Subsection 214(1) - No deductions
Administrative Policy
93 C.P.T.J. - Q.27
Royalties earned by non-residents not carrying on business in Canada from Canadian resource properties are subject to withholding tax under s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(d) | 37 | |
| Tax Topics - Income Tax Regulations - Regulation 805 | 84 |
Subsection 214(3) - Deemed payments
Paragraph 214(3)(a)
Cases
Gillette Canada Inc. v. The Queen, 2001 DTC 895 (TCC), aff'd on varied grounds 2003 FCA 22
The taxpayer (a Canadian subsidiary of a U.S. corporation ("Gillette Boston")) contributed a 9.9% interest in a French partnership that was 90%...
See Also
Minet Inc. v. The Queen, 96 DTC 1405 (TCC)
O'Connor TCJ. accepted the taxpayer's submission that ss.214(3)(a) and 56(2) could not be applied to impose Part XIII tax where a Canadian...
Florsheim Inc. v. The Queen, 95 DTC 110, [1994] 2 CTC 2290 (TCC)
The taxpayer was subject to liability for Part XIII tax pursuant to ss.80.4(2), 15(9), 214(3)(a), 215(6) and 227(10.1) in respect of interest-free...
Industries P.W.I. Inc. v. MNR, 93 DTC 852 (TCC)
An interest-free loan made by the taxpayer to a non-resident corporate shareholder was subject to Part XIII tax. The taxpayer unsuccessfully...
Administrative Policy
21 June 2023 Internal T.I. 2017-0720181I7 - Application of 15(2) and 215(6)
Canco was assessed for and paid Part XIII tax regarding royalty payments that it made to its non-resident parent (Parentco) and to a non-resident...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | no s. 56(2) or 15(1) benefit from the conferral by Canco of a benefit on a non-resident sister by bearing the Part XIII tax on a royalty paid to it | 235 |
20 June 2023 STEP Roundtable Q. 10, 2023-0965831C6 - Non-Resident Corporations Owning Canadian Real Estate
A non-resident corporation owned by a non-resident individual purchases a Canadian vacation home that is available for use by that individual and...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | the benefit to a non-resident from personal use of a non-resident corporation’s Canadian cottage is reduced by an interest-free loan from the shareholder | 257 |
5 May 2021 IFA Roundtable Q. 7, 2021-0887521C6 - Section 247, FAPI & Subsection 80.4(2)
A wholly-owned foreign subsidiary (FS) of CanCo uses funds generated from its operations to make a non-interest bearing loan to a foreign...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) - Paragraph 247(2)(a) | a non-interest-bearing loan from a CFA to a NR sister of the Canadian taxpayer would generate imputed interest and FAPI to CFA, plus s. 80.4(2) application to sister | 199 |
| Tax Topics - Income Tax Act - Section 80.4 - Subsection 80.4(2) | a non-interest-bearing loan from a CFA to a NR sister of the Canadian taxpayer generated double tax (FAPI and Pt. XIII tax) | 218 |
16 August 2017 Internal T.I. 2015-0622751I7 - Part XIII Tax on Benefit to Non-resident
A foreign subsidiary of Canco (Opco) in turn wholly-owned a non-resident “Finco,” which made an interest-free loan to a non-resident sister of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(9) | s. 15(9) applies to interest-free loan between two foreign affiliates | 285 |
| Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) | use of s. 160 to collect s. 15(9) liability of indirect FA on dividends paid to Canco | 275 |
| Tax Topics - Income Tax Act - Section 215 - Subsection 215(1) | CFA liable for failure to "withhold" and remit Pt XIII tax on interest-free benefit on loan to NR sister of its Cdn grandparent | 127 |
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | s. 227.1 liability can extend to NR directors of a CFA | 176 |
| Tax Topics - Income Tax Act - Section 80.4 - Subsection 80.4(2) | extra-territorial application of s. 80.4(2) | 134 |
19 October 2012 External T.I. 2012-0440071E5 - Section 67 of the Income Tax Act
Where a taxpayer pays an intercompany management fee or similar charge and CRA reduces the amount of the deduction under s. 67 ("perhaps on the...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 67 | correlative income reduction to recipient where s. 67 denial | 164 |
5 October 2012 Roundtable, 2012-0451241C6 F - Benefit conferred on a NR shareholder by a NR corp
Does s. 214(3)(a) deem a non-resident corporation to pay a dividend (subject to Part XIII tax under s. 212(2)) to its non-resident shareholder...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(7) | s. 15(7) assists in determining that s. 15 can apply to the NR shareholder of a NR corporation gratuitously using the corporation’s Canadian property | 73 |
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | s. 247(2) could apply to produce s. 212(1)(d) withholding where the NR shareholder of a NR corporation gratuitously uses Canadian corporate property | 92 |
8 March 2007 Internal T.I. 2006-0214291I7 - Part XIII withholding tax
Where a loan or royalty agreement between a Canadian and a non-resident does not contain a gross-up clause and the Canadian is assessed under s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(b) | 49 |
19 November 1999 External T.I. 9732345 - LOANS TO NON-RESIDENTS - PART XIII TAX
Where a Canadian partnership makes a loan to the U.S. parent of a wholly-owned Canadian resident corporation ("Canco") which is a member of the...
