treated (detailed transfer pricing rules have been proposed).

    Who and what does the LNG income tax apply to?

    The LNG tax applies to “a person who engages in or has income derived from liquefaction activities, whether or not the person is liable to pay tax under this Act”. Where LNG operations are carried on in a partnership, the partners, rather than the partnership, will be subject to the tax. However, the relevant amounts (e.g., income or loss, deductions, certain balances, and certain expenditures) are to be computed as if the partnership were a separate person and allocations of the same to the individual partners must be reasonable having regard to all the circumstances.

    Liquefaction activities

    As noted above, the LNG tax applies where a person engages in or derives income from “liquefaction activities”. Specifically, “liquefaction activities” is defined to mean one or more of the following:

    (a) acquiring, owning or disposing of

    (i) “liquefied natural gas”,[3] “natural gas liquids”[4] or “natural gas”[5] that is at an LNG facility, or

    (ii) a right to acquire, own or dispose of liquefied natural gas, natural gas liquids or natural gas that is at an LNG facility;

    (b) acquiring, owning or disposing of

    (i) all or part of an LNG facility, or

    (ii) a right to use all or part of an LNG facility;

    (c) operating all or part of an LNG facility;

    (d) in relation to a person who owns or operates all or part of an LNG facility, disposing of electrical power generated at the LNG facility;

    (e) in relation to a person who owns or operates all or part of an LNG facility, acquiring, owning or disposing of intangible personal property that is used or exploited, or acquiring, owning or disposing of a right to use or exploit intangible personal property,

    (i) for the operations of the LNG facility, or

    (ii) for one or more of the activities described above in paragraphs (a) to (d);

    (f) acquiring, owning or disposing of a right to receive income derived from one or more of the activities described above in paragraphs (a) to (e);

    (g) in relation to a person who carries out one or more of the activities described above in paragraphs (a) to (f), activities that support the construction, administration, operations and maintenance of the LNG plant and that are not otherwise described in paragraphs (a) to (f);

    (h) restoring, reclaiming or remediating an LNG facility site.

    The definitions of “LNG facility” and “LNG Plant” are paramount to understanding the scope of “liquefaction activities” and hence the scope of the LNG tax.

    The meaning of “LNG facility” is set out in section 7 of the Act. Specifically, an LNG facility is defined to consist of all of the following:[6]

    (a) a particular LNG plant located in B.C.;

    (b) land on which the LNG plant is situated or land that is contiguous to such land and used or held for the operations of the LNG plant, and

    (c) tangible personal property used on, and “improvements”[7] to, the land described in (b) to carry out activities described in paragraph (g) of the definition of “liquefaction activities” (see above).

    “LNG plant”, as used in the definition of “LNG facility” and elsewhere in the Act, is defined in section 8 of the Act to consist of all of the following:

    (a) tangible personal property and improvements that are part of a series of systems used or intended to be used for liquefying natural gas, including, without limitation, tangible personal property and improvements that are used or intended to be used for one or more of the following purposes:

    (i) delivering natural gas to the series of systems by means of a feedstock spur pipeline;[8]

    (ii) receiving or measuring natural gas delivered to the series of systems;

    (iii) removing natural gas liquids from natural gas and separating those liquids;

    (iv) storing natural gas liquids;

    (b) tangible personal property and improvements that are used or intended to be used for storing liquefied natural gas if that property is part of the series of systems referred to in paragraph (a);

    (c) tangible personal property and improvements that are part of a series of systems used or intended to be used for one or more of the following purposes if the series of systems immediately follows the series of systems referred to in paragraph (a):

    (i) measuring liquefied natural gas or natural gas liquids that are to be loaded for shipment or transmitted for regasification;

    (ii) loading liquefied natural gas or natural gas liquids for shipment;

    (iii) supporting the loading of liquefied natural gas or natural gas liquids for shipment;

    (iv) transmitting liquefied natural gas for regasification;

    (d) tangible personal property and improvements that are used or intended to be used to generate electrical power if the electrical power is to be used primarily for the series of systems referred to in paragraph (a), other than tangible personal property and improvements owned or operated by a prescribed person;

    (e) tangible personal property and improvements that are necessary for complying with health, safety and environmental standards required by law in relation to the use or intended use of the tangible personal property and improvements described in paragraphs (a) to (d).

