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.
JUN 21 1988
Specialty Rulings Directorate O.S. Laurikainen 957-2125
SUBJECT: Article XI Canada-U.S. Income Tax Convention (1980) (the "Convention") Guarantee Fees
This is in response to your memorandum of March 24, 1988 wherein you have requested our opinion whether guarantee fees are considered interest for the purposes of Article XI, paragraph 4 of the Convention.
The above paragraph includes in the definition of interest, "income assimilated to income from money lent by the taxation laws of the Contracting state in which the income arises". Accordingly, since paragraph 214(15)(a) of the Canadian Income Tax Act (the "Act") deems guarantee fees paid to a non-resident to be interest for the purposes of Part XIII of the Act, it is our view that they also constitute interest for the purposes of the Convention.
We trust that this is the information you have requested.
for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1988
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© Sa Majesté la Reine du Chef du Canada, 1988
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