Deemed-resident trusts are exempt from Part XIII tax but subject to Part XIII withholding

Although s. 94(3)(a)(viii) deems various non-resident trusts to be resident in Canada for purposes of determining their liability for Part I and XIII tax (i.e., so that they are not subject to Part XIII tax), s. 94(4)(c) provides that they continue to be non-resident for s. 215 purposes so that, for example, a deemed dividend received by such a trust from a Canadian corporation would be subject to Part XIII withholding. The trust should treat such withholding as a payment on account of its Part I tax liability.

Neal Armstrong. Summaries of 25 July 2014 Memo 2013-0513641I7 under s. 94(3)(g) and s. 104(7.01).