Marginal note:Tax
212 (1) Every non-resident person shall pay an income tax of 25% on every amount that a person resident in Canada pays or credits, or is deemed by Part I to pay or credit, to the non-resident person as, on account or in lieu of payment of, or in satisfaction of,
Marginal note:Management fee
(a) a management or administration fee or charge;
Marginal note:Interest
(b) interest except
(i) interest payable by a non-resident-owned investment corporation,
(ii) interest payable on
(A) bonds of or guaranteed by the Government of Canada issued on or before December 20, 1960,
(B) bonds of or guaranteed by the Government of Canada issued after December 20, 1960, and before April 16, 1966, the interest on which is payable to the government or central bank of a country other than Canada or to any international organization or agency prescribed by regulation, or
(C) bonds, debentures, notes, mortgages, hypothecary claims or similar obligations
(I) of or guaranteed by the Government of Canada,
(II) of the government of a province or an agent thereof,
(III) of a municipality in Canada or a municipal or public body performing a function of government in Canada,
(IV) of a corporation, commission or association to which any of paragraphs 149(1)(d) to (d.6) applies, or
(V) of an educational institution or a hospital if repayment of the principal amount thereof and payment of the interest thereon is to be made, or is guaranteed, assured or otherwise specifically provided for or secured by the government of a province,
issued after April 15, 1966,
(iii) interest payable in a currency other than Canadian currency to a person with whom the payer is dealing at arm’s length, on
(A) any obligation where the evidence of indebtedness was issued on or before December 20, 1960,
(B) any obligation where the evidence of indebtedness was issued after December 20, 1960, if the obligation was entered into under an agreement in writing made on or before that day, under which the obligee undertook to advance, on or before a specified day, a specified amount at a specified rate of interest or a rate of interest to be determined as provided in the agreement, to the extent that the interest payable on the obligation is payable
(I) in respect of a period ending not later than the earliest day on which, under the terms of the obligation determined as of the time it was entered into, the obligee would be entitled to demand payment of the principal amount of the obligation or the amount outstanding as or on account of the principal amount thereof, as the case may be, if the terms of the obligation determined as of that time provided for that payment on or after a specified day, or
(II) in respect of a period ending not later than one year after the time the obligation was entered into, in any other case,
(C) any bond, debenture or similar obligation issued after December 20, 1960, for the issue of which arrangements were made on or before that day with a dealer in securities, if the existence of the arrangements for the issue of the bond, debenture or similar obligation can be established by evidence in writing given or made on or before that day,
(D) an amount not repayable in Canadian currency deposited with an institution that was at the time the amount was deposited or at the time the interest was paid or credited a prescribed financial institution,
(E) any obligation entered into in the course of carrying on a business in a country other than Canada, to the extent that the interest payable on the obligation is deductible in computing the income of the payer under Part I from a business carried on by the payer in such a country, or that, but for subsection 18(2) or section 21, would have been so deductible, or
(F) any obligation entered into by the payer after December 20, 1960, on assuming an obligation referred to in clause 212(1)(b)(iii)(A) in consideration or partial consideration for the purchase by the payer of property of the vendor that constituted security for that obligation, if the payer on entering into the obligation undertook to pay the same amount of money on or before the same date and at the same rate of interest as the vendor of the property had undertaken in respect of the obligation under which the vendor was the obligor,
(for the purpose of this subparagraph, interest expressed to be computed by reference to Canadian currency shall be deemed to be payable in Canadian currency),
(iv) interest payable on any bond, debenture or similar obligation to a person with whom the payer is dealing at arm’s length and to whom a certificate of exemption that is in force on the day the amount is paid or credited was issued under subsection 212(14),
(v) interest payable to a person with whom the payer is dealing at arm’s length on any obligation entered into in the course of carrying on a life insurance business in a country other than Canada,
