5 January 1996 CTF Roundtable Q. 31, 9523976 - GROSS-UP PAYMENTS -- summary under Subsection 212(1)

Where a gross-up is paid or credited by a Canadian resident to a non-resident pursuant to a loan agreement that is not otherwise exempt from withholding tax, withholding tax "is generally required whether or not the gross-up meets the legal definition of interest because the preamble to paragraph 212(1)(b) of the Act refers to amounts paid or credited, 'as, on account or in lieu of payment of, or in satisfaction of, ... interest'".