Paragraph 212(1)(a) - Management fee
Cases
Peter Cundill & Associates Ltd. v. The Queen, 91 DTC 5085, [1991] 1 CTC 197 (FCTD), aff'd 91 DTC 5543 (FCA)
The taxpayer, which was the portfolio manager of the Cundill Value Fund and the Cundill Security Fund (the "Funds"), contracted with a Bermuda...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | dependency on name fund manager and 50% owner | 184 |
| Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. | 15 | |
| Tax Topics - Statutory Interpretation - Noscitur a Sociis | 74 |
Administrative Policy
IT-468R "Management or Administration Fees Paid to Non-residents" (Archived) 29 December 1999
5. ...[T]he term "management or administration" generally includes the functions of planning, direction, control, co-ordination, systems or other...
Paragraph 212(1)(b) - Interest
Cases
The Queen v. Immobiliare Canada Ltd., 77 DTC 5332, [1977] CTC 481 (FCTD)
A Canadian subsidiary ("Place Victoria") of a non-resident corporation ("SGI") decided with the consent of SGI to postpone the payment of interest...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) | sale of bond with accrued interest did not satisfy interest | 178 |
| Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) | elimination of Part XIII tax was a s. 246(1) benefit | 91 |
| Tax Topics - Income Tax Act - Section 76 | 105 |
See Also
Kinguk Trawl Inc. v. The Queen, 2002 DTC 1399 (TCC), rev'd 2003 DTC, 2003 FCA 85
When the Minister assessed the taxpayer for failure to withhold on interest credited by it on amounts owing by it to a non-resident group which...
Wenger's Ltd. v. MNR, 92 DTC 2132, [1992] 2 CTC 2479 (TCC)
At the time of paying its Russian suppliers at a fixed interval of time after taking delivery of goods from them, the taxpayer paid them a...
Havlik Enterprises Ltd. v. MNR, 89 DTC 159, [1989] 1 CTC 2262 (TCC)
Sales contracts which the Canadian taxpayer ("Havlik") entered into with a Chinese supplier required Havlik to obtain irrevocable letters of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 215 - Subsection 215(2) | meaning of "or otherwise" | 67 |
| Tax Topics - Income Tax Act - Section 215 - Subsection 215(6) | 113 |
Inland Revenue Commissioners v. Oswald, [1945] A.C. 360, 26 TC 435
A mortgage provided that interest in arrears might at the option of the mortgagee be capitalized. The capitalization of interest by the mortgagee...
Holder v. C.I.R., [1932] A.C. 624 (HL)
The taxpayer and others guaranteed all amounts owing by a company to a bank, subject to an upper limit. When the company became insolvent, amounts...
Administrative Policy
2020 Ruling 2020-0854741R3 - Subordinated Notes without Maturity
Note terms
In order to obtain “undated” capital that will be used by it inter alia to make distributions to its shareholders, Aco, a resident...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | note interest that could be cancelled in issuer's discretion stated to be non-deductible | 188 |
2019 Ruling 2018-0776381R3 - Part XIII tax under a reverse repo agreement
ACo will enter into “reverse repo” transactions with BCo (a sister corporation) under which: at the outset, ACo will pay an amount equalling...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 260 - Subsection 260(2) | reverse repo not recharacterized as securities loan | 116 |
15 September 2020 IFA Roundtable Q. 2, 2020-0852741C6 - IFA 2020 - Q2 - WHT on mismatched swap payments
A Canadian resident taxpayer (Canco) enters into a swap agreement with a non-arm’s length non-resident company (NRco). Payments under the swap...
2018 Ruling 2017-0732001R3 - XXXXXXXXXX
Proposed transactions
ACo will issue unsecured subordinated Notes in one or more public offerings for an amount equalling or approximating their...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | interest which the issuer can elect not to pay was treated as non-deductible | 186 |
2017 Ruling 2016-0649061R3 - Part XIII tax on payments on Notes
Proposed transactions
ACo will issue unsecured subordinated Notes in one or more public offerings at no more than a shallow discount. The interest...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) | a perpetual note whose interest payments were optional had non-deductible interest | 218 |
13 July 2018 Internal T.I. 2017-0713301I7 - Assumption of accrued interest
The Partnership, a general partnership governed by the laws of a U.S. state that was a Canadian partnership under s. 102 as its partners were...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(13.1) - Paragraph 212(13.1)(a) | withholding when debt of Canadian partnership assumed by sub | 171 |
2014 Ruling 2014-0539791R3 - Paragraph 212(1)(b)
underline;">: Background. The (Canadian-resident) Trust was formed to provide credit protection to the (non-resident unrelated) Bank by entering...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Participating debt interest | interest paid on limited recourse debt to the extent of available debtor assets was not participating debt interest | 248 |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | creditors' approval of CCAA plan of compromise for the debtor trust did not cause them to not deal at arm's length with trust | 204 |
16 April 2014 External T.I. 2014-0525071E5 - Part XIII tax on interest payments
Given that a nephew and his uncles were not related, interest on a notes issued by the nephew's corporation to acquire another corporation from...