(vii) interest payable by a corporation resident in Canada to a person with whom that corporation is dealing at arm’s length on any obligation where the evidence of indebtedness was issued by that corporation after June 23, 1975 if under the terms of the obligation or any agreement relating thereto the corporation may not under any circumstances be obliged to pay more than 25% of
(A) where the obligation is one of a number of obligations that comprise a single debt issue of obligations that are identical in respect of all rights (in equity or otherwise, either immediately or in the future and either absolutely or contingently) attaching thereto, except as regards the principal amount thereof, the total of the principal amount of those obligations, or
(B) in any other case, the principal amount of the obligation,
within 5 years from the date of issue of that single debt issue or that obligation, as the case may be, except
(C) in the event of a failure or default under the said terms or agreement,
(D) if the terms of the obligation or any agreement relating thereto become unlawful or are changed by virtue of legislation or by a court, statutory board or commission,
(E) if the person exercises a right under the terms of the obligation or any agreement relating thereto to convert the obligation into, or exchange the obligation for, a prescribed security, or
(F) in the event of the person’s death;
(viii) interest payable on a mortgage, hypothecary claim or similar obligation secured by, or on an agreement for sale or similar obligation with respect to, real property situated outside Canada or an interest in any such real property except to the extent that the interest payable on the obligation is deductible in computing the income of the payer under Part I from a business carried on by the payer in Canada or from property other than real property situated outside Canada,
(ix) interest payable in Canadian currency on account of an amount in Canadian currency deposited in a country other than Canada with a branch or office of a payer who
(A) is, or is eligible to become, a member of the Canadian Payments Association, or
(B) is a credit union that is a shareholder or member of a body corporate or organization that is a central for the purposes of the Canadian Payments Association Act,
to a person with whom the payer is dealing at arm’s length,
(x) interest payable to a prescribed international organization or agency,
(xi) interest payable on an amount deposited with a prescribed financial institution for the period during which the amount was an eligible deposit (within the meaning assigned by subsection 33.1(1)) of the institution, and
(xii) interest payable under a securities lending arrangement by a lender under the arrangement that is a financial institution prescribed for the purpose of clause 212(1)(b)(iii)(D), or a registered securities dealer resident in Canada, on money provided to the lender either as collateral or as consideration for the particular security lent or transferred under the arrangement where
(A) the particular security is an obligation referred to in subparagraph 212(1)(b)(ii) or an obligation of the government of any country, province, state, municipality or other political subdivision,
(B) the amount of money so provided at any time during the term of the arrangement does not exceed 110% of the fair market value at that time of the particular security, and
(C) the arrangement was neither intended, nor made as a part of a series of securities lending arrangements, loans or other transactions that was intended, to be in effect for more than 270 days,
and for the purpose of this paragraph, where interest is payable on an obligation, other than a prescribed obligation, and all or any portion of the interest is contingent or dependent on the use of or production from property in Canada or is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation, the interest shall be deemed not to be interest described in subparagraphs 212(1)(b)(ii) to 212(1)(b)(vii) and 212(1)(b)(ix);
Marginal note:Estate or trust income
(c) income of or from an estate or a trust to the extent that the amount
(i) is included in computing the income of the non-resident person under subsection 104(13), except to the extent that the amount is deemed by subsection 104(21) to be a taxable capital gain of the non-resident person, or
(ii) can reasonably be considered (having regard to all the circumstances including the terms and conditions of the estate or trust arrangement) to be a distribution of, or derived from, an amount received by the estate or trust as, on account of, in lieu of payment of or in satisfaction of, a dividend on a share of the capital stock of a corporation resident in Canada, other than a taxable dividend;
Marginal note:Rents, royalties, etc.
