Background/ structure
A collective investment scheme (the “Fund”) established under Swiss law is an arrangement by which investors pool their assets to be managed by and in the name of a Swiss regulated fund management company (the “Management Company’) for the account of the investors, whose proportionate entitlements to income and cash or in-kind redemption proceeds are represented by non-voting units. The Fund was established by a contract of the investors with the Manager and the non-resident custodian of the Fund assets (the “Custodian”), and lacks legal personality. The Custodian delegated the custody of Canadian securities (being mostly listed shares of Canadian companies) to the “Canadian Sub-Custodian.” The Fund unitholders are all Swiss entities providing pension or retirement plans.
Ruling
To the extent that an amount paid or credited from the Fund Assets to the [representative Swiss] Taxpayer or reinvested in the Fund Assets under the Fund Contract in the interest of the Taxpayer is paid, credited or reinvested out of a dividend paid or credited on Canadian Securities that are part of the Fund Assets, such dividend will be exempt from Canadian tax imposed by paragraph 212(2) of the Act by virtue of subparagraph 3(b) of Article 10 of the [Canada-Swiss] Treaty.
The person who pays, credits or provides such dividend will not be required to deduct and withhold an amount under subsection 215(1) of the Act from such dividend and the Canadian Sub-Custodian will not be required to deduct and withhold under subsection 215(3) in respect of such dividend.