21 July 2009 Internal T.I. 2009-0322591I7 F - Déduction des intérêts
The taxpayer purchased assets from the vendor (apparently, a non-resident) in consideration for shares of the taxpayer and interest-bearing debt,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | replacement of note and capitalized interest by new note with increased amount did not constitute payment by novation of the old debt | 193 |
| Tax Topics - General Concepts - Payment & Receipt | replacement of note with capitalized note with note for full amount did not constitute payment by novation | 119 |
23 January 2008 External T.I. 2007-0241391E5 - Withholding tax on payments made by a guarantor
Would "Part XIII withholding tax… apply to amounts of interest and/or principal payments made by a Canadian resident corporate guarantor to a...
8 March 2007 Internal T.I. 2006-0214291I7 - Part XIII withholding tax
"Where a loan agreement provides for a gross-up of the interest payments, our position is that paragraph 18(1)(t) of the Act does not apply to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 214 - Subsection 214(3) - Paragraph 214(3)(a) | ss. 56(2) and 214(3) inapplicable to a benefit conferred on a non-shareholder non-resident | 119 |
2006 Ruling 2006-0208001R3 - Post-amble to paragraph 212(1)(b)
Where holders of notes receive at maturity a return linked to the performance of three mutual funds, the post-amble under s. 212(1)(b) will not...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Participating debt interest | participation based on mutual funds unrelated to issuer | 60 |
2005 Ruling 2005-0161521R3 - Postamble of 212(1)(b)
An interest rate under a term facility intended to qualify for the exemption under s. 212(1)(b)(vii) was equal to LIBOR plus a spread which...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii) | 99 | |
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Participating debt interest | variable interest tracked creditworthiness, not profitability | 99 |
7 May 2004 IFA Roundtable Q. 1, 2004-0072131C6 - IFA Round Table 2004 Q.1 - 212(13.1)(a)
In the context of a "tower" structure, a partnership of which two taxable Canadian corporations are the partners borrows money from a U.S....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Treaties - Income Tax Conventions - Article 11 | 257 | |
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(13.1) - Paragraph 212(13.1)(a) | where s. 212(13.1)(a) does not apply, it may be possible to consider a Canadian partner to be an interest payer | 221 |
19 February 2003 Internal T.I. 2002-0125767 - STRONG CURRENCY BORROWINGS
Periodic swap payments made under a "plain vanilla swap" were not subject to Part XIII tax.
8 January 2003 External T.I. 2002-0173135 - INTEREST POSTAMBLE
"A loan agreement that contains a provision for increased payments to the lender that are based on the ratio of certain debt to EBITDA ... of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Participating debt interest | participating interest exclusion might apply where interest rate increased when high debt to EBITDA ratio | 141 |
9 October 2001 External T.I. 2001-0096655 - Interest Exemption From Part XIII
CCRA "would not generally consider interest that is computed by reference to a stock index as satisfying the exception conditions described in the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii) | 42 | |
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Participating debt interest | acceptable to link to stock index that is not selected based on inclusion of the issuer or corporations with siimilar business | 102 |
13 July 2001 Internal T.I. 2000-0051017 - STRONG CURRENCY BORROWINGS
Recharacterizing periodic swap payments as interest could not be supported given that the relationship between the parties was not that of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Swaps | 110 |
16 November 2000 External T.I. 2000-0050975 - WITHHOLDING TAX ON SWAP PAYMENTS
A payment made pursuant to "the risk mitigation provision" in a swap agreement would not be considered to be on account, in lieu of payment of, or...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Clause 212(1)(b)(i)(C) | 48 |
22 November 2000 External T.I. 2000-0046375 - WITHHOLDING TAX ON INDEX LINKED DEBT
The Agency would not generally consider the return computed by reference to a foreign stock index to be "computed by reference to revenue,...
| Other locations for this summary | |
|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Participating debt interest | exclusion not engaged where debt return is linked to foreign stock index |
16 May 2000 External T.I. 2000-0011015 - WITHHOLDING TAX ON INDEX-LINKED INTEREST
Before concluding that it generally would be acceptable for the interest rate on a debt instrument to vary in accordance with the value of a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Participating debt interest | link to FX fluctuation acceptable | 123 |
24 November 1995 External T.I. 9508605 - WITHHOLDING TAX ON PRESCRIBED DEBT OBLIGATIONS
Deemed interest on prescribed debt obligations is subject to withholding tax under s. 212(1)(b).
