Determine whether the investee is a foreign affiliate.

Canvest is a resident Canadian corporation that has three investments in the shares of non-resident corporations. For each of the investments in non-resident corporations described below, determine whether the investee is a foreign affiliate.

Forco 1 Canvest owns 3 percent of Forco 1. A wholly owned Canadian subsidiary of Canvest owns 8 percent of Forco 1. Forco 2 Canvest owns 9 percent of Forco 2. Canvest is not related to any of the other shareholders of Forco 2. Forco 3 Canvest owns 5 percent of Forco 3. The spouse of the shareholder who has a controlling interest in Canvest owns the other 95 percent of the shares of Forco 3.

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