CRA indicates that the two-year s. 227(6) time limit for requesting a Part XIII tax refund applies to a request based on a Treaty “as if resident” clause that is silent on the timing point

As an example of an “as if resident” (“AIR”) clause, the Directorate referred to Art. 18(2) of the Canada-Italy Treaty which relevantly indicated that the tax which Canada could impose on a periodic pension arising in Canada does not exceed the lesser of (a) 15% of the excess of the annual pension amount over Cdn.$12,000, and (b) the amount of Canadian tax the recipient would have been required to pay on the annual pension amount had the recipient been resident in Canada. CRA indicated that, by virtue of s. 227(6), a taxpayer request for an assessment of tax under this Treaty provision must be made no later than two years after the end of the calendar year in which the pension amounts were paid, stating:

Generally, domestic law must be applied first and treaty provisions may override those provisions. Since subsection 227(6) of the Act is Canadian domestic law, it is applied first, restricting the timeframe for claiming a refund of excess Part XII.5 or Part XIII tax paid to two years from the end of the taxation year in which the income is received. …Article 18, paragraph 2 … does not provide a specific timeline for making such a request. Further, the Canada-Italy Treaty does not have any other provisions extending the timeframe to a request a refund of tax in respect of taxation that is not in accordance with the provisions of the Canada-Italy Treaty … . Other treaties would need to be reviewed on a case-by-case basis to determine if any of the provisions therein affect the application of subsection 227(6) [citing 9402551].

Neal Armstrong. Summary of 20 June 2023 Internal T.I. 2021-0904981I7 under s. 227(6).