IT-119R4 "Debts of Shareholders and Certain Persons Connected With Shareholders" 7 August 1998
No penalty if tax remitted by Feb 15/based only on net annual increase in balance
38 ....If there is no series of loans or other transactions and...
Articles
Michael N. Kandev, "NIB Loan to Non-FA-Related Non-Resident", Canadian Tax Highlights, Vol.26, No. 4, April 2018, p. 5
Interest-free loan from a CFA of Canco to a NR sister of Canco
2015-0622751I7 … analyzed the tax consequences of a foreign parent, its wholly...
Paragraph 214(3)(f)
Administrative Policy
2021 Alberta CPA Roundtable under “Estates/ Trusts and Nonresident Withholding Tax”
When asked to comment on an example of the application of s. 214(3)(f), CRA indicated that, where an estate or trust had income payable at its...
Subsection 214(3.1)
Administrative Policy
TPM-02R Secondary Transfer Pricing Adjustments, Repatriation and Part XIII Tax Assessments 1 June 2021
Secondary adjustments arise at year end
- Although s. 15(1) or 56(2) benefits are deemed by s. 214(3.1) to be paid at the time of the event or...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(12) | 439 | |
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(13) | 605 | |
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(14) | 104 | |
| Tax Topics - Income Tax Act - Section 227 - Subsection 227(8.5) - Paragraph 227(8.5)(b) | no penalty re secondary adjustments even if not pursuant to s. 247(12) | 99 |
| Tax Topics - Income Tax Act - Section 227 - Subsection 227(8) | no penalty re secondary adjustments even if no repatriation agreement | 99 |
Subsection 214(7) - Sale of obligation
Administrative Policy
14 January 2011 External T.I. 2004-0098601E5 - Foreign currency borrowings and ss 214(7) and (8).
A foreign currency debt obligation must, pursuant to s. 261(2), be converted to Canadian currency for the purposes of determining "the price for...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 214 - Subsection 214(15) | 93 | |
| Tax Topics - Income Tax Act - Section 214 - Subsection 214(8) - Paragraph 214(8)(c) | 113 | |
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(2) | principal amount converted at historical rate | 113 |
1 May 2009 IFA Roundtable Q. 12, 2009-0320231C6 F - Convertible Debt Obligations
Traditional convertible debentures are: unsecured subordinated of a public corporation issued in Canadian dollars for their face value; bear...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Participating debt interest | no deemed interest on conversion of traditional convertible debenture | 187 |
Income Tax Technical News, No. 41, 23 December 2009 Under "Definition of 'Tax Shelter' - Subsection 237.1(1)
The amount considered to be repaid on the conversion of a convertible debenture generally will be the stated capital of the shares issued.
If a...
88 C.R. - "Finance and Leasing" - "Interest" - "Amounts Paid on Redemption of Bonds or Purchase of Bonds in the Open Market"
The purchase on the open market by the issuer of a bond held by a non-resident is deemed to be a payment of interest subject to the provisions of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 24 |
Articles
David W. Ross, "Convertible Debentures - Principal Amount", Resource Sector Taxation, (2006) Vol. IV, No. 2, p. 280.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Principal Amount | 94 |
Subsection 214(7.1) - Idem [Sale of obligation]
Articles
Broadhurst, "Financing by Non-Residents", 1992 Corporate Management Tax Conference Report, p. 9:19
In the writer's view, s. 214(7.1) does not apply to a non-resident who purchases trade receivables from a Canadian vendor, then resells the trade...
Subsection 214(8)
Paragraph 214(8)(a)
Administrative Policy
88 C.R. - "Finance and Leasing" - "Withholding Tax"
Finance recognizes the anomaly that, unlike the s. 212(1)(b)(vii) exemption, the definition of excluded obligation does not recognize supervening...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii) | 21 |
Paragraph 214(8)(c)
Administrative Policy
26 November 2013 Annual CTF Roundtable, 2013-0509061C6 - Part XIII Tax & Standard Convertible Debentures
CRA is not inclined at this time to take the position that standard convertible debentures would in general constitute "excluded debt...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Participating debt interest | interest and premium on standard convertible debenture not participating | 113 |
14 January 2011 External T.I. 2004-0098601E5 - Foreign currency borrowings and ss 214(7) and (8).
In our view, pursuant to subsection 261(2) of the Act, the discount and yield tests set out in paragraph 214(8)(c) of the Act for a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 214 - Subsection 214(15) | 93 | |
| Tax Topics - Income Tax Act - Section 214 - Subsection 214(7) | FX movements can cause deemed interest | 89 |
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(2) | principal amount converted at historical rate | 113 |
Income Tax Technical News, No. 41, 23 December 2009 Under "Definition of 'Tax Shelter' - Subsection 237.1(1)
"The sole fact that the fair market value of the shares issued on conversion exceeds the issue price of the convertible debt obligation is not,...
