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 ISSUE:
The Department’s position concerning events of default for the withholding tax exemption under 212(1)(b)(vii).
Position TAKEN:
State the position in the 1996 Conference Report and the Technical News No. 9.
REASON FOR POSITION TAKEN:
N/A
XXXXXXXXXX 5-983055
A. St-Amour, CA
Attention: XXXXXXXXXX
March 24, 1999
Re: 212(1)(b)(vii) of the Income Tax Act (the “Act”)
This is in reply to your letter of November 18, 1998, requesting a clarification of some comments stated at the 1997 International Tax Seminar. We apologize for the delay in replying.
It is our understanding that the questions and answers at that conference where expedited because of time constraints. For further detail of the Department’s position on this matter, please refer to our comments stated at the 1996 Conference of the CTF and in the Income Tax Technical News No. 9.
We are not prepared to accept the situation that you described in the last paragraph of your letter. Such an interpretation would contravene subparagraph 212(1)(b)(vii) which requires that “the corporation may not under any circumstances be obliged to pay more than 25%...except in the event of default. In your example, the payment would be before the default.
As indicated in paragraph 22 of Information Circular 70-6R3 dated December 30, 1996, the above comments do not constitute an advance income tax ruling and are not binding on the Department. We trust the above comments will be of assistance to you. If you have any other questions, do not hesitate to contact us.
Yours truly,
for Director
Financial Industries Division
Income Tax Ruling and
Interpretation Directorate
Policy and Legislation Branch
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