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 Issues:
Whether the marketing fees in respect of crude oil would be exempt from the 25% withholding tax under subparagraph 212(1)(d)(iii) of the Act.
Position TAKEN:
The marketing fees would be exempt from the 25% withholding tax to the extent that such fees are made for services performed by the taxpayer in connection with the sale of crude oil or the negotiation of a contract for the taxpayer.
Reasons FOR POSITION TAKEN:
The term "property" is defined in subsection 248(1) of the Act as "property of any kind whatever whether real or personal or corporeal or incorporeal ...". It is our view that the crude oil in question would be considered as "property" for the purpose of the exemption provision under subparagraph 212(1)(d)(iii) of the Act.
March 2, 1995
Calgary Tax Services Office Resource Industries
B. Rooke Section
A/Assistant Director of Audit Peter Lee
(613) 957-8977
Attention: Susan Clozza
International Audit
943366
XXXXXXXXXX
Further to our recent telephone conversation (Lee/Clozza), this is in reply to your memorandum of December 15, 1994 and to confirm that we are not able to comment on the reasonableness of the marketing fees paid by XXXXXXXXXX and on whether such fees were made exclusively for services performed in connection with the sale of crude oil and the negotiation of crude oil sales contracts. Such a determination could only be made after all the relevant facts are considered and we do not have all the relevant facts at this time.
You also requested our comments on whether the marketing fees would be subject to the 25% withholding tax pursuant to subparagraph 212(1)(d)(iii) of the Act. The term "property" is defined in subsection 248(1) of the Act as "property of any kind whatever whether real or personal or corporeal or incorporeal ...". It is our view that the crude oil in question would be considered as "property" for the purpose of the exemption provision under subparagraph 212(1)(d)(iii) of the Act. Accordingly, it is our view that the marketing fees would be exempt from the 25% withholding tax under subparagraph 212(1)(d)(iii) of the Act to the extent that such fees are made for services performed by XXXXXXXXXX in connection with the sale of crude oil or the negotiation of a contract for XXXXXXXXXX.
We hope that our comments are helpful to you in resolving the matter. If you have any queries in respect of this matter, please contact the writer.
for Director
Manufacturing Industries,
Partnerships and Trusts Division
Rulings Directorate
Policy and Legislation Branch
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