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ARTICLE · 31 JANUARY 2012

Updates To Section 116 Clearance Certificate Process

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The Canada Revenue Agency ("CRA") has released updated Information Circular IC72-17R6 dated September 29, 2011, replacing IC72-17R5 (March 15, 2005).

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Jennifer Hanna
Jennifer Hanna
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(First published by the Canadian Tax Foundation in (2012) 12:1Tax for the Owner-Manager.)

The Canada Revenue Agency ("CRA") has released updated Information Circular IC72-17R6 dated September 29, 2011, replacing IC72-17R5 (March 15, 2005).  The revised circular reflects legislative changes to section 116 and the definition of "taxable Canadian property" that have been enacted over the past several years, and addresses issues relating to section 116 compliance for fiscally transparent entities.  In particular, the circular addresses the application of the hybrid entity clause in Article IV(6) of the Canada-U.S. Tax Convention ("Canada-U.S. Treaty") and compliance procedures for partnerships.  The circular also explains how the recently introduced "Declaration of Eligibility" forms NR301, NR302 and NR303 are integrated into the section 116 compliance process.  This article summarizes the changes contained in the revised circular.

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