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.
XXX
This is in reply to your Round Trip Memorandum ("RTM") of April 16, 1986 concerning a request by the above noted charity for a refund of tax withheld pursuant to Part XIII. According to the information provided with your RTM, XXX. The accountants acknowledge that there is no specific article in the Canada-U.K. Convention which refers to an exemption for U.K. charities from Canadian withholding tax in respect of dividends. They do, however, refer to paragraph i of Article 10 of the Convention and infer that in some way it exempts withholding on dividends paid to U.K. charities.
Our Comments
Dividends paid to a U.K. charity are not exempt from Canadian withholding tax. However, paragraph 1 of Article 10 of the Convention does reduce the rate of withholding from 25% to 15%. As the XXX has deducted withholding at the reduced rate no refund is exigible.
It is possible that the XXX accountants may be looking for the refund by virtue of a Certificate of Exemption referred to if subsection 212(14) of the Income Tax Act. However, these certificates, issued by our Registration Division, 400 Cumberland Place, are only in respect of interest, as stated in subparagraph 212(1)(b)(iv) of the Act. Perhaps it should be pointed out to the U.K. accountants that a Certificate of Exemption referred to in subsection 212(14) cannot be issued with respect to dividends.
We trust our comments will prove helpful.
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© Her Majesty the Queen in Right of Canada, 1986
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© Sa Majesté la Reine du Chef du Canada, 1986
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