    However, the following are specifically excluded from forming part of an LNG plant:

    (a) a feedstock pipeline;

    (b) tangible personal property and improvements that are located upstream of a feedstock spur pipeline;

    (c) a vehicle or vessel that is used to transport liquefied natural gas or natural gas liquids from a series of systems referred to in the definition of “LNG plant”;

    (d) a pipeline used to transport liquefied natural gas, natural gas liquids or natural gas from a series of systems referred to in the definition of “LNG plant”, except a pipeline used for a purpose described in (c)(ii) or (iv) in such definition (i.e., used for loading liquefied natural gas or natural gas liquids for shipment or transmitting liquefied natural gas for regasification).

    Care must be taken in reading and applying the definitions of “LNG facility” and “LNG plant” to the unique facts of a particular project or projects, or components thereof. The proper interpretation of these terms is critical because the tax imposed under the Act is payable in respect of a taxpayer’s “net operating income” or “net income”, each of which is defined with reference to an “LNG source”, where “LNG source” means liquefaction activities carried out at or in respect of a particular LNG facility. Some LNG-related activities will therefore not be taxable (e.g., if they solely relate to activities outside the LNG facility. Alternatively, while one may not ordinarily consider a lessor of land to be carrying on liquefaction activities, the definitions of “liquefaction activities” and “LNG facility” appear to subject a person that earns property income from the leasing of land to an LNG plant owner or operator for use in the operation of an LNG plant to the LNG tax.

    Furthermore, one potential complexity we have identified in the Act concerns how the defined terms “feedstock pipeline” and “feedstock spur pipeline” impact the application of the proposed tax and which pipelines - existing and new - will fall within these two categories.

    Classification as a “feedstock pipeline” versus a “feedstock spur pipeline” may have pronounced economic implications. This is because the definition of “LNG plant” in section 8 of the Act includes feedstock spur pipeline facilities, income from which the tax applies to, whereas a feedstock pipeline is specifically excluded.

    Minimizing the income-earning potential of feedstock spur pipeline facilities and having these facilities integrated into the larger costs of the LNG plant would be one expected way for industry to take advantage of the income tax calculation and escalation provisions contained in the Act.

    However, there may be pragmatic challenges in achieving this result. B.C. LNG proponents have raised concerns with the magnitude of the capital cost investment required to develop projects in B.C. In part, this is due to the significant geographic distance between new natural gas sources, the location of the coastal terminals, and the lack of infrastructure to achieve the transmission requirements. To mitigate this risk, we have seen major project proponents reach out to and indeed select third party, for-profit natural gas pipeline companies to provide what has been defined to be “spur” pipeline transmission facilities and service. However, in such circumstances, feedstock spur pipelines will not become vertically integrated into the downstream operations and affairs of the liquefaction plant. The tax proposed under the Act, however, will seemingly apply to the “spur” pipeline company. The cost of this tax would reasonably be expected to be passed on to the shipper, which would reasonably be expected to be the LNG plant owners. As spur pipeline companies would reasonably be expected to have a different cost and income earning profile as compared to LNG plants, this could give rise to circumstances where a spur pipeline company must pay the higher rate of taxation (see below regarding the 3.5% tax on “net income”) before the downstream connected LNG plant costs have been recovered. This result would seem to be at odds with the overall intention of the legislation, namely, to have the higher rate of taxation apply only after all capital investment made in respect of the entire liquefaction works and undertaking have been recovered. However, to achieve this result, LNG proponents would seemingly need to become the owners of the spur pipeline facilities so that these costs could be included in the overall LNG plant cost computations. This outcome would again seem to be at odds with the needs of at least the major LNG project proponents seeking to avoid “spur” pipeline investment/ownership.

