US LLCs — Limited Opportunity?

The April 8, 2010 decision of the Tax Court of Canada in TD Securities (USA) LLC v. R. (2008-2314(IT)G) has reversed a long-standing position of the Canada Revenue Agency (CRA) that US limited liability companies (LLCs) are not entitled to the benefits of the Canada-US Income Tax Convention (Treaty) before the recent amendments made in the Fifth Protocol to the Treaty. While we expect the case will be appealed, US LLCs that have not claimed the benefit of the Treaty for past years may wish in the meantime to file amended returns for branch tax or capital gains tax or to file claims for refunds of withholding tax on dividends, interest, royalties and management fees for past years. Applications for refunds of amounts withheld must be made no later than two years after the calendar year in which the amount was withheld and remitted.