CRA indicates that there is no need to assess a CRIC whose s. 212.3(7)(d) liability for failure to use its cross-border PUC has been eliminated through a late s. 212.3(7)(d)(i) filing

A corporation resident in Canada (the “CRIC”) was able to offset a dividend deemed to be paid by s. 212.3(2)(a) to its non-resident parent against the paid-up capital of CRIC shares held by its parent -but the form required by s. 212.3(7)(d)(i) to report such offset was not submitted by the CRIC’s filing due date for that year. As a result, s. 212.3(7)(d)(ii) automatically deemed a dividend (the “Reduction Dividend”) to have been paid to the CRIC's non-resident parent on that filing due date, so that on that date, the CRIC was liable under s. 215(1) to pay the Part XIII tax on the Reduction Dividend.

However, the CRIC then late-filed the form. Consequently, s. 227(6.2)(c) deemed the Part XIII tax liability with respect to the Reduction Dividend to have been paid on that late-filing date, thereby eliminating the s. 215(1) remittance obligation.

Regarding whether CRA could or should assess the CRIC under s. 227(10), it indicated that the "amount payable" in s. 227(10) (or under s. 227(10.1)(c)) in respect of any assessment of the non-resident parent) referred not to the unpaid balance, but to the amount of the liability before any payment thereof. Accordingly, the deemed payment under s. 227(6.2)(c) did not eliminate Part XIII tax liability but rather caused that Part XIII tax liability to be settled.

On this basis, the Minister had the discretion to make an assessment at any time under s. 227(10) (or (10.1)) but was not required to do so. Thus, as the Part XIII tax liability had been settled, there was no need to inform the CRIC or the non-resident person of the amount of the liability through an assessment.

Neal Armstrong. Summaries of 4 June 2025 External T.I. 2024-1039701E5 under s. 212.3(7)(d) and s. 227(8.3)(b).