CRA states that a non-resident lender consent fee is not an administration fee and treats non-resident dealer board attendance as services rendered in Canada

Canco paid “consent fees” (calculated as a percentage of the amount owing) in order to obtain the consent of arm’s length non-resident lenders to a sale of its shares to a non-resident purchaser. Before finding that the fees were not subject to Part XIII tax as a management or “administration” fee or charge, or on any other ground, the Directorate noted that at the time of the original introduction of s. 212(1)(a), the Minister of Finance had stated (even before getting to the exclusions in s. 212(4)) that “a management or administration fee or charge is to be regarded as an amount paid for advice or direction pertaining to the operation or administration of a company, not including an amount paid for services to an independent firm.”

Canco had also paid fees of a non-resident dealer for assistance in structuring the transaction, finding purchasers, evaluating their offers and coordinating due diligence. Regarding Reg. 105 withholding, CRA stated that “it would appear that at least some of the services, particularly meeting with the Board of Directors would be provided in Canada,” and referred to its comment in IC 75-6R2, para. 32 that “The portions allocated to the services to be performed inside and outside Canada must be clearly expressed either within the contract or through the related information and documents.”

Neal Armstrong. Summaries of 30 March 2017 Internal T.I. 2016-0636721I7 under s. 212(1)(a) and Reg. 105.