Principal Issues: Whether a trust can receive a refund of the withholding tax remitted pursuant to section 116.
Position: We are not able to provide a ruling on this matter as it relates to a completed transaction. However, we have provided the taxpayer with guidance on where to submit request.
Reasons: See below.
XXXXXXXXXX 2015-059685
M. Panourgias
(416) 973-9524
December 10, 2015
Dear XXXXXXXXXX,
Re: Estate of XXXXXXXXXX (the “Estate”)
We are replying to your letter of June 16, 2015 in which you requested an advance income tax ruling (“Ruling”) to confirm whether withholding tax remitted pursuant to section 116 of the Income Tax Act (Canada) (the “Act”) was correctly withheld and remitted by the purchaser upon the disposition of land in XXXXXXXXXX, by the Estate in XXXXXXXXXX. In particular, you are seeking a refund in respect of the amount withheld.
As discussed, Rulings are intended to provide assurance on the income tax treatment of proposed transactions. Rulings are generally not issued on completed transactions. See Information Circular, IC70-6R6, Advance Income Tax Rulings and Technical Interpretations, for more details. Although we are not able to provide you with a Ruling, we are writing to provide you with guidance on where to direct your request.
Section 116 requests and remittances for property located in XXXXXXXXXX, are processed by the XXXXXXXXXX Tax Services Office (“XXXXXXXXXX TSO”). We discussed your request with the XXXXXXXXXX TSO on a no-names basis. We were advised that you should submit a letter to the XXXXXXXXXX TSO with your request, and preferably with the income tax return(s) reporting the disposition of the real property. The letter should be sent to the attention of “Non-resident dispositions” or the “Assistant Director of Audit”. Also, in order for your file to be expedited, the XXXXXXXXXX TSO recommended that you also include the following with your request:
- Copy of the terminal personal income tax return for the late XXXXXXXXXX;
- Copy of the will of the late XXXXXXXXXX;
- Explanation as to why it has taken so long for the taxpayer(s) to file an income tax return reporting the disposition of the real property; and
- Name of the purchaser, purchaser’s law firm and the amount remitted.
We have also forwarded a copy of this letter to the XXXXXXXXXX TSO along with your initial submission to the Income Tax Rulings Directorate. However, the XXXXXXXXXX TSO will not begin their review of your request until you submit a letter directly to the TSO along with the other information noted above.
Finally, you may wish to consider whether the expected refund is statute barred pursuant to subsection 164(1) of the Act or if the exception in subsection 164(1.5) of the Act is applicable.
We hope this information is of assistance to you.
Yours truly,
Steve Fron, CPA, CA
Manager, Trust Section II
Financial Industries and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
cc: XXXXXXXXXX Tax Services Office