CRA finds that a late-filed s. 216 nil return does not eliminate interest on the retroactively eliminated Part XIII withholding

Where a Canadian agent of a non-resident owner is assessed for failing to withhold and remit Part XIII tax on rental collections paid to the non-resident, a s. 216(4) undertaking is filed within six months of the applicable year end and a s. 216 return (showing nil tax payable) is filed on a timely basis, CRA considers, following Pechet, that the obligation to withhold and remit is not extinguished retroactively, so that the interest on the unpaid remittance obligation which accrued up to filing the return is not eliminated.

Neal Armstrong.  Summary of 7 February 2014 Memo 2013-0506151I7 under s. 227(8.3).