Is a non-resident trust, that is deemed to be resident in Canada pursuant to s. 94 and which owns a Canadian rental property, resident in Canada for purposes of non-resident withholding tax on rent paid to it?
CRA indicated that such a deemed resident trust is not subject to Part XIII tax on amounts paid or credited to it, but is not considered to be resident in Canada for the purposes of determining the liability of a person other than the trust to withhold and remit under s. 215 – so that there is still a requirement to withhold and remit Part XIII tax on the rent paid to such trust.
Per s. 94(3)(g), to the extent that the amount on which the Part XIII tax is paid has been included in the calculation of the deemed resident trust’s income, the withholding amount is deemed to have been paid on account of the trust tax under Part I for the particular taxation year.
S. 216(4.1) may provide relief in respect of the withholding required to be remitted on rent on real or immovable property in respect of a deemed resident trust, where the person who is otherwise required by s. 215(3) to remit the Part XIII tax in the year makes an election not to remit, provided that certain conditions are met.