(d) rent, royalty or similar payment, including, but not so as to restrict the generality of the foregoing, any payment
(i) for the use of or for the right to use in Canada any property, invention, trade-name, patent, trade-mark, design or model, plan, secret formula, process or other thing whatever,
(ii) for information concerning industrial, commercial or scientific experience where the total amount payable as consideration for that information is dependent in whole or in part on
(A) the use to be made of, or the benefit to be derived from, that information,
(B) production or sales of goods or services, or
(C) profits,
(iii) for services of an industrial, commercial or scientific character performed by a non-resident person where the total amount payable as consideration for those services is dependent in whole or in part on
(A) the use to be made of, or the benefit to be derived from, those services,
(B) production or sales of goods or services, or
(C) profits,
but not including a payment made for services performed in connection with the sale of property or the negotiation of a contract,
(iv) made pursuant to an agreement between a person resident in Canada and a non-resident person under which the non-resident person agrees not to use or not to permit any other person to use any thing referred to in subparagraph 212(1)(d)(i) or any information referred to in subparagraph 212(1)(d)(ii), or
(v) that was dependent on the use of or production from property in Canada whether or not it was an instalment on the sale price of the property, but not including an instalment on the sale price of agricultural land,
but not including
(vi) a royalty or similar payment on or in respect of a copyright in respect of the production or reproduction of any literary, dramatic, musical or artistic work,
(vii) a payment in respect of the use by a railway company or by a person whose principal business is that of a common carrier of property that is railway rolling stock as defined in the definition rolling stock in section 2 of the Railway Act
(A) if the payment is made for the use of that property for a period or periods not expected to exceed in the aggregate 90 days in any 12 month period, or
(B) in any other case, if the payment is made pursuant to an agreement in writing entered into before November 19, 1974;
(viii) a payment made under a bona fide cost-sharing arrangement under which the person making the payment shares on a reasonable basis with one or more non-resident persons research and development expenses in exchange for an interest in any or all property or other things of value that may result therefrom,
(ix) a rental payment for the use of or the right to use outside Canada any corporeal property,
(x) any payment made to a person with whom the payer is dealing at arm’s length, to the extent that the amount thereof is deductible in computing the income of the payer under Part I from a business carried on by the payer in a country other than Canada, or
(xi) a payment made to a person with whom the payer is dealing at arm’s length for the use of or the right to use property that is
(A) an aircraft,
(B) furniture, fittings or equipment attached to an aircraft, or
(C) a spare part for property described in clause 212(1)(d)(xi)(A) or 212(1)(d)(xi)(B);
Marginal note:Timber royalties
(e) a timber royalty in respect of a timber resource property or a timber limit in Canada (which, for the purposes of this Part, includes any consideration for a right under or pursuant to which a right to cut or take timber from a timber resource property or a timber limit in Canada is obtained or derived, to the extent that the consideration is dependent on, or computed by reference to, the amount of timber cut or taken);
(f) [Repealed, 1997, c. 25, s. 63(1)]
Marginal note:Patronage dividend
(g) a patronage dividend, that is, a payment made pursuant to an allocation in proportion to patronage as defined by section 135 or an amount that would, under subsection 135(7), be included in computing the non-resident person’s income if that person were resident in Canada;
Marginal note:Pension benefits
(h) a payment of a superannuation or pension benefit, other than
(i) and (ii) [Repealed, 1996, c. 21, s. 55(1)]
(iii) an amount or payment referred to in subsection 81(1) to the extent that that amount or payment would not, if the non-resident person had been resident in Canada throughout the taxation year in which the payment was made, be included in computing that person’s income,
(iii.1) the portion of the payment that is transferred by the payer on behalf of the non-resident person, pursuant to an authorization in prescribed form, to a registered pension plan, registered retirement savings plan or registered retirement income fund and that
(A) because of subsection 146(21) or 147.3(9) would not, if the non-resident person had been resident in Canada throughout the taxation year in which the payment was made, be included in computing the non-resident person’s income, or
(B) by reason of paragraph 60(j) or 60(j.2) would, if the non-resident person had been resident in Canada throughout the year, be deductible in computing the non-resident person’s income for the year,
(iii.2) an amount referred to in paragraph 110(1)(f) to the extent that the amount would, if the non-resident person had been resident in Canada throughout the taxation year in which the amount was paid, be deductible in computing that person’s taxable income or that of the spouse or common-law partner of that person,