5 July 1994 Internal T.I. 9334557 F - Part XIII - Pooled Common Trust Funds
Canadian dividend or interest income paid to a pooled common trust fund in the U.S. will be treated for Part XIII purposes as being paid to a...
93 C.R. - Q. 31
The amount of withholding tax applicable to a $1,000 interest payment that then is increased in amount pursuant to a standard gross-up clause will...
IC-77-16R4 "Non-Resident Income Tax", 11 May 1992, para. 21
A payment by a guarantor resident in Canada to a non-resident on account of or in lieu of payment of, or in satisfaction of interest that was on...
28 March 1991 T.I. (Tax Window, No. 1, p. 19, ¶1173)
The Financial Industries Division has recommended that the assessing policy in IT-233R be applied for all purposes of the Act including Part XIII.
27 March 1990 T.I. AC74543 [guaranteed interest received as interest]
Liability for withholding under s. 212(1)(b) is determined from the perspective of the non-resident payee and not from that of the resident payor....
84 C.R. - Q. 60
No Part XIII tax is exigible on payments made by Canco on an interest coupon swap provided that the payments by Canco are made at the same time as...
Articles
Raj Juneja, "Taxation of equity derivatives", 2015 CTF Annual Conference paper
Implicit interest element where mismatched equity swap payments (p. 17:19-20)
[I]f the periodic payments under a TRS are not made by both parties...
Wilson, "Selected Canadian Withholding Tax Issues", 1996 Cross-Border Taxation Issues and Developments, International Fiscal Association, p. 233
Includes an extended discussion of the Canadian withholding tax treatment of guaranteed payments.
Subparagraph 212(1)(b)(i)
Administrative Policy
3 December 1992 T.I. 921655 (C.T.O. "Factoring Accounts Receivable Whether Sale or Loan"; Tax Window, No. 26, p. 5, ¶2315)
Canco "sells" its “eligible” trade accounts receivable to its U.S. wholly-owned subsidiary (USco) for their outstanding value, less an arm’s...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 16 - Subsection 16(1) | 53 |
Articles
John Tobin, "Infrastructure and P3 Projects", 2017 Conference Report (Canadian Tax Foundation), 10:1-31
S. 212(13.1)(c) precludes transparent treatment of controlling NR partnership
Subsection 18(7) does not apply for withholding tax purposes. If a...
Subparagraph 212(1)(b)(ii)
See Also
Munich Reinsurance Co. (Canada Branch) v. The Queen, 2000 DTC 2009 (TCC)
Refund interest earned by the taxpayer as a result of overpayments of tax would not have qualified for exemption under s. 212(1)(b)(ii)(c). Bowman...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 2 - Subsection 2(3) - Paragraph 2(3)(b) | 127 |
Moran v. Pappas (1997), 34 OR (3d) 251 (Ont. Ct. (G.D.))
A corporation that was responsible to the Ontario Minister of Agriculture and Food fell within the definition of a Crown agency in the Crown...
R. v. Eldorado Nuclear Ltd.; R. v. Uranium Canada Ltd. (1983), 4 DLR (4th) 193, [1983] 2 S.C.R. 551
Although Eldorado would not have been a Crown agent under the common law test of whether the alleged agent can assert independence by reason of...
Sydney Steel Corp v. A.L.E. & C. Ltd. (1983), 148 DLR (3d) 348 (N.S. C.A.)
Sydney Steel Corporation was not an agent of the Crown given that in controlling the day-to-day operations of its plant it was operating...
Re Canada Dairies Corp. Ltd. (1981), 131 DLR (3D) 605 (Ont. S.C.)
The Ontario Milk Marketing Board and the Milk Commission of Ontario were part of a direct legislative procedure to control the marketing of milk...
Re McGruer & Clark Ltd (1976), 13 OR (2d) 385 (S.C.O.)
The Ontario Development Corporation was a Crown agency within the meaning of s. 1 of the Crown Agency Act (Ontario) given that: the Crown owned...
R. v. Ontario Relations Board, Ex. P. Ontario Housing Corp. (1971), 19 DLR (3d) 47 (Ont HC)
The statutory restrictions and controls of the executive branch of the Ontario government over the Ontario Housing Corporation, which was a...
