Principal Issues: 1. What are the general requirements to obtain a refund of Part XIII tax under subsection 227(6)?
2. What is the recourse available to a non-resident of Canada (resident of Barbados) when the period to apply to request a refund of Part XIII tax under subsection 227(6) has ended?
Position: 1. Generally, a request for a refund of overpaid Part XIII tax is made by sending a completed Form NR7-R, Application for Refund of Part XIII Tax Withheld, to the CRA. Regardless of the form of the written request, subsection 227(6) specifies that the application for a refund must be made by the taxpayer “no later than 2 years after the end of the calendar year in which the amount was paid…”
2. In our view, there is no relief available to the non-resident in the proposed situation.
Reasons: An assessment under subsection 227(7) cannot be made when the two-year limitation period in subsection 227(6) has not been met. An assessment under subsection 227(10.1) is not required because there is no balance owing, or collectible amount outstanding, with respect to the non-resident’s Part XIII tax liability.
In addition, there is no relief available to a taxpayer under the Canada-Barbados Tax Convention to override the two-year limitation period required by subsection 227(6).
Re-appropriation under section 221.2 is not available to the non-resident, mainly because this would override Parliament's intention to limit the access to the excess amount of Part XIII tax to two years.
In addition, as the tax was paid by the payor on behalf of the non-resident, only the non-resident has the right to receive the excess amount of remitted Part XIII tax. The fact that the non-resident did not file a refund request in a timely manner does not provide the payor with the right to any excessive Part XIII remittance.