(iv) in the case of a payment described in section 57, that portion of the payment that would, by virtue of that section, not be included in the recipient’s income for the taxation year in which it was received, if the recipient were resident in Canada throughout that year, or
(iv.1) the portion of the payment that is transferred by the payer on behalf of the non-resident person, pursuant to an authorization in prescribed form, to acquire an annuity contract in circumstances to which subsection 146(21) applies,
except such portion, if any, of the payment as may reasonably be regarded as attributable to services rendered by the person, to or in respect of whom the payment is made, in taxation years
(v) during which the person at no time was resident in Canada, and
(vi) throughout which the person was not employed, or was only occasionally employed, in Canada;
Marginal note:Benefits
(j) any benefit described in any of subparagraphs 56(1)(a)(iii) to 56(1)(a)(vi), any amount described in paragraph 56(1)(x) or 56(1)(z) (other than an amount transferred under circumstances in which subsection 207.6(7) applies) or the purchase price of an interest in a retirement compensation arrangement;
Marginal note:Retiring allowances
(j.1) a payment of any allowance described in subparagraph 56(1)(a)(ii), except
(i) such portion, if any, of the payment as may reasonably be regarded as attributable to services rendered by the person, to or in respect of whom the payment is made, in taxation years
(A) during which the person at no time was resident in Canada, and
(B) throughout which the person was not employed, or was only occasionally employed, in Canada, and
(ii) the portion of the payment transferred by the payer on behalf of the non-resident person pursuant to an authorization in prescribed form to a registered pension plan or to a registered retirement savings plan under which the non-resident person is the annuitant (within the meaning assigned by subsection 146(1)) that would, if the non-resident person had been resident in Canada throughout the year, be deductible in computing the income of the non-resident person by virtue of paragraph 60(j.1);
Marginal note:Supplementary unemployment benefit plan payments
(k) a payment by a trustee under a registered supplementary unemployment benefit plan;
Marginal note:Registered retirement savings plan payments
(l) a payment out of or under a registered retirement savings plan or a plan referred to in subsection 146(12) as an “amended plan” that would, if the non-resident person had been resident in Canada throughout the taxation year in which the payment was made, be required by section 146 to be included in computing the income of the non-resident person for the year, other than the portion thereof that
(i) has been transferred by the payer on behalf of the non-resident person pursuant to an authorization in prescribed form
(A) to a registered retirement savings plan under which the non-resident person is the annuitant (within the meaning assigned by subsection 146(1)),
(B) to acquire an annuity described in subparagraph 60(l)(ii) under which the non-resident person is the annuitant, or
(C) to a carrier (within the meaning assigned by subsection 146.3(1)) as consideration for a registered retirement income fund under which the non-resident person is the annuitant (within the meaning assigned by subsection 146.3(1)), and
(ii) would, if the non-resident person had been resident in Canada throughout the year, be deductible in computing the income of the non-resident person for the year by virtue of paragraph 60(l);
Marginal note:Deferred profit sharing plan payments
(m) a payment under a deferred profit sharing plan or a plan referred to in subsection 147(15) as a “revoked plan” that would, if the non-resident person had been resident in Canada throughout the taxation year in which the payment was made, be required by section 147, if it were read without reference to subsections 147(10.1) and 147(20), to be included in computing the non-resident person’s income for the year, other than the portion thereof that is transferred by the payer on behalf of the non-resident person, pursuant to an authorization in prescribed form, to a registered pension plan or registered retirement savings plan and that
(i) by reason of subsection 147(20) would not, if the non-resident person had been resident in Canada throughout the year, be included in computing the non-resident person’s income, or
(ii) by reason of paragraph 60(j.2) would, if the non-resident person had been resident in Canada throughout the year, be deductible in computing the non-resident person’s income for the year;
Marginal note:Income-averaging annuity contract payments
(n) a payment under an income-averaging annuity contract, any proceeds of the surrender, cancellation, redemption, sale or other disposition of an income-averaging annuity contract, or any amount deemed by subsection 61.1(1) to have been received by the non-resident person as proceeds of the disposition of an income-averaging annuity contract;
Marginal note:Other annuity payments
(o) a payment under an annuity contract (other than a payment in respect of an annuity issued in the course of carrying on a life insurance business in a country other than Canada) to the extent of the amount in respect of the interest of the non-resident person in the contract that, if the non-resident person had been resident in Canada throughout the taxation year in which the payment was made,
(i) would be required to be included in computing the income of the non-resident person for the year, and
(ii) would not be deductible in computing that income;
Marginal note:Payments from R.H.O.S.P.
