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.
| |
DATE: July 17, 1991 |
| TO: |
FROM: |
| Head Office |
Head Office |
| Non-Resident Taxation Division |
Financial Industries Division |
| Source Deductions Programs |
|
| Section |
M.M. Trotier |
| |
957-8953 |
| Attention: Jean-Pierre Laroche FILE 911008SUBJECT: 24(1) |
This is in reply to your letter of April 10, 1991 concerning the review by the Non-Resident Unit in the Vancouver District Office of the 24(1) and the potential recovery of underdeducted non-resident tax.
Where a non-resident reinsurer holds assets such as treasury bills directly any interest received on these treasury bills by the non-resident reinsurer would be exempt from Part XIII withholding tax pursuant to subclause 212(1)(b)(iii)(C)(I) of the Income Tax Act (the "Act"). However, where a non-resident reinsurer is the beneficiary of an actual trust which earns income from treasury bills any amount paid or credited to the non-resident could be subject to Part XIII withholding tax pursuant to paragraph 212(1)(c) and subsection 212(11) of the Act since the income would be treated as trust income. Any exemption otherwise available to the non-resident reinsurer under paragraph 212(1)(b) with respect to the direct receipt of interest would not be available since the income has not retained its identity.
In the specific situations referred to above it is our understanding that the 24(1)…
The intentions of the parties involved in these arrangements is relevant to the determination of whether a trust exists and whether that trust is a "bare trust".
The Department's current position with respect to bare trusts is that the settlor should be considered the owner of the property. In such cases the withholding requirements for purposes of Part XIII of the Act would be determined with respect to the nature of the investments and income made and received by the trustee on the non-resident's behalf.
[23]
We trust the above will be of assistance. Should you wish to, pursue this matter further do not hesitate to contact us with your concerns or arguments.
F. Lee WorkmanChiefFinancial Institutions SectionFinancial Industries DivisionRulings Directorate
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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