Under the Convention between Canada and Switzerland for the Avoidance of Double Taxation with Respect to Taxes on Income and on Capital (the "Convention"), competent authorities from both countries have concluded an agreement to allow Canadian collective investment vehicles (Vehicles such as a Mutual Fund Trust, a Mutual Fund Corporation, a Pooled Fund Trust or a Master Trust) to benefit from a refund of Swiss withholding tax on a pro rata basis of investors resident in Canada.

Opinions differ on how tax conventions apply to collective investment vehicles. According to Canada, Canadian collective investment vehicles should be direct recipients of the benefits of a tax convention. However, countries such as Switzerland prefer to allocate these benefits to persons who invest in collective investment vehicles rather than the entity itself.

Under the agreement concluded between Canada and Switzerland, Switzerland is prepared to grant Canadian collective investment vehicles the reduced withholding tax rate stipulated in the Convention, in proportion to the investors resident in Canada. The initial withholding tax rate is as stipulated in domestic Swiss law but, at the end of the Canadian collective investment vehicle's fiscal year, the collective investment vehicle will notify Swiss tax authorities of the number of investors residing in Canada in order to be refunded accordingly. This refund can be claimed by annually filing a single request using the new Form 96a. The refund will be granted in proportion to the percentage of investors residing in Canada.

This agreement does not affect Canadian pension funds that directly receive dividends and interest from Swiss sources; they can continue, as they have in the past, to claim the refund with Form 96.

The new Form 96a for collective investment vehicles can be downloaded or ordered electronically from the Internet site of the Swiss Federal Tax Administration.

As a result of this agreement, the Canada Revenue Agency can now confirm that collective investment vehicles are eligible for the reduced withholding tax rate under the Convention.

The Canadian collective investment vehicles must present the completed form to their regional tax services office in order to have it certified by the Canadian tax authorities.