Administrative Policy
29 August 1995 External T.I. 9506325 - SIMILAR OBLIGATIONS AND 212(1)(B)(II)(C)(II)
Guaranteed investment certificates and term deposits would qualify as "similar obligations" for purposes of s. 212(1)(b)(ii)(C)(II), in that they...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(1) - Paragraph 4900(1)(c.1) | similar obligation must be in writing, containing an explicit promise by the issuer to reimburse an amount on a given day, and be of the same nature as the listed obligations | 169 |
91 C.R. - Q.40
Stripped Government of Canada bond interest coupons qualify for the exemption.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 146 - Subsection 146(1) - Qualified Investment | 14 |
14 January 1991 T.I. (Tax Window, Prelim. No. 3, p. 30, ¶1090)
Guaranteed investment certificates may constitute "similar obligations".
IT-155R3 "Exemption from Non-resident Tax on Interest Payable on Certain Bonds, Debentures, Notes, Hypothecs or Similar Obligations"
General discussion of s. 212(1)(b)(ii)(C) exemption for governmental obligations.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 164 - Subsection 164(3) | 13 | |
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii) | 40 |
Clause 212(1)(b)(i)(C)
Administrative Policy
16 November 2000 External T.I. 2000-0050975 - WITHHOLDING TAX ON SWAP PAYMENTS
Where payments made by a provincial government pursuant to a swap agreement were found to contain an element of interest, the Agency would...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(b) | 33 |
Clause 212(1)(b)(iii)(C)
Cases
Munich Reinsurance Co. v. The Queen, 96 DTC 6185, [1996] 2 CTC 5 (FCTD)
Interest earned by the taxpayer (a German corporation) on income tax instalments which it had overpaid did not qualify for exemption under s....
Clause 212(1)(b)(iii)(D)
Administrative Policy
2005 Ruling 2005-0139661R3 - Withholding Index-Linked Notes
A foreign-denominated index-linked note issued by a Canadian bank which did not provide for the return of the principal amount or any interest or...
87 C.R. - Q.1
An "amount deposited" is any unsecured debt of a prescribed financial institution which is reported to the applicable government authority as a...
IT-360R2 "Interest Payable in a Foreign Currency"
General discussion of the exemption in s. 212(1)(b)(iii)(D).
Articles
Wilkie, "Structuring International Debt Issues: A Canadian Perspective", Canadian Tax Journal, January/February 1987, p. 1
General discussion.
Clause 212(1)(b)(iii)(E)
Cases
Kinguk Trawl Inc. v. Canada, 2003 DTC 5168, 2003 FCA 85
The taxpayer (which was engaged in fishing for shrimp in Canadian waters) was found, based on the wording of an agreement between it and a...
Cutlers Guild Ltd. v. The Queen, 81 DTC 5093, [1981] CTC 115 (FCTD)
The obtaining of letters of credit from a New York financial institution by the taxpayer's president was found to be ancillary to the taxpayer's...
See Also
Kinguk Trawl Inc. v. The Queen, 2003 DTC 1524, 2003 TCC 842
The taxpayer, which fished in the Atlantic Ocean and sold fish through an agent in Denmark, was entitled for purposes of s. 212(1)(b)(iii)(E) to...
Subparagraph 212(1)(b)(vii)
Cases
General Electric Capital Equipment Finance Inc. v. Canada, 2002 DTC 6734, 2001 FCA 392
Amendments to the terms of promissory notes that decreased the principal owing, increased the interest rate, changed the maturity date and changed...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | changes to 3 of the 4 fundamental attributes of debt produced new debt | 311 |
See Also
Lixo Investments Ltd. v. R., 97 DTC 1030, [1997] 2 CTC 2772 (TCC)
The corporate taxpayer was found to be dealing in arm's length with a non-resident corporation ("Slupy") which had provided most of the taxpayer's...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | 140 |
Carma Developers Ltd. v. The Queen, 96 DTC 1798, [1996] 3 CTC 2029 (TCC), briefly aff'd 96 DTC 6569 (FCA)
Under a plan that was approved by the requisite majority of creditors in accordance with the companies' Creditors Arrangement Act, various classes...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(2) - Paragraph 80(2)(a) | 198 |
Administrative Policy
2007 Ruling 2006-0218931R3 - Material Adverse Clause and Withholding Exemption
Favourable ruling with respect to a material adverse change clause whose wording was redacted.
2006 Ruling 2006-0211781R3 - Withholding Tax Exemption
Non-resident term lenders make a loan to a wholly-owned subsidiary ("Finco") of the general partner of a Canadian limited partnership that is a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(2.3) | on-loan by special purpose sub in ordinary course | 62 |
2006 Ruling 2006-0195501R3 - Withholding Tax Exemption
A wholly-owned taxable Canadian subsidiary ("Finco") of another taxable Canadian corporation ("ACo") on-lends money borrowed from a non-resident...