    How is the tax computed?

    The definition of “LNG source” makes it clear that the tax is imposed on an LNG facility-by-LNG facility basis. For greater certainty, the Act also provides that it applies in respect of each LNG source (i.e., a particular LNG facility) as if the taxpayer in question were a separate person in respect of each LNG source. This means that a separate tax return will need to be filed by a single taxpayer if such taxpayer derives income from more than one LNG facility. Consolidation of income from more than one LNG facility is not permitted.

    Depending on the availability of unused net operating losses and/or undeducted costs comprising the capital investment account (each of which is discussed below), the net income derived from liquefaction activities in respect of an LNG source will be taxed at the rate of either 1.5% or 3.5% (increasing to 5% for 2037).

    Tax on “net operating income” - 1.5%

    Part 3 of the Act contains rules regarding the computation of “net operating income”, upon which a 1.5% tax is payable. Any tax paid at this rate is added to a tax pool in respect of the particular LNG source, and will be creditable against taxes payable at the higher rate of 3.5% or 5% (see below regarding tax on “net income”) in current and subsequent taxation years. In most cases, therefore, the 1.5% tax will essentially be a prepayment of a portion of the higher rate tax eventually payable.

    The rules were modelled on the computation of income under the Income Tax Act (Canada) (the “federal Act”), with certain exceptions. In particular, income for this purpose does not include recaptured capital cost allowance (“CCA”), interest or dividends, hedging gains or losses, or capital gains or losses. In addition, and importantly, no deduction is allowed for CCA or financing charges (including interest). There are also special rules regarding the cost of natural gas at the inlet to the LNG facility and relating to the deemed disposition of inventory including liquefied natural gas, natural gas liquids, and natural gas (discussed below).

    However, a deduction is allowed for an “investment allowance” based on the taxpayer’s “adjusted capital investment account”. The investment allowance is computed by multiplying the average balance in the taxpayer’s adjusted capital investment account for the taxation year (which average is calculated by averaging the balance in the adjusted capital investment account at the end of such taxation year and at the end of the preceding taxation year) by the product of 0.75 and a rate to be prescribed by regulation.

    The adjusted capital investment account of a taxpayer begins with determining the balance of “capital investment account” (discussed below in respect of the tax on “net income”), which is then adjusted in accordance with the Act.

    To the extent a taxpayer has a net operating loss for a taxation year from an LNG source, as determined in accordance with the foregoing, this amount is added to the taxpayer’s net operating loss account, resulting in a pool available to offset future net income that would otherwise be subject to the 3.5% tax described below.

    Expenditures (other than prescribed expenditures) incurred by the taxpayer before the taxpayer’s first taxation year begins for the purpose of gaining or producing income from an LNG source on or after the date on which the taxpayer’s first taxation year begins, as well as prescribed expenditures in that period (collectively referred to as “qualifying expenditures”), may be included in computing the net operating loss account if the taxpayer makes an election in the tax return for the first taxation year in respect of the LNG source in accordance with section 84 of the Act.

    Tax on “net income” - 3.5% (increasing to 5% for 2037)

    Part 3 of the Act contains rules regarding the computation of “net income”, upon which a 3.5% tax is payable. The rate of this tax will increase to 5% for taxation years beginning on or after January 1, 2037. The computation of net income begins with determining net operating income (described above) for the taxation year from the LNG source and then adding and/or subtracting certain amounts in respect of net operating losses and the capital investment account.