13 December 1995 External T.I. 9530135 - MEANING OF "EXCLUDED OBLIGATION"
A demand interest-bearing promissory note would qualify as an excluded obligation because it was not issued at a discount.
Articles
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 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii) | 0 |
Subsection 214(14)
Subsection 214(15) - Standby charges and guarantee fees
Cases
R. v. Melford Developments Inc., 82 DTC 6281, [1982] CTC 330, [1982] 2 S.C.R. 504
In the absence of this provision, "interest" in Part XIII would refer primarily to "the payment of rent by a borrower for the use of the principal...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Treaties - Income Tax Conventions | 59 | |
| Tax Topics - Treaties - Income Tax Conventions - Article 11 | guarantee fees were not interest | 82 |
Administrative Policy
14 January 2011 External T.I. 2004-0098601E5 - Foreign currency borrowings and ss 214(7) and (8).
A foreign currency debt obligation must, pursuant to s. 261(2), be converted to Canadian currency for the purposes of determining "the price for...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 214 - Subsection 214(7) | FX movements can cause deemed interest | 89 |
| Tax Topics - Income Tax Act - Section 214 - Subsection 214(8) - Paragraph 214(8)(c) | 113 | |
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(2) | principal amount converted at historical rate | 113 |
6 May 2003 External T.I. 2003-0014145 - Part XIII Fee for letter of credit
A letter of credit fee paid by the taxpayer to a foreign bank for providing documentary letters of credits in respect of an importation of goods...
26 November 1996 T.I. 963464 (C.T.O. "Standby and Funding Fees")
"Where a funding fee is paid in respect of a term loan which satisfies all the requirements of subparagraph 212(1)(b)(vii) of the Act so that the...
90 C.R. - Q.47
When a Canadian corporation borrows funds from an arm's length lender and its non-resident parent guarantees the loan for no consideration, the...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) | 39 |
88 C.R. - F.Q.25
A guarantee fee received by a wholly-owned non-resident subsidiary of the borrower under a s. 212(1)(b)(vii)-exempt loan for guaranteeing the...
Articles
Loveland, "Income Tax Impediments to Foreign Investment in Canada", 1982 Conference Report, p. 666 at pp. 690-693.
Paragraph 214(15)(b)
Administrative Policy
30 March 2017 Internal T.I. 2016-0636721I7 - Consent fees and withholdings
In order to obtain the agreement of arm’s length non-resident financial institutions to a sale of the shares of Canco to the non-resident...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(4) - Paragraph 212(4)(a) | consent fee was not for “advice or direction pertaining to the operation or administration of a company” | 161 |
| Tax Topics - Income Tax Regulations - Regulation 105 - Subsection 105(1) | non-resident dealer who attended at Canadian board meetings was rendering services in Canada | 184 |
10 October 2001 Internal T.I. 2001-0097597 F - Emprunt auprès d'une banque étrangère
A Canadian borrower incurred setup fees on it loan from a foreign bank, which consisted of: a minimal amount for opening the credit file; a more...
Subsection 214(16) - Deemed dividends
Administrative Policy
5 October 2017 Internal T.I. 2015-0614021I7 - 214(16) deemed dividend
A portion of the interest paid by CanCo to ForCo, which is a controlled foreign affiliate of the Canadian parent of CanCo, is not deductible...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Foreign Accrual Property Income - A - Paragraph (b) | s. 214(16) does not recharacterize interest as dividends for FAPI purposes | 105 |
23 May 2013 Roundtable, 2013-0483731C6 - Thin Capitalization
Where a portion of the interest payable by Canadian subsidiary (Canco) on loans from its US Parent and a UK sister company is denied under the...
Example
Assume that throughout the year, Canco in the above example has $1,000 in paid-up capital and no other equity, and owes $1,000 to US-Co (its...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Commodities, and commodities futures and derivatives | 43 | |
| Tax Topics - Income Tax Act - Section 9 - Computation of Profit | 36 |
Paragraph 214(16)(a)
Articles
Carrie Smit, "Thin Capitalization Amendments – Denied Interest May be Subject to Withholding Tax", CCH, Tax Topics, No. 2114, September 13, 2012, at p. 3.
It should be considered whether loans may be transferred among lenders prior to a particular interest payment (or prior to year end in the case...
Paragraph 214(16)(b)
Administrative Policy
5 October 2018 APFF Roundtable Q. 1, 2018-0768721C6 F - Procedure re: refund of excess w/h under Part XIII
A corporation with a June 30 taxation year end makes monthly payments of interest on a loan from its non-resident parent, and remits withholding...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227 - Subsection 227(5) | withholding on interest that does not reflect the benefit of a subsequent s. 214(16)(b) designation can be recovered only on a s. 227(5) annual basis | 249 |