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.
APR 28 1986
K.B. Harding
XXXX This is in reply to your letter of January 20, 1986, concerning withholding tax applicable on dividend and interest payments from stock or debt held in Australia for the benefit of pension funds resident in Canada.
Your letter indicates that the Australians are presently withholding tax on dividend and interest payments at 15 per cent, and you believe that your clients may be entitled to an exemption from tax on such income.
We have reviewed the Canada-Australia Income Tax Convention, and it is our view the Australian payers are withholding the appropriate rate of tax on dividend and interest based on the information submitted. The Canada-Australian Income Tax Convention does not provide an exemption for dividends and interest received by pension fund trusts similar to Article XXI of the Canada-United States Income Tax Convention.
In the reverse situation, where an Australian pension fund receives interest or dividend payments from its Canadian investments, Canada will withhold tax at 15 per cent on such payments. Exceptions to this general rule are those set out in paragraph 212(l)(b) of the Canadian Income Tax Act. It should be noted that subparagraph 212(1)(b)(iv) of the Act requires a certificate of exemption which is provided for in subsection 212(14) of that Act.
You may wish to review the Australian Income Tax Act or contact the Australian authorities to determine whether they have exceptions to the general rule set out in the Canada-Australia Income Tax Convention.
We hope that this is satisfactory for your purposes.
Yours sincerely,
Director Provincial and International Relations Division KBH/jb
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© Her Majesty the Queen in Right of Canada, 1986
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© Sa Majesté la Reine du Chef du Canada, 1986
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