(p) a payment out of or under a fund, plan or trust that was at the end of 1985 a registered home ownership savings plan (within the meaning assigned by paragraph 146.2(1)(h) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as it read in its application to the 1985 taxation year), other than
(i) the portion of the payment that is a refund of an excess described in paragraph 146.2(7)(a) of that Act (as it read in its application to the 1985 taxation year) made on or before April 30, 1986, and
(ii) the portion of the payment that can reasonably be considered to be income of the fund, plan or trust after 1985;
Marginal note:Registered retirement income fund payments
(q) a payment out of or under a registered retirement income fund that would, if the non-resident person had been resident in Canada throughout the taxation year in which the payment was made, be required by section 146.3 to be included in computing the non-resident person’s income for the year, other than the portion thereof that
(i) has been transferred by the payer on behalf of the non-resident person pursuant to an authorization in prescribed form
(A) to a registered retirement savings plan under which the non-resident person is the annuitant (within the meaning assigned by subsection 146(1)),
(B) to acquire an annuity described in subparagraph 60(l)(ii) under which the non-resident person is the annuitant, or
(C) to a carrier (within the meaning assigned by subsection 146.3(1)) as consideration for a registered retirement income fund under which the non-resident person is the annuitant (within the meaning assigned by subsection 146.3(1)), and
(ii) would, if the non-resident person had been resident in Canada throughout the year, be deductible in computing the non-resident person’s income for the year by reason of paragraph 60(l);
Marginal note:Registered education savings plan
(r) a payment that is
(i) required by paragraph 56(1)(q) to be included in computing the non-resident person’s income under Part I for a taxation year, and
(ii) not required to be included in computing the non-resident person’s taxable income or taxable income earned in Canada for the year;
Marginal note:Home insulation or energy conversion grants
(s) a grant under a prescribed program of the Government of Canada relating to home insulation or energy conversion,
Marginal note:NISA Fund No. 2 payments
(t) a payment out of a NISA Fund No. 2 to the extent that that amount would, if Part I applied, be required by subsection 12(10.2) to be included in computing the person’s income for a taxation year;
Marginal note:Amateur athlete trust payments
(u) a payment in respect of an amateur athlete trust that would, if Part I applied, be required by section 143.1 to be included in computing the person’s income for a taxation year; or
Marginal note:Payments under an eligible funeral arrangement
(v) a payment made by a custodian (within the meaning assigned by subsection 148.1(1)) of an arrangement that was, at the time it was established, an eligible funeral arrangement, to the extent that such amount would, if the non-resident person were resident in Canada, be included because of subsection 148.1(3) in computing the person’s income.
Marginal note:Tax on dividends
(2) Every non-resident person shall pay an income tax of 25% on every amount that a corporation resident in Canada pays or credits, or is deemed by Part I or Part XIV to pay or credit, to the non-resident person as, on account or in lieu of payment of, or in satisfaction of,
(a) a taxable dividend (other than a capital gains dividend within the meaning assigned by subsection 130.1(4), 131(1) or 133(7.1)); or
(b) a capital dividend.
Marginal note:Replacement obligations
(3) For the purpose of subparagraph 212(1)(b)(vii), an obligation (in this subsection referred to as the “replacement obligation”) issued by a corporation resident in Canada wholly or in substantial part and either directly or indirectly in exchange or substitution for an obligation or a part of an obligation (in this subsection referred to as the “former obligation”) shall, where
(a) the replacement obligation was issued
(i) as part of a proposal to, or an arrangement with, its creditors that was approved by a court under the Bankruptcy and Insolvency Act,
(ii) at a time when all or substantially all of its assets were under the control of a receiver, receiver-manager, sequestrator or trustee in bankruptcy, or
(iii) at a time when, because of financial difficulty, the issuing corporation or another corporation resident in Canada with which it does not deal at arm’s length was in default, or could reasonably be expected to default, on the former obligation,
(b) the proceeds from the issue of the replacement obligation can reasonably be regarded as having been used by the issuing corporation or another corporation with which it does not deal at arm’s length in the financing of its active business carried on in Canada immediately before the time when the replacement obligation was issued, and
(c) all interest on the former obligation was (or would be, if the person to whom that interest was paid or credited were non-resident) exempt from tax under this Part because of subparagraph 212(1)(b)(vii),
be deemed to have been issued when the former obligation was issued.
