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21 May 2018- 10:53pm CRA indicates that a non-resident who incorrectly claimed a no-PE Treaty exemption is exposed to the usual penalties Email this Content CRA indicated that it will not provide any special safe harbour for a non-resident corporation that did not make any T2 filings (other than a Treaty-based claim for exemption in an attached Sched. 91) or prepared contemporaneous documentation under s. 247(4) where it had reasonably (but, in CRA’s view, incorrectly) considered that it did not have a Canadian permanent establishment for its business. ...

., ensuring compliance with ITA requirements including monitoring for non-qualified investments and ensuring that all transactions occurred at fair market value), it follows that such trusts will have their central management and control in Canada, so that they “will always be considered resident in Canada.” ...

However, CRA considered that s. 232 was not available where the supplier, in addition to refunding the purchase price for the returned goods, also covers the incremental freight costs of the customer. ...

However, in circumstances where the debtor actually used the borrowed funds in its active business in the country of its residence, she considered the finding of the Tribunals below that the source was in that country should not be interfered with. ...

The Rulings Directorate indicated that this transaction likely entailed a novation of the loan, and that Part XIII tax thereby applied under s. 212(1)(b) and s. 212(13.1)(a) at that time on the amount of the accrued interest on the basis that: [A]t the time of this novation, the Partnership would be considered to have made a payment or credit in kind of the Accrued Interest to the Creditor Affiliate by delivering the Debtor Affiliate’s covenant to make the payments under the Loan agreement to the Creditor Affiliate. ...

Factors considered before making such a request include the existence of large unexplained tax reserves. ...

CRA ruled that the FCP including the constituent sub-funds would be treated as fiscally transparent for purposes of the Act so that, for example, dividends or interest paid by a particular Canadian investment in a sub-fund would be considered an amount paid directly to the unitholder “in proportion to its co-ownership interest in the assets and Gross Income of the particular Sub-Fund.” ...

The taxpayer’s list of uncertain tax positions that relates to the tax reserves in the taxpayer’s financial statements is considered to be part of the taxpayer’s books and records and is not a privileged document unless otherwise demonstrated. ...

Its reasoning suggested that it considered the “on” test to be satisfied by virtue of the fact that “ACo acquired the shares of FA2 and FA3 as part of the process of liquidating and dissolving FA1, which included ACo disposing of its shares of FA1.” ...

CRA responded that it: may be willing to accept that the transfer of property between non-arm’s length parties for the nominal amount of $1 could be considered a gift. ...