2006 Ruling 2006-0191881R3 - Witholding Tax Exemption
Favourable ruling with respect to a cross-border term loan made to an indirect subsidiary ("Finco") of an income fund, with the proceeds on-lent...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 132 - Subsection 132(6) | loan guarantees | 56 |
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(2.3) | 47 |
26 July 2005 External T.I. 2005-0134621E5 - Withholding Exemption
In indicating that where a non-resident payer is a partnership (made up of corporations) and is deemed to be a resident of Canada, the exemption...
2005 Ruling 2005-0161521R3 - Postamble of 212(1)(b)
An interest rate under a term facility intended to qualify for the exemption under s. 212(1)(b)(vii) was equal to LIBOR plus a spread which...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(b) | variable interest tracked creditworthiness | 99 |
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Participating debt interest | variable interest tracked creditworthiness, not profitability | 99 |
2005 Ruling 2005-0124081R3 - Withholding Tax Exemption
Permissible events of default in a project financing included events that involved parties not subject to the loan agreement, e.g., parent...
2005 Ruling 2005-0133561R3 - withholding tax exemption
A Canadian subsidiary ("Finco") of the general partner of a Canadian limited partnership issues U.S. dollar secured notes in the U.S. market and...
2005 Ruling 2005-0119091R3 - Withholding tax; interest
Favourable ruling with respect to a subsidiary trust of an income fund transferring a business division to a partnership, which borrowed from a...
2004 Ruling 2004-0094741R3 - Withholding Exemption -Minimum EBITDA
A Canadian corporation ("Holdco") finances an acquisition with notes ("Holdco Notes") or (if it is unable to successfully market the Holdco Notes)...
Draft GST/HST Policy Statement "Agreements and Novation"
Example A: No novation where a corporation issues a promissory note to a bank with respect to an already-existing loan of $100 million, the...
2004 Ruling 2004-0094751R3 - Withholding tax; interest
GAAR did not apply where a Canadian securitization trust, in order to borrow at favourable rates provided by an arm's length foreign lender,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 59 |
2004 Ruling 2004-0093591R3 - Withholding - GP corporation on loans to LP
In order to access the more favourable terms available in the U.S. markets, the general partner of a publicly-traded limited partnership borrows...
2004 Ruling 2004-0092731R3 - Withholding Tax exemption on-loan to a lp
A favourable ruling re loan by U.S. lenders to the corporate general partner of a Canadian partnership which on-lends, on similar terms, to the...
Income Tax Technical News, No. 30, 21 May 2004
The GE Capital case is consistent with the views of the Agency that at common law a rescission of a debt obligation will be implied when the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1) | 38 | |
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) | dollar amounts not artificial; parent lossco must have independent income source | 143 |
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(5) - Paragraph 111(5)(a) | 27 | |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m) | no reserve if substantial peformance | 107 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 96 | |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(f) | general partner cannot contract on its own account with partnership | 232 |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(g) | 38 |
2003 Ruling 2003-03924
The corporate general partner of a Canadian limited partnership operating a business in Canada borrows on an unsecured basis under a loan with a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) | 101 |
17 June 2003 External T.I. 2002-0178455 - NEW DEBT OBLIGATIONS; NOVATION
"Whether a change in the terms of a debt obligation results in a 'new' obligation for the purposes of subparagraph 212(1)(b)(vii) of the Act...
2002 Ruling 2002-0167273 - WITHHOLDING EXCEPTION ASSET SALE
A favourable ruling given where the issuer was required to make an offer to noteholders out of a specified portion of net after-tax proceeds of...
3 July 2002 External T.I. 2002-0122185 - TWO TIERED PARTNERSHIP
An otherwise eligible borrowing will qualify where the borrower is a partnership "all of the members of which:
3 July 2002 External T.I. 2001-0084615 - ACCEPTABLE EVENTS OF DEFAULT
When asked whether it would be an acceptable event of default respecting a note borrowing by a widely held corporation to refer to the direct or...
2000 Ruling 2000-0029483 - Interest paid to non-residents
The controlling shareholder of the corporate borrower was a mutual fund trust which received most relevant services pursuant to management and...
9 October 2001 External T.I. 2001-0096655 - Interest Exemption From Part XIII
An extension of the maturity date of a debt obligation occurring in accordance with its original terms would generally not result in CCRA viewing...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(b) | stock index link | 102 |
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Participating debt interest | acceptable to link to stock index that is not selected based on inclusion of the issuer or corporations with siimilar business | 102 |
17 September 2001 External T.I. 2001-0087185 - EVENT OF FAILURE OR DEFAULT
The presence of the following event of default would not be acceptable: "The occurrence or threatened occurrence of an event which, in the opinion...
4 December 2001 External T.I. 2001-0111455 - WITHHOLDING TAX EXEMPTION INTEREST
Clarification that the conversion right referred to in #E9721405 and #E9824125 referred to situations where conversion was at the option of the...