    The net result is that the 3.5% tax will not apply to a taxpayer in respect of its LNG source until sufficient income has been derived from such source in excess of the aggregate of prior net operating losses and amounts that have been included in computing the capital investment account for that source. In other words, while the net operating loss and capital investment accounts remain available to be deducted, a tax of 1.5% applies to net operating income (this can be thought of as a minimum tax), and thereafter the 3.5% tax will apply (or 5% to the extent the higher rate of tax becomes payable in respect of a taxation year beginning on or after January 1, 2037), provided that previously paid low rate tax remaining in the taxpayer’s tax pool may be credited against the higher rate tax.

    Capital investment account

    Sections 60 and 61 of the Act set out the basic rules for determining the balance of a taxpayer’s capital investment account for an LNG source as at a particular time. Generally, the account will include the capital cost to the taxpayer of all “capital investment property” acquired by the taxpayer before that time, and certain other amounts.

    “Capital investment property” is defined for this purpose to include property referred to in the definition of “LNG facility” (i.e., the components of the LNG plant itself, the land on which the LNG plant is situated, and land contiguous to such land and used or held for the purposes of the operations of the LNG plant), as well as intangible personal property that is used or exploited for liquefaction activities carried out at or in respect of an LNG facility. Inventory, shares, partnership and trust interests, and bonds, debentures, bills of exchange, notes, mortgages, and similar obligations, are specifically excluded.

    Capital investment property owned by a taxpayer immediately before the taxpayer’s first taxation year (referred to as “qualifying property”) may be included in determining the capital investment account if the taxpayer makes an election in the tax return for the first taxation year in respect of the LNG source in accordance with section 85 of the Act. Depending on whether the election is made to apply subsection 85(3) or (6), the taxpayer generally will be deemed to have acquired, at the beginning of the first taxation year, capital investment property with a capital cost to the taxpayer equal to: (a) the fair market value of the qualifying property at the beginning of that first taxation year, or (b) the amount, if any, by which the amount that would otherwise be the capital cost to the taxpayer of the qualifying property exceeds the total of all financial incentives that the taxpayer received before that first taxation year in respect of or for the acquisition of the qualifying property.

    All amounts deducted in computing net income, proceeds of disposition of capital investment property (less expenses incurred in making the disposition), financial incentives that the taxpayer received or was entitled to receive in respect of or for the acquisition of a capital investment property, and certain other amounts, are to be deducted in computing the balance of the capital investment account.

    Deemed purchases and sales of commodities

    As noted above, “liquefaction activities”, which are subject to the tax, include acquisitions and dispositions of liquefied natural gas, natural gas liquids, and natural gas. The Act contains rules which deem such commodities to be acquired or disposed in certain circumstances. For example, if a taxpayer owns a commodity before and after it leaves an LNG plant, the taxpayer is deemed to have disposed of the commodity to itself at a price equal to that which would have been the price had the disposition been to an arm’s length party.

    Similarly, if a taxpayer owns natural gas immediately before and after the natural gas passes through an LNG facility inlet meter for an LNG facility, the taxpayer is deemed to purchase such natural gas at such LNG facility inlet meter. Such natural gas, together with any natural gas acquired by the taxpayer at an LNG facility inlet meter from a person or partnership with whom the taxpayer was not dealing at arm’s length, is referred to in the Act as having been “notionally acquired”. The taxpayer must calculate, on a monthly basis, the cost of all natural gas notionally acquired in the month pursuant to section 50 of the Act using the formulae set out in sections 51 to 53 (see below under valuation rules).

    Valuation rules

    The Act contains specific rules applicable to the valuation of natural gas at the inlet to an LNG facility.[9] In general, natural gas purchased from an arm’s length person within a feedstock pipeline or at the inlet to the LNG facility is valued at the amount paid or payable for the gas from the arm’s length person (adjusted for the cost of transporting the natural gas within the feedstock pipeline), while all other natural gas (including natural gas acquired from a non-arm’s length person or deemed to be acquired by a taxpayer from itself, and natural gas purchased upstream of the feedstock pipeline) is valued based on a reference price and adjusted to account for transportation costs to the LNG facility. The reference price will be set monthly by the Minister of Natural Gas Development and determined using the market price of natural gas at Spectra Station 2.