Interpretation of management or administration fee or charge
(4) For the purpose of paragraph 212(1)(a), management or administration fee or charge does not include any amount paid or credited or deemed by Part I to have been paid or credited to a non-resident person as, on account or in lieu of payment of, or in satisfaction of,
(a) a service performed by the non-resident person if, at the time the non-resident person performed the service
(i) the service was performed in the ordinary course of a business carried on by the non-resident person that included the performance of such a service for a fee, and
(ii) the non-resident person and the payer were dealing with each other at arm’s length, or
(b) a specific expense incurred by the non-resident person for the performance of a service that was for the benefit of the payer,
to the extent that the amount so paid or credited was reasonable in the circumstances.
Marginal note:Motion picture films
(5) Every non-resident person shall pay an income tax of 25% on every amount that a person resident in Canada pays or credits, or is deemed by Part I to pay or credit, to the non-resident person as, on account or in lieu of payment of, or in satisfaction of, payment for a right in or to the use of
(a) a motion picture film, or
(b) a film, video tape or other means of reproduction for use in connection with television (other than solely in connection with and as part of a news program produced in Canada),
that has been or is to be used or reproduced in Canada.
Marginal note:Acting services
(5.1) Notwithstanding any regulation made under paragraph 214(13)(c), every person who is either a non-resident individual who is an actor or that is a corporation related to such an individual shall pay an income tax of 23% on every amount paid or credited, or provided as a benefit, to or on behalf of the person for the provision in Canada of the acting services of the actor in a film or video production.
Marginal note:Relief from double taxation
(5.2) Where a corporation is liable to tax under subsection (5.1) in respect of an amount for acting services of an actor (in this subsection referred to as the “corporation payment”) and the corporation pays, credits or provides as a benefit to the actor an amount for those acting services (in this subsection referred to as the “actor payment”), no tax is payable under subsection (5.1) with respect to the actor payment except to the extent that it exceeds the corporation payment.
Marginal note:Reduction of withholding
(5.3) If the Minister is satisfied that the deduction or withholding otherwise required by section 215 from an amount described in subsection (5.1), would cause undue hardship, the Minister may determine a lesser amount to be deducted or withheld and that lesser amount is deemed to be the amount so required to be deducted or withheld.
Marginal note:Interest on provincial bonds from wholly-owned subsidiaries
(6) Where an amount described by subsection 212(1) relates to interest on bonds or other obligations of or guaranteed by Her Majesty in right of a province or interest on bonds or other obligations provision for the payment of which was made by a statute of a provincial legislature, the tax payable under subsection 212(1) is 5% of that amount.
Marginal note:Where s. (6) does not apply
(7) Subsection 212(6) does not apply to interest on any bond or other obligation described therein that was issued after December 20, 1960, except any such bond or other obligation for the issue of which arrangements were made on or before that day with a dealer in securities, if the existence of the arrangements for the issue of the bond or other obligation can be established by evidence in writing given or made on or before that day.
Marginal note:Bonds issued after December 20, 1960 in exchange for earlier bonds
(8) For the purposes of this Part, where any bond, except a bond to which clause 212(1)(b)(ii)(C) applies, was issued after December 20, 1960 in exchange for a bond issued on or before that day, it shall, if the terms on which the bond for which it was exchanged was issued conferred on the holder thereof the right to make the exchange, be deemed to have been issued on or before December 20, 1960.
Marginal note:Exemptions
(9) Where
(a) a dividend or interest is received by a trust from a non-resident-owned investment corporation,
(b) an amount (in this subsection referred to as the “royalty payment”) is received by a trust as, on account of, in lieu of payment of or in satisfaction of, a royalty on or in respect of a copyright in respect of the production or reproduction of any literary, dramatic, musical or artistic work, or
(c) interest is received by a mutual fund trust maintained primarily for the benefit of non-resident persons
and a particular amount is paid or credited to a non-resident person as income of or from the trust and can reasonably be regarded as having been derived from the dividend, interest or royalty payment, as the case may be, no tax is payable because of paragraph 212(1)(c) as a consequence of the payment or crediting of the particular amount if no tax would have been payable under this Part in respect of the dividend, interest or royalty payment, as the case may be, if it had been paid directly to the non-resident person instead of to the trust.
