Income Tax Application Rules

Marginal note:Application of Part XIII of amended Act

• 10 (4) Where an amount is paid or credited by a person resident in Canada to a non-resident person

  • (a) who is resident in a prescribed country, and

  • (b) with whom the person resident in Canada was dealing at arm’s length,

  as, on account of, in lieu of payment of or in satisfaction of, interest payable on any bond, debenture, mortgage, note or similar obligation issued before 1976 by the person resident in Canada to the non-resident person, for the purposes of computing the tax under Part XIII of the amended Act payable by the non-resident person on the amount, the reference in subsection 212(1) of that Act to “25%” shall be read as a reference to “15%”.

• (5) [Repealed, 2007, c. 35, s. 69]

• Marginal note:Limitation on non-resident’s tax rate

  (6) Notwithstanding any provision of the amended Act, where an agreement or convention between the Government of Canada and the government of any other country that has the force of law in Canada provides that where an amount is paid or credited, or deemed to be paid or credited, to a resident of that other country the rate of tax imposed thereon shall not exceed a specified rate,

  • (a) any reference in Part XIII of the amended Act to a rate in excess of the specified rate shall, in respect of such an amount, be read as a reference to the specified rate; and

  • (b) except where the amount can reasonably be attributed to a business carried on by that person in Canada, that person shall, for the purpose of the agreement or convention in respect of the amount, be deemed not to have a permanent establishment in Canada.