What weight will CRA to the examples in paras. 182 and 187 of the Commentary on Art. 29 of the 2017 OECD Model respecting whether a structure or transaction satisfies the object and purpose clause within the PPT of the MLI; and what additional guidance will it provide, particularly respecting private equity and other collective investors (e.g., expedited rulings)?
CRA noted that Canada has not placed a reservation on Art. 29 of the Model, which contains a principal purpose test that is almost identical to the PPT in the MLI, nor has it placed an observation on the related Commentary, and also noted that Commentary bearing on the above examples emphasized the importance of the facts and circumstances of each case. CRA then indicated that whether it will apply the PPT to situations similar the examples will turn on an examination of the facts and circumstances of each case, the relevant authorities and the wording and object of the relevant covered treaty. Respecting the PPT’s application to CIVs issues, CRA will give consideration to matters such as other articles in the particular covered treaty, e.g., para. 7(a) of the Canada-France Treaty, any relevant competent authority agreement, e.g., the Canada-Netherlands agreement regarding closed funds for mutual account and previous rulings, e.g., on Switzerland contractual investment funds and Ireland common contractual funds.
Similarly to GAAR rulings, there may be consultation with various areas before any ruling on the issue is issued.