2001 Ruling 2000-0060623 - Amendments to Notes - Disposition?
Amendments to notes to extend the maturity date, change the amortization schedule for principal and change the interest rate were ruled not to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | no disposition where no novation or rescission | 110 |
10 January 2001 External T.I. 2000-0007835 - EXEMP FROM WITHHOLDING TAX ON INTEREST
The loan agreement will not qualify if it requires the proceeds of sale of assets of the borrower to be applied against the loan if such sale is...
6 March 2000 External T.I. 1999-001355
The Directorate will consider in the context of a rulings application whether default by any member of a corporate group even if not a party to...
2000 Ruling 2000-0035043 - XXXXXXXXXX
A Canadian subsidiary of a foreign parent issues units each consisting of a debt obligation, a guarantee of the parent and a put to the parent...
15 June 1999 External T.I. 9903035 - WITHHOLDING TAX
Where a partnership has lent to a Canadian corporation, the condition that the lender must be dealing at arm's length with the borrower is applied...
1998 Ruling 9817073 - DISCOUNT BONDS
A note would be offered at a significant discount from the stated principal amount and no cash interest would be payable thereon prior to a date...
1997 IFA Round Table, Q. 5, No. 9713180
RC's policy that asset dispositions may be permitted to be a triggering event requiring the borrower to repay includes involuntary dispositions...
30 November 1995 Ruling 9629853 - CHANGE OF CONTROL TRIGGERING EVENT
Ruling given on a loan whose definition of change of control included a situation where persons other than existing holders became the beneficial...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii) | 57 |
2 September 1998 Technical Interpretation 980737
A requirement to repay a U.S.-dollar loan in the event that the Canadian-dollar equivalent of the borrowing appreciates to 110% of the...
21 July 1999 External T.I. 9915455 - POST-AMBLE TO 212(l)(B)
"Interest payments which fluctuate on the basis of a formula that seeks to determine the extent to which the stock price of the borrower either...
4 March 1999 Technical Interpretation 982412
Where a debenture will become convertible (apparently, at the option of the holder) into deposit notes of the issuer once the issuer has obtained...
Income Tax Technical News, No. 15, "The Tax Consequences of the Adoption of the 'Euro' Currency"
Discussion of whether the redenomination, renominalization or reconventioning of an obligation would give rise to a new obligation.
30 November 1997 Ruling 9813393 - XXXXXXXXXX - EVENT OF DEFAULT
The description of facts included a requirement on the Canadian issuer of notes to use asset sale proceeds, that had not been applied within the...
Income Tax Technical News, No. 11, Sept. 30, 1997
The postamble usually will not apply to disqualify interest on a debt instrument that varies according to the value of foreign currency. The...
9 September 1997 External T.I. 9721405 - CONVERSION OF DEBT OBLIGATION
Where a debt obligation provides that it is convertible at the option of the holder into another debt obligation of the same issuer provided that...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 51 - Subsection 51(1) | conversion conditional on issuer notice | 173 |
| Tax Topics - Income Tax Act - Section 51.1 | conversion subject to issuer notice | 173 |
Income Tax Technical News, No. 9, 10 February 1997
RC will "continue to accept circumstances such as, change of control, ratings decline or asset sales as being events of failure or default under a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Other Legislation/Constitution - Federal - Indian Act - Section 87 | 26 | |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | loss transfer must be to affiliated person - related not enough | 48 |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | 69 | |
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(c.3) - Subparagraph 88(1)(c.3)(ii) | 151 | |
| Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(12) | 69 | |
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(i) | avoidance of double taxation through absence of ACB adjustment | 129 |
30 November 1996 Ruling 9723563 - CHANGE OF CONTROL - LISTED EVENT OF DEFAULT
Favourable ruling with respect to notes issued to U.S. residents that provide that upon the occurrence of a Change of Control (as defined), there...
30 November 1996 Ruling 9702203 - WITHHOLDING PART XIII
The impetus for amendments to a trust indenture came from the taxpayer and the persons who took it over. Accordingly, the method chosen by the...
30 November 1995 Ruling 9629853 - CHANGE OF CONTROL TRIGGERING EVENT
Ruling given on a loan whose definition of change of control included a situation where persons other than existing holders became the beneficial...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii) | de facto change of control | 57 |
1996 TEI Round Table, Part VII, Q. B., 9640070
Until several cases before the courts have been decided, RC is deferring implementing a recommendation that certain lease transactions that are...
1996 Ruling 961368
With respect to a situation where a taxable Canadian corporation made an offer to purchase at a premium outstanding notes that were eligible for...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(9.1) | 64 |
18 January 1996 External T.I. 9530045 - COMMODITY REFERENCE IN PAYING INTEREST
Where interest on a debenture is paid by way of the issue of a fixed number of common shares, it would appear that the interest would be computed,...