    Transfer pricing rules

    Division 2 of Part 5 of the Act contains transfer pricing rules generally applicable to transactions between a taxpayer or partnership and either (a) a person with whom the taxpayer or partnership, or a member of the partnership, does not deal at arm’s length, or (b) a partnership of which the person referred to in (a) is a member. The rules are generally modelled after the transfer pricing rules set out in the federal Act, with a couple of key differences:

    • the transfer pricing rules in the Act, unlike the federal Act, are not limited to transactions with non-residents, and
    • the Act specifically sets out how the transfer pricing rules apply to self-dealings and how they apply to deemed sales of liquefied natural gas, natural gas liquids, and natural gas that leave an LNG plant.

    Similar to the federal Act, however, the Act allows the taxing authority to make adjustments in respect of the matters covered by the rule (e.g., those between, or deemed to be between, non-arm’s length parties) if a particular transaction does not accord with the arm’s length principle, and to impose a penalty to the extent the taxpayer has not made “reasonable efforts” to comply with such principle. In this regard, taxpayers are encouraged to prepare contemporaneous documentation to support the pricing of such transactions.[10] In the absence of such documentation, the taxpayer will be deemed not to have made reasonable efforts to determine an arm’s length price.

    The penalty will apply only to the extent the transfer pricing adjustments for the taxation year in question (for which the taxpayer has not made reasonable efforts to determine an arm’s length price) is greater than the lesser of (a) 10% of the taxpayer’s gross revenue for the taxation year from the LNG source, and (b) $5,000,000. If applicable, the penalty will be equal to 3.5% of the value of such adjustments (increasing to 5% for taxation years that begin on or after January 1, 2037).

    In addition to the transfer pricing rules, the Act requires certain acquisitions or dispositions of inventory or capital investment property by a taxpayer to occur at fair market value. The valuation rules published along with the Act indicate that, generally, an amount that reflects an arm’s length price for these purposes will be accepted as meeting the fair market value test. However, these transactions are not subject to the requirement to prepare contemporaneous documentation or the transfer pricing penalties.

    Closure tax credit

    The Act provides for a tax credit of 5% of “eligible expenditures”, up to a maximum of the tax paid at the 3.5% (or 5%) rate by the taxpayer in respect of the LNG facility, which may be claimed in the taxpayer’s last taxation year. The last taxation year for this purpose is the taxation year in which the later of the following dates occurs: (a) the date that a certificate of restoration is issued under section 41 of the Oil and Gas Activities Act (B.C.) in respect of the LNG facility (if applicable), and (b) the date that a prescribed document is issued in relation to an obligation imposed under another Act of the Legislature, or under an Act of the Parliament of Canada, in relation to the restoration, reclamation, or remediation of the LNG facility site.

    “Eligible expenditures” are defined as the total of all “eligible closure expenditures” in respect of the applicable LNG facility, where each such expenditure is:

    1. required to comply with an obligation that is imposed under an Act of the Legislature or of the Parliament of Canada, and in relation to the restoration, reclamation, or remediation of the LNG facility site (unless otherwise prescribed);
    2. required to comply with an obligation assumed under a written agreement between the taxpayer and the government of B.C., the government of Canada, a municipality in Canada, or a public body performing a function of government in Canada, and in relation to the restoration, reclamation, or remediation of the LNG facility site (unless otherwise prescribed); or
    3. within a class of expenditures prescribed for these purposes and is incurred in relation to the restoration, reclamation, or remediation of the LNG facility site,

    to the extent that the expenditure has not already been directly or indirectly taken into account in computing the taxpayer’s net income, net operating income or net operating loss for the taxpayer’s last taxation year or a previous taxation year in respect of the LNG source that includes the LNG facility.

    In addition, the expenditure must be incurred between the time when the taxpayer notifies the Oil and Gas Commission that it intends to permanently cease operations and the date the LNG facility closes.