Marginal note:Trust beneficiaries residing outside of Canada
(10) Where all the beneficiaries of a trust established before 1949 reside, during a taxation year, in one country other than Canada and all amounts included in computing the income of the trust for the taxation year were received from persons resident in that country, no tax is payable under paragraph 212(1)(c) on an amount paid or credited in the taxation year to a beneficiary as income of or from the trust.
Marginal note:Payment to beneficiary as income of trust
(11) An amount paid or credited by a trust or an estate to a beneficiary or other person beneficially interested therein shall be deemed, for the purpose of paragraph 212(1)(c) and without limiting the generality thereof, to have been paid or credited as income of the trust or estate, regardless of the source from which the trust or estate derived it.
Marginal note:Deemed payments to spouse, etc.
(12) Where by reason of subsection 56(4) or 56(4.1) or any of sections 74.1 to 75 of this Act or section 74 of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, there is included in computing a taxpayer’s income under Part I for a taxation year an amount paid or credited to a non-resident person in the year, no tax is payable under this section on that amount.
Marginal note:Rent and other payments
(13) For the purposes of this section, where a non-resident person pays or credits an amount as, on account or in lieu of payment of, or in satisfaction of,
(a) rent for the use in Canada of property (other than property that is rolling stock as defined in section 2 of the Railway Act),
(b) a timber royalty in respect of a timber resource property or a timber limit in Canada,
(c) a payment of a superannuation or pension benefit under a registered pension plan or of a distribution to one or more persons out of or under a retirement compensation arrangement,
(d) a payment of a retiring allowance or a death benefit to the extent that the payment is deductible in computing the payer’s taxable income earned in Canada,
(e) a payment described in any of paragraphs 212(1)(k) to 212(1)(n), 212(1)(q) and 212(1)(v), or
(f) interest on any mortgage, hypothecary claim or other indebtedness entered into or issued or modified after March 31, 1977 and secured by real property situated in Canada or an interest therein to the extent that the amount so paid or credited is deductible in computing the non-resident person’s taxable income earned in Canada or the amount on which the non-resident person is liable to pay tax under Part I,
the non-resident person shall be deemed in respect of that payment to be a person resident in Canada.
Marginal note:Application of Part XIII tax where payer or payee is a partnership
(13.1) For the purposes of this Part, other than section 216,
(a) where a partnership pays or credits an amount to a non-resident person, the partnership shall, in respect of the portion of that amount that is deductible, or that would but for section 21 be deductible in computing the amount of the income or loss, as the case may be, referred to in paragraph 96(1)(f) or 96(1)(g) if the references therein to “a particular place” and “that particular place” were read as references to “Canada”, be deemed to be a person resident in Canada;
(a.1) where a partnership pays, credits or provides to a non-resident person an amount described in subsection (5.1), the partnership is deemed in respect of the amount to be a person; and
(b) where a person resident in Canada pays or credits an amount to a partnership (other than a Canadian partnership within the meaning assigned by section 102), the partnership shall be deemed, in respect of that payment, to be a non-resident person.
Marginal note:Application of Part XIII tax where non-resident operates in Canada
(13.2) For the purposes of this Part, where in a taxation year
(a) a non-resident person whose business was carried on principally in Canada, or
(b) a non-resident person who
(i) manufactures or processes goods in Canada,
(ii) operates an oil or gas well in Canada or extracts petroleum or natural gas from a natural accumulation thereof in Canada, or
(iii) extracts minerals from a mineral resource in Canada
pays or credits an amount (other than an amount to which subsection 212(13) applies) to another non-resident person, the first-mentioned non-resident person shall be deemed, in respect of the portion of that amount that was deductible in computing that person’s taxable income earned in Canada for any taxation year, to be a person resident in Canada.
Marginal note:Application of Part XIII to authorized foreign bank
(13.3) An authorized foreign bank is deemed to be resident in Canada for the purposes of
(a) this Part, in respect of any amount paid or credited to or by the bank in respect of its Canadian banking business; and
(b) the application in paragraph (13.1)(b) of the definition Canadian partnership in respect of a partnership interest held by the bank in the course of its Canadian banking business.