1996 Corporate Management Tax Conference Round Table, Q. 8
Where s. 212(13.2) applies to deem a U.S. corporation to be a person resident in Canada for Part XIII purposes, interest paid by it will represent...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(13.2) | 74 |
30 November 1995 Ruling 9623193 - WITHOLDING TAX ON INTEREST
Where notes initially are issued on an unregistered basis to qualified investors in order to effect placement of the issue on a timely basis, the...
25 August 1995 External T.I. 9517335 - CONVERTIBLE DEBENTURES WITH ANTI-DILUTION CLAUSE
Where debentures are convertible only into prescribed securities, but there is an anti-dilution clause that provides that in the event of a...
10 December 1993 Income Tax Severed Letter 9333055 - Witholding Tax Exemption
"In a situation where interest is computed by reference to dividends paid or payable to shareholders of any class of shares of the capital stock...
93 C.M.TC - Q. 8
RC does not consider the Viceroy Rubber case to have precedential value because of its unusual facts and will maintain its policy in IT-361R2,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | 48 |
93 C.M.TC - Q. 7
RC's concern with cash collateral accounts is that in some situations it may have been intended from the outset that the borrower would pay down...
93 C.M.TC - Q. 6
Where, upon default, the non-resident lender, rather than demanding repayment, agrees with the Canadian borrower that payment will be deferred as...
92 C.M.TC - Q. 13
If the primary purpose of a loan to a newly incorporated subsidiary of a corporate partner in a partnership, with a view to the subsidiary then...
91 C.R. - Q. 50
The deposit of funds by a non-resident person with a non-resident financial institution which lends those funds to a Canadian corporation not...
91 C.R. - Q. 17
A debenture which is exchangeable at the option of the holder for shares of the issuer, based on a formula using the most recent market price but...
28 August 1991 Memorandum (Tax Window, No. 8, p. 23, ¶1434)
Where a non-resident person which does not deal at arm's length with a Canadian borrower deposits funds with a non-resident financial institution...
19 August 1991 T.I. (Tax Window, No. 8, p. 22, ¶1431)
The exemption in s. 212(1)(b)(vii) will not apply where the terms of a debt obligation require the debt to be repaid within five years from the...
9 August 1991 T.I. (Tax Window, No. 7, p. 22, ¶1391)
Interest which fluctuates on the basis of fluctuations in the value of a foreign currency may be considered to be computed by reference to a...
29 July 1991 T.I. (C.T.O. Fax Service Doc. No. 305; Tax Window, No. 7, p. 12, ¶1374)
The exemption will cease to apply if and when the debtor ceases to be at arm's length with the creditor and, conversely, will begin to apply if...
10 June 1991 T.I. (Tax Window, No. 4, p. 23, ¶1289)
None of the exemptions in s. 212(1)(b) will apply to the taxable dividend received by a shareholder of a mortgage investment corporation,...
23 November 1990 T.I. (Tax Window, Prelim. No. 2, p. 5, ¶1038)
The exemption will not apply to interest paid by a partnership of resident Canadian corporations unless all members of the partnership deal at...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(4) | 20 |
25 January 1990 T.I. 5-8575
Where the terms and conditions of a debt obligation provide for legal defeasance at the time the obligation is issued, this may result in the...
2 January 1990 T.I. (June 1990 Access Letter, ¶1280)
Once Regulation 6208 is passed, a non-resident should be entitled to a refund of withholding tax paid after December 19, 1986 on debentures...
89 C.R. - Q. 1
In a situation wherein a loan agreement states that there is an event of default if there is a change in control of the borrower, such event is...
89 C.R. - Q. 2
"Where interest amounts are fixed and payable pursuant to a legal obligation to pay interest at a fixed rate, the fact that the timing of the...
89 C.R. - Q. 3
The deposit by a non-resident of funds with the non-resident financial institution that in turn loans funds to a Canadian corporation with which...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 56 |
88 C.R. - "Finance and Leasing" - "Withholding Tax"
Ordinarily a change in debt holders will not cause a loss of the exemption - cf., if a new debt results.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 214 - Subsection 214(8) - Paragraph 214(8)(a) | 22 |
87 C.R. - Q. 2
The exemption potentially can apply to interest on the unpaid balance of the selling price of property.
86 C.R. - Q. 11
It is permissible for the loan agreement to provide that the insurance proceeds are to be deposited with an independent party for the...
86 C.R. - Q. 12
A requirement to pay because of a change in economic conditions, e.g., commodity prices, is not permissible.
