19 September 2000 Internal T.I. 2000-0022277 - NON-RESIDENT RCA WITHHOLDING TAXES

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Will paragraph 212(13)(c) apply to an RCA when non-resident distributes amounts to a non-resident beneficiary?

Position: Yes.

Reasons: Non-resident payer is deemed to be resident in Canada and is required to withhold on its payments.

		September 19, 2000

	INTERNATIONAL TSO	HEADQUARTERS
	Nathalie Thibault	M.P. Sarazin
	Technical Advisor	824-5441

2000-002227

Paragraph 212(13)(c) of the Income Tax Act

We are writing in response to your letter of April 20, 2000, requesting our views regarding the application of paragraph 212(13)(c) of the Income Tax Act (the "Act").

You have a client that has asked for an example of when paragraph 212(13)(c) would be applied by the Canada Customs and Revenue Agency. In addition, the client has asked if contributions to the retirement compensation arrangement ("RCA") have to be made while the beneficiary is a resident of Canada.

Comments

For purposes of the Act, pension payments paid by a non-resident to a non-resident beneficiary from an RCA would be subject to withholding tax pursuant to paragraphs 212(1)(j) and 212(13)(c) of the Act. Should your client have a specific proposed transaction in mind, we would be pleased, in consultation with your directorate, to provide our views of the application of these provisions in the context of an advance income tax ruling request. If your client is dealing with a completed transaction, you may refer the file to us for our advice and we will provide our interpretation to you.

We note that Parts I and XIII of the Act do not distinguish between contributions made to the RCA while the beneficiary was a resident or a non-resident of Canada. The determination of whether a particular income tax convention would affect the application of the above provisions of the Act can only be determined on a case by case basis where all of the facts are known.

For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the Canada Customs and Revenue Agency's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version, or they may request a copy severed using the Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Mrs. Jackie Page at (613) 994-2898. A copy will be sent to you for delivery to the client.

Patricia Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate