1996 Corporate Management Tax Conference Round Table, Q. 8

Where s. 212(13.2) applies to deem a U.S. corporation to be a person resident in Canada for Part XIII purposes, interest paid by it will represent "interest payable by a corporation resident in Canada" for purposes of s. 212(1)(b)(vii).

Where s. 250(5) deems a U.S.-incorporated subsidiary whose central management and control is in Canada, to be resident in the U.S., the subsidiary will be considered a "non-resident person" for purposes of applying s. 212(13.2). Therefore, if its operations are carried on solely in Canada, interest payments made by it to a non-resident of Canada will be subject to Part XIII tax (unless an exemption, such as under s. 212(1)(b)(vii)) is available.