84 C.R. - Q. 38
Loss or destruction of property may represent an event of default, in which event it is permissible for the borrower to be required to repay.
84 C.R. - Q. 60
Where a Canadian corporation has debt in currency X and borrows currency Y under a currency swap arrangement, the interest payments made by Canco...
ATR-69, dated April 20, 1995
Favourable ruling given with respect to a requirement to repurchase 10-year notes at 101% of their principal dollar amount in the event of the...
ATR-49
Description of exempt loan to finance construction of manufacturing plant where each drawdown constitutes a separate loan and failure to complete...
IT-155R3 "Exemption from Non-resident Tax on Interest Payable on Certain Bonds, Debentures, Notes, Hypothecs or Similar Obligations"
An amount paid by a guarantor in respect of interest payable under a guaranteed obligation is subject to the withholding tax unless the obligation...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 164 - Subsection 164(3) | 13 | |
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(b) - Subparagraph 212(1)(b)(ii) | 11 |
IT-361R2 "Exemption from Tax on Interest Payments to Non-residents"
General discussion.
Read, "Technical Matters", 83 C.R., p. 783
A cross default provision can, depending upon the facts, constitute a legitimate event of default. Events that are the consequence of an act by...
Articles
Robert A. Kopstein, Janette Y. Pantry, "Subparagraph 212(1)(b)(vii) Withholding Tax Exemption", 2005 Conference Report, c. 15.
Julie Colden, "Implications of Imperial Oil", Canadian Current Tax, Vol. 15, No. 3, December 2004, p. 21.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 214 - Subsection 214(8) - Paragraph 214(8)(c) | 0 |
Jack A. Silverson, "The New Trust Proposals in Section 212(1)(b)(vii)", Corporate Finance, Vol. VII, No. 2, 1999, p. 615.
Smith, "Recent Transactions: Debt", 1993 Conference Report, C. 19
Discussion of Hollinger Lyons transaction (including cash equivalent option, and change in control definition).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 19 |
Richardson, "European Currency Unit: A Currency for All Seasons", Corporate Finance, Vo. 1, No. 2, 1992, p. 43
The ECU qualifies as a currency other than Canadian currency.
Wilkie, "Issues Impacting on Exposure to Canadian Withholding Tax", Corporate Finance, Vol. 1, No. 1, 1992, p. 17.
Richardson, "Current Developments in Debt Financing: A Canadian Tax Perspective", 1988 Conference Report, C.22: Discussion of "poison puts".
Hansen, Richardson, "How Canadian Issuers Use Short-term Instruments", International Financial Law Review, February 1987, page 11
Description of "put-option structure".
Wilkie, "Structuring International Debt Issues: A Canadian Perspective", Canadian Tax Journal, January-February 1987, page 1
Compendium of various s. 212(1)(b)(vii).
Couzin, "Canada: Withholding Tax and Interest", Tax Management International Journal, January 1982, page 14
Comprehensive discussion.
Loveland, "Income Tax Impediments to Foreign Investment in Canada", 1982 Conference Report, page 666
RC will not disagree with an ordering provision respecting the repayments of separate drawdowns provided the ordering is reasonable.
Paragraph 212(1)(c) - Estate or trust income
Administrative Policy
30 November 2001 External T.I. 2001-0100125 F - Traitement fiscal fiducies-sûreté
For the sole purpose of guaranteeing the repayment of a loan from a Canadian financial institution, a non-resident transfers his Canada Savings...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition - Paragraph (j) | exclusions from a disposition under para. (c) on a transfer to a trust do not extend to para. (j) exclusion | 317 |
2014 Ruling 2013-0509431R3 - Part XIII tax and distributions from a trust
The Fund is a listed mutual fund trust which is not fiscally transparent for U.S. tax purposes. It is not subject to SIFT tax as essentially its...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Treaties - Income Tax Conventions - Article 22 | distributions to U.S. residents funded out of ROC payments and cross-border interest | 277 |
18 November 2011 External T.I. 2011-0422441E5 - Capital dividend paid to a Non-Resident
Shares of a Canadian-controlled private corporation held by the estate were redeemed for cash proceeds, with the resulting deemed dividend paid...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(11) | redistribution of capital dividend subject to Part XIII tax | 194 |
9 October 2009 APFF Roundtable Q. 5, 2009-0327001C6 F - Succession canadienne - dividende en capital
When a capital dividend (arising from insurance proceeds) received by an estate is used for the payment of estate taxes, would the distribution of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(11) | allocation of capital dividend between estate duties and NR distribution | 131 |
July 1990 Memorandum
Distributions of income of a trust from Canadian term deposits or bank accounts to the State of Israel was exempted from withholding tax on the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) | 32 |