Marginal note:Certificate of exemption
(14) The Minister may, on application, issue a certificate of exemption to any non-resident person who establishes to the satisfaction of the Minister that
(a) an income tax is imposed under the laws of the country of which the non-resident person is a resident;
(b) the non-resident person is exempt under the laws referred to in paragraph 212(14)(a) from the payment of income tax to the government of the country of which the non-resident person is a resident; and
(c) the non-resident person is
(i) a person who is or would be, if the non-resident person were resident in Canada, exempt from tax under section 149,
(ii) a trust or corporation that is operated exclusively to administer or provide superannuation, pension, retirement or employee benefits, or
(iii) a trust, corporation or other organization constituted and operated exclusively for charitable purposes, no part of the income of which is payable to, or is otherwise available for, the personal benefit of any proprietor, member, shareholder, trustee or settlor thereof.
Marginal note:Certain obligations
(15) For the purposes of subparagraph (1)(b)(ii), after November 18, 1974 interest on a bond, debenture, note, mortgage, hypothecary claim or similar obligation that is insured by the Canada Deposit Insurance Corporation is deemed not to be interest with respect to an obligation guaranteed by the Government of Canada.
Marginal note:Payments for temporary use of rolling stock
(16) Clause 212(1)(d)(vii)(A) does not apply to a payment in a year for the temporary use of railway rolling stock by a railway company to a person resident in a country other than Canada unless that country grants substantially similar relief for the year to the company in respect of payments received by it for the temporary use by a person resident in that country of railway rolling stock.
Marginal note:Exception
(17) This section is not applicable to payments out of or under an employee benefit plan or employee trust.
Marginal note:Return by financial institutions and registered securities dealers
(18) Every person who in a taxation year is a prescribed financial institution for the purpose of clause 212(1)(b)(iii)(D) or a person resident in Canada who is a registered securities dealer shall
(a) within 6 months after the end of the year file with the Minister a return in prescribed form if in the year the person paid or credited an amount to a non-resident person in respect of which the non-resident person is, because of clause 212(1)(b)(iii)(D) or subparagraph 212(1)(b)(xii), not liable to pay tax under this Part; and
(b) on demand from the Minister, served personally or by registered letter, file within such reasonable time as may be stipulated in the demand, an undertaking in prescribed form relating to the avoidance of payment of tax under this Part.
Marginal note:Tax on registered securities dealers
(19) Every taxpayer who is a registered securities dealer resident in Canada shall pay a tax under this Part equal to the amount determined by the formula
1/365 × .25 × (A - B) × C
where
- A
- is the total of all amounts each of which is the amount of money provided before the end of a day to the taxpayer (and not returned or repaid before the end of the day) by or on behalf of a non-resident person as collateral or as consideration for a security that was lent or transferred under a securities lending arrangement described in subparagraph 212(1)(b)(xii),
- B
- is the total of
(a) all amounts each of which is the amount of money provided before the end of the day by or on behalf of the taxpayer (and not returned or repaid before the end of the day) to a non-resident person as collateral or as consideration for a security described in clause 212(1)(b)(xii)(A) that was lent or transferred under a securities lending arrangement, and
(b) the greater of
(i) 10 times the greatest amount determined under those laws to be the capital employed by the taxpayer at the end of the day, and
(ii) 20 times the greatest amount of capital required under those laws to be maintained by the taxpayer as a margin in respect of securities described in clause 212(1)(b)(xii)(A) at the end of the day, and
- C
- is the prescribed rate of interest in effect for the day,
and shall remit that amount to the Receiver General on or before the 15th day of the month after the month in which the day occurs.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- R.S., 1985, c. 1 (5th Supp.), s. 212
- 1994, c. 7, Sch. II, s. 174, Sch. VI, s. 10, Sch. VIII, s. 123, c. 21, ss. 97, 137
- 1995, c. 21, ss. 64, 73
- 1996, c. 21, s. 55
- 1997, c. 25, s. 63
- 1998, c. 19, ss. 62, 216
- 1999, c. 22, s. 75
- 2000, c. 12, s. 142
- 2001, c. 17, ss. 173, 226
- Date modified: