| 19(1) | File No. 5-8473 |
| A. Seidel | |
| (613) 957-8960 |
October 26, 1989
Dear Sir:
This is in reply to your letter of August 2, 1989 with respect to the withholding of tax pursuant to Part XIII of the Income Tax Act (the "Act") where a non-resident corporation in one country uses a Canadian bank as its agent to make interest or dividend payments to a non-resident in another country.
Whether a Canadian bank is acting as an agent for a non-resident corporation is a question of fact which can only be determined after the thorough review of all the relevant agreements. The hypothetical situation described in your letter lacks sufficient detail to allow such a determination. We would note, however, that the receipt of the income be a bank in its own name is not indicative of an agency relationship.
Where it can be established that the Canadian bank is acting as an agent for the non-resident corporation, it is our view that the Canadian bank is not the person paying or crediting the interest or dividend to the non-resident in the other country and therefore will not be required to withhold tax pursuant to Part XIII of the Act.
While we hope our comments are of assistance to you they do not constitute an advance income tax ruling and therefore are not binding on the Department in respect of a specific situation.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate