Words and Phrases - "amount payable"

A corporation resident in Canada (the “CRIC”) was deemed by s. 212.3(2)(a) to pay a dividend (the “Initial Dividend”) to its non-resident parent. Although it could be effectively offset against the paid-up capital of CRIC shares held by its parent, the form required by s. 212.3(7)(d)(i) to report such reduction was not submitted by the CRIC’s filing due date for the year of the Initial Dividend. As a result, s. 212.3(7)(d)(ii) automatically deemed a dividend (the “Reduction Dividend”) to have been paid to the CRIC's non-resident parent on that filing due date, so that on that date, the CRIC was liable under s. 215(1) to pay the Part XIII tax on the Reduction Dividend.

However, the CRIC then late-filed the form. Consequently, s. 227(6.2)(c) deemed the Part XIII tax liability with respect to the Reduction Dividend to have been paid on the day that form was late-filed, so that the requirement to remit that tax to the Receiver General was then eliminated.

Was an assessment of Part XIII tax under s. 227(10) in respect of the Reduction Dividend required to be made?

CRA indicated that the "amount payable" in s. 227(10) (or under s. 227(10.1) in respect of any assessment of the non-resident parent) referred not to the unpaid balance, but to the amount of the liability before any payment thereof. Accordingly, the deemed payment under s. 227(6.2)(c) did not eliminate Part XIII tax liability but rather caused that Part XIII tax liability to be settled.

On this basis, the Minister had the discretion to make an assessment at any time under s. 227(10) or 227(10.1) but was not required to do so. Thus, as the Part XIII tax liability had been settled, there was no need to inform the CRIC or the non-resident person of the amount of the liability through an assessment or to enforce collection of an unpaid balance.