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.
Dear Sirs:
Re: Section 80.4 and Paragraph 214(3)(a) of the Income Tax Act
This is in reply to your letter dated April 3, 1990 whereby you requested our opinion as to the application of the above-noted provisions of the Income Tax Act to a loan by non-resident corporation to a non-resident individual in a hypothetical case where one or another of the non-resident parties is subject to Canadian tax on other unrelated items of income or otherwise has some significant (although unrelated) nexus with the Canadian jurisdiction.
In our opinion, non-residents are subject to tax under the Income Tax Act only in respect of income from a source in Canada. The determination of the situs of the source of any particular item of income is essentially a question of fact.
We anticipate that it is unlikely that any shareholder benefit associated with a loan from a non-resident corporation to a non-resident individual that is not related to any other item of income that has a source in Canada or to any connection that either of the parties has in Canada would have a source in Canada.
The opinions expressed herein are not advance income tax rulings and, in accordance with paragraph 24 of Information Circular 70-6R dated December 18, 1978, are not considered binding on the Department.
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© Her Majesty the Queen in Right of Canada, 1990
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© Sa Majesté la Reine du Chef du Canada, 1990
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