    To claim the closure tax credit, the taxpayer must file an application within 18 months of its last taxation year.

    Natural gas corporate income tax credit

    As part of introducing comprehensive LNG income tax legislation, the B.C. government also announced a new natural gas tax credit that will be available to qualifying corporations - namely, corporations that are taxpayers under the Act and have a permanent establishment in B.C. - in order to offset regular corporate income taxes arising under the Income Tax Act (B.C.). The credit is intended to incentivize corporations to maintain a permanent establishment in B.C. with a view to attracting new corporate income tax revenue to B.C.

    A qualifying corporation’s annual natural gas tax credit for a taxation year that begins on or after January 1, 2017 will be 0.5% of the corporation’s eligible cost of natural gas for the taxation year, which is the total cost, as determined under the Act, of all natural gas acquired or notionally acquired in the taxation year by the corporation at the LNG facility inlet meters for an LNG facility (or the portion thereof allocated to the corporation if it is a member of a partnership operating the facility).

    The credits can only be used to the extent the corporation has income tax payable after applying all other B.C. income tax credits, and only insofar as they reduce the taxpayer’s B.C. corporate income tax to an amount equivalent to the amount that would be payable if the B.C. general corporate income tax rate were 8%. As the current general corporate income tax rate is 11%, the credits therefore allow for a maximum rate reduction of 3%.


    [1] Available at: http://www.canadianenergylawblog.com/2014/10/21/british-columbia-government-tables-lng-tax-legislation/

    [2] Available at: http://www.canadianenergylawblog.com/

    [3]liquefied natural gas” means natural gas from which natural gas liquids have been predominantly removed and that is liquefied.

    [4]natural gas liquids” means butane, ethane, propane or pentanes plus and any other condensates, or any combination of them, whether in gaseous or liquid form.

    [5]natural gas” means all fluid hydrocarbons, before and after processing, including hydrogen sulphide, carbon dioxide and helium produced from a well, but excluding petroleum (meaning, crude petroleum and all other hydrocarbons, regardless of gravity, that are or can be recovered in liquid form from a pool through a well by ordinary production methods or that are or can be recovered from oil sand or oil shale) and excluding liquefied natural gas (as defined in Footnote 3).

    [6] Note that a facility that is an LNG facility will continue to be an LNG facility until the closure date for the LNG facility.

    [7]improvements” includes a building, a structure, and any other thing that is affixed to, or installed in, a building, a structure, or land so that it ceases to be personal property at common law.

    [8]feedstock spur pipeline” means a natural gas pipeline that delivers natural gas from a feedstock pipeline to this series of systems.

    feedstock pipeline” means that portion of a natural gas pipeline from and including the feedstock pipeline inlet on the natural gas pipeline to the feedstock spur pipeline connected to that natural gas pipeline.

    feedstock pipeline inlet” means a meter station that is (a) located in B.C. on a natural gas pipeline, and (b) designated by regulation in respect of an LNG facility.

    [9] Note that non-arm’s length purchases and sales after the natural gas has passed through the inlet will be subject to the transfer pricing rules described below.

    [10] Such contemporaneous documentation must comply with section 81 of the Act, and must generally described all of the following: (i) the property or services to which the transaction relates; (ii) the terms and conditions of the transaction and their relationship, if any, to the terms and conditions of each other transaction entered into between the participants in the transaction; (iii) the identity of the participants in the transaction and the participants’ relationship to each other at the time the transaction was entered into; (iv) the functions performed, the property used or contributed and the risks assumed, in respect of the transaction, by the participants in the transaction; (v) the data and methods considered and the analysis performed to determine the transfer prices or the allocations of profits or losses or contributions to costs in respect of the transaction; and (vi) the assumptions, strategies and policies, if any, that influenced the determination of the transfer prices or the allocations of profits or losses or contributions to costs in respect of the transaction.