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.
Dear Sirs:
Re: Canadian Withholding Tax
This is in reply to your letter dated February 15, 1988 in which you requested an interpretation concerning Canadian withholding taxes.
Your letter describes the situation as follows:
XXX
You have requested an interpretation on whether the fees paid by XXX to XXX constitute payments described in paragraph 212(1)(d) of the Canadian Income Tax Act (the "Act"). Further, you are concerned that if the payments are subject to Canadian withholding tax, the result is double taxation because the arrangement between XXX and XXX results in no net income subject to tax in the United Kingdom for XXX against which a foreign tax credit could be applied.
It is our position that paints for the use of computer software fall within the provisions of paragraph 212(1)(d) of the Act. Whether the payments are made to XXX or XXX does not change the nature or the purpose of the payments. Accordingly, XXX is required to withhold tax at a rate of 10% from the payments as specified by Article XII of the Canada-U.K. Tax Convention (1978).
In response to your concern about the possibility of double taxation, we agree that this may result. Since one of the purposes of most tax treaties is the elimination of double taxation it would appear that XXX should be entitled to some form of relief. However, since XXX is a resident of the United Kingdom it would be necessary for the company to seek relief from that country.
We trust that our comments will be of assistance to you.
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© Her Majesty the Queen in Right of Canada, 1988
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© Sa Majesté la Reine du Chef du Canada, 1988
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