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.
This is in reply to your letter of October 30, 1980 requesting our opinion dealing with withholding tax on payments by a partnership to non-residents of Canada in the following example.
A partnership is constituted under the laws of Canada with all the partners being Canadian residents. The partnership earns income from U.S. sources. In the course of earning such income, the partnership borrows money from a non-Canadian lender, and pays interest on such borrowings. The interest will be deductible in computing the partnership's income under Part I of the Act against the income earned in the U.S.
It is our opinion that since the interst expense would be deductible in computing income from a source that is not in Canada, the partnership is not deemed to be a person resident in Canada pursuant to paragraph 212(13.1)(a) of the Act. The partnership is therefore not required to withhold tax under paragraph 212(1)(b) of the Act.
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© Her Majesty the Queen in Right of Canada, 1980
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© Sa Majesté la Reine du Chef du Canada, 1980
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