A non-resident reinsurer of Canadian risks may be required to place property in trust in Canada (a "Reinsurance Trust"). Proposed s. 212(9)(d) provides that dividends or interest distributed to beneficiaries of a Reinsurance Trust will not be subject to Part XIII tax where they would not have been subject to Canadian tax had they been paid directly to non-residents. Although s. 227(6) provides a procedure for recovering the amounts paid under such circumstances, how will the corporation recover the amounts paid before the 2-year period under s. 227(5) back to the 1 January 2000 effective date? CRA responded:
The CRA's application of such a retroactive measure for the purposes of Part XIII appears to be limited by the application of subsections 227(6) and 227(7). In this regard, the CRA is exploring possible avenues for the implementation of this type of retroactive measure. The CRA is currently conducting consultations and plans to announce its position to APFF members as soon as it finishes its analysis.