Q. 27: Deemed Dividend to Non-Resident under Paragraph 214(3)(a)
Paragraph 20(1)(j) provides relief to a Canadian resident shareholder who repays a loan that was previously included in computing his income by virtue of subsection 15(2). However, no relief is provided to a non-resident shareholder who repays a loan the amount of which was previously deemed to have been paid to the non-resident as a dividend by virtue of paragraph 214(3)(a) and on which withholding tax was paid.
What is the reason for this difference in the treatment of resident and non-resident shareholders?
Department's Position
This question raises a tax policy concern that should be directed by the questioner to officials from the Department of Finance.
Prepared by: J.E. HarmsDate: May 27, 1991File: 7-911250