Cases
Canada v. Prévost Car Inc., 2009 DTC 5721, 2009 FCA 57
The taxpayer paid dividends to its shareholder, ("Prévost Holding"), a Netherlands holding company which, in turn, paid dividends in...
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| Tax Topics - Treaties - Income Tax Conventions | 76 |
Hunter Douglas Ltd. v. The Queen, 79 DTC 5340, [1979] CTC 424 (FCTD)
A Canadian company shifted its central management and control to the Netherlands, thereby becoming a resident of the Netherlands for purposes of...
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| Tax Topics - Treaties - Income Tax Conventions | 49 |
See Also
RMM Canadian Enterprises Inc. v. The Queen, 97 DTC 302, [1998] 1 C.T.C. 2300 (TCC)
After finding that sale proceeds was deemed to be a dividend by s. 84(2), Bowman TCJ. went on to find that this deemed dividend was a dividend for...
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| Tax Topics - Income Tax Act - Section 159 - Subsection 159(3) | 167 | |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) | 188 | |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 235 | |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | purchaser of cash-rich company without any signifcant separate role did not deal at arm's length | 177 |
| Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) | application of s. 84(2) to sale of cash-rich company to accommodation party who quickly paid cash proceeds therefor | 222 |
| Tax Topics - Treaties - Income Tax Conventions | 96 |
Specialty Manufacturing Ltd. v. The Queen, 97 DTC 1511, [1998] 1 CTC 2095 (TCC)
Article IX of the 1980 Canada-U.S. Convention and Article IV of the 1942 Canada-U.S. Convention did not prevent the application of s. 18(4) of the...
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| Tax Topics - Income Tax Act - Section 18 - Subsection 18(4) | 54 |
Administrative Policy
27 October 2020 CTF Roundtable Q. 5, 2020-0864281C6 - Article IV:6 of the Canada-US Treaty
A partnership whose partners are resident in the U.S. and in other countries with which Canada does and does not have a treaty owns a French...
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| Tax Topics - Treaties - Income Tax Conventions - Article 4 | where Canco is held by fiscally transparent Franceco, which is held by LP with only some US partners, there is a choice as to which Treaty to apply | 374 |
18 April 2019 Internal T.I. 2018-0753621I7 - Subsection 247(12)
Parentco, a U.S.-resident, is the only member of Parentco LLC, which is the only member of Sisterco LLC, and also wholly-owns Canco. Canco resides...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(12) | transfer pricing income adjustment re sale to NR sister gave rise to taxable dividend | 110 |
| Tax Topics - Treaties - Income Tax Conventions - Article 4 | a s. 247(12) secondary-adjustment deemed dividend paid by Canco to an LLC sister qualified under Art. IV(6) for the 5% Treaty-reduced rate on dividends to its U.S. parent | 498 |
4 April 2019 Internal T.I. 2017-0736531I7 - Articles IV(6) and X(6) of the Canada-US Treaty
Two U.S. corporations that were “qualifying persons” for purposes of the Canada-U.S. Treaty (USCo1 and USCo2) held 58% and 42%, respectively,...
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| Tax Topics - Treaties - Income Tax Conventions - Article 4 | Art. IV(6) of Cda-US Treaty can be satisfied where Canadian branch profits are earned at bottom of stacked LLCs held by qualifying persons | 247 |
7 September 2016 External T.I. 2014-0563781E5 - Articles 10 and 11 of Canada-UK Treaty
A UK corporation (“GP Co”) is the general partner (with a 1% interest) of a UK limited partnership which is fiscally transparent for UK...
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| Tax Topics - Treaties - Income Tax Conventions - Article 11 | limited partners of an LP can deal at arm’s length with a Canadian subsidiary of the LP | 452 |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | limited partners of an LP could deal at arm’s length with a Canadian sub of the LP | 222 |
28 May 2015 IFA Roundtable Q. 12, 2015-0581521C6 - IFA 2015 Q.12: Canada-Switzerland Treaty
A corporation resident in Switzerland ("Swissco") wholly-owns "Holdco," which wholly-owns "Canco"). S. 214(3)(a) deems Canco to pay a dividend to...
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| Tax Topics - Treaties - Income Tax Conventions | resolution of conflicting French and English Treaty versions of Swiss Treaty in taxpayer's favour | 89 |
28 May 2015 IFA Roundtable Q. 2, 2015-0581551C6 - IFA 2015 Q.2: GAAR and treaty shopping
What is CRA's position on the application of the GAAR to treaty shopping arrangements? CRA stated:
The…comments on treaty shopping… made in...
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| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | treaty shopping | 99 |
11 July 2014 External T.I. 2013-0497381E5 - REIT investment in a US IRA.
An IRA account of Mr. X (who is a citizen and a resident of the US) receives a distribution on units held in a REIT as defined in s. 122.1(1). ...
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| Tax Topics - Treaties - Income Tax Conventions - Article 22 | REIT income distributions to IRA at 15% | 222 |
31 May 2013 External T.I. 2013-0486011E5 - Loan to non-resident - Part XIII tax
A Canadian-resident corporation (CanCo1) and its wholly-owned Canadian-resident subsidiary (CanCo2) are the 99% limited partner and 1% general...
23 October 2012 External T.I. 2012-0440101E5 - Article X(6) Canada-US Treaty
A US LLC, which has two US-resident members (either two corporations or an individual and a corporation) who qualify for Treaty benefits, carries...
17 May 2012 IFA Roundtable, 2012-0444151C6 - Hybrid Partnerships and Branch Tax Liability
The two partners of a partnership which has elected to be a domestic corporation for Code purposes are: a corporation which is resident in the...
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| Tax Topics - Treaties - Income Tax Conventions - Article 29A | 170 |
2012 Ruling 2012-0435211R3 - Article XXIX-A(3) of the Canada-US Tax Convention
Holdco, which had been a listed U.S. company, was taken private by L5, which was a fund whose members are not known. Holdco and its subsidiary,...
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| Tax Topics - Treaties - Income Tax Conventions - Article 29A | US Holdco in Chap. 11 receives dividend | 235 |
2012 Ruling 2011-0424211R3 - Article X(2) and 84(3) deemed dividends
All of the Class A shares of two taxable Canadian corporations ("OpCo2" and "Salesco") are owned by a corporation ("USSalesco1") which is not...
Income Tax Technical News No. 44 13 April 2011 [archived]
After commenting on a transaction in which a ULC held by a US C corporation (USco) increases its paid-up capital (giving rise to a deemed...
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| Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) | inter-provincial loss shifting | 65 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(e) | exchangeable debenture appreciation not recognized | 90 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(f) | exchangeable debenture appreciation not recognized | 106 |
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(1) | exchangeable debenture exercise | 84 |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(c) | FMV basis in contributed property | 72 |
30 November 2010 Annual CTF Roundtable, 2010-0386391C6 - Branch Tax
In response to a query as to whether the branch tax reduction in Art. X(6) of the Canada-US Tax Convention is available to a fiscally transparent...
13 July 2009 External T.I. 2009-0318701E5 - Article X(2) and Tiered Partnerships
Where a US corporation that is a qualifying person is a 99.99% limited partner of a Delaware limited partnership which, in turn, is a 99.99%...
21 May 2009 IFA Roundtable Q. 1, 2009-0321451C6 - Meaning of beneficial owner in Article 10, 11 & 12
In the Prévost Car case, "the Court implied that where an intermediary acts as a mere conduit or funnel in respect of an item of income, the...
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| Tax Topics - Treaties - Income Tax Conventions - Article 11 | 84 |
2007 Ruling 2007-0248021R3 - Cdn Japan Convention: withholding rate deemed div.
a dividend deemed to be received by significant Japanese corporate shareholder of a Canadian corporation under s. 84(3) on the purchase for...
2004 IFA Roundtable Q. 3, 2004-007223
Although a partner is not considered to own a specified percentage of the shares of a corporation held by a partnership, a favourable ruling was...
17 December 2002 External T.I. 2002-0155005 - FTC for U.K. Dividends
Following the repeal of U.K. ACT in 1999, paragraph 3 of the Canada-U.K. Convention continues to apply since individuals in the United Kingdom are...
30 January 2002 External T.I. 2001-0106695 - Subs. 219(5.3);Article X of Canada-US Treaty
A deemed dividend under s. 219(5.3) of the Act will be treated as a dividend governed by Article X, paragraph 2 of the Canada-U.S. Convention,...
8 January 1996 External T.I. 9428025 - RETURN OF CAPITAL FROM A DELAWARE CORPORATION
Because the purpose of the "source country deemed dividend rule" in the definition of "dividend" in paragraph 3 of Article X of the Canada-U.S....
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| Tax Topics - Income Tax Act - Section 90 - Subsection 90(1) | all distributions from Delaware corps are dividends | 92 |
| Tax Topics - Income Tax Act - Section 90 - Subsection 90(3) | all distributions from Delaware corps are dividends | 92 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Dividend | 92 |
4 March 1993 Memorandum (Tax Window, No. 30, p. 18, ¶2472)
A Canadian resident will not be entitled to a foreign tax credit or to a refund of ACT from the U.K. authorities with respect to a stock dividend...
October 1992 T.I. 921009 "Loans to Non-Residents"
Where a Canadian subsidiary issues a demand note to its U.S. parent, the deemed dividend arising under s. 214(3)(a) will be eligible for the...
3 September 1992 T.I. 920333 "Interest-Free Loans - Reason for Withholding"
The word dividend in the Canada U.S.-Convention includes deemed dividends arising under s. 214(3)(a) of the Act.
8 April 1992 T.I. (913412 (March 1993 Access Letter, p. 83, ¶C180-135; Tax Window, No. 18, p. 10, ¶1847)
Where s. 214(3)(a) imputes a shareholder benefit to U.S. resident shareholders of a U.S. corporation which allows them to use a Canadian vacation...
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| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | 28 |
91 C.R. - Q.1
A U.S. corporation holding shares through a U.S. partnership will not be eligible for the 10% rate.
Articles
Peter Lee, Paul Stepak, "PE Investments in Canadian Companies", draft 2017 CTF Annual Conference paper
Application of 10%-of-voting power test where sister companies held through holding “Aggregator” LP (pp. 5, 9)
[A] PE fund limited partnership...
Elio Andrea Palmitessa, "Italian Supreme Court Applies the Beneficial Ownership Clause to Pure Holding Companies", Tax Notes International, April 17, 2017, p. 259
Dividend withholding avoidance (p. 259)
[A] U.S. corporation owned a holding company in France, which in turn owned an Italian subsidiary. In 2002...
Timothy Hughes, Matias Milet, Marc Richardson-Arnould, "Private Equity Funds – Selected Canadian Tax Issues", Tax Management International Journal, 2016, p.84
Advantages of separate fund for Canadian investors (p. 87)
A non-Canadian private equity fund that expects to have significant investor capital...
Jack Bernstein, "Canada-US Tax Traps for LLCs", Canadian Tax Highlights, Volume 22, Number 2, February 2014, p. 11
High US branch tax if use LLC (p.11)
Assume that a Canco expands into the United States and forms an LLC to be the US opco. For Canadian tax...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | 143 | |
| Tax Topics - Treaties - Income Tax Conventions - Article 4 | 144 |