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.
T. Harris
(613) 995-1723
XXXX
November 16, 1983
Dear Sirs:
Re: Section 219 Branch Tax
This is in response to your letter dated September 22, 1983 concerning the rate of Part XIV tax payable under subsection 2XXXX of the Income Tax Act (the "Act") by a corporation resident in the United States which has a permanent establishment in Canada.
Specifically, you are concerned that subsection 11(4) of the Income Tax Application Rules (ITAR) will not apply to reduce the rate of Part XIV tax payable by the United States corporation since Article XI of the Canada-U.S. Tax Convention (the "Convention") states that the rate of withholding taxes payable with respect to dividends will not exceed 157 if the United States corporation does not have a permanent establishment in Canada.
It is our view that the reference to the corporation not having a permanent establishment in Canada as contained in Article XI of the Convention is not relevant for the purpose of subsection 11(4) of the ITAR in computing the rate of tax payable under Part XIV of the Act. Consequently, pursuant to ITAR 11(4), the rate of Part XIV tax payable by residents of the United States is restricted to 15%.
Yours truly,
ORIGINAL SIGNÉ PAR R.D. WEIL
for Director Corporate Rulings Division Legislation Branch
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© Her Majesty the Queen in Right of Canada, 1983
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© Sa Majesté la Reine du Chef du Canada, 1983
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