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Unformatted text preview: sider the results if the situation were reversed. usco makes an upstream interest-bearing loan to Canco. in this case, usco is not a qualifying person and is not eligible to benefit from the reduced interest withholding rate on interest payments from Canco, unless it meets the conditions of the active trade or business test in article xxix a(3) or the derivative benefits test in article xxix a(4).29 The upstream loan example appears to reveal an inappropriate and inconsistent result when compared with the downstream loan example. Just as the qualifying person test 28 because the protocol entered into force on December 15, 2008, the rate is reduced to 4 percent in 2009, and to nil in 2010 and onward. Withholding tax on arm’s-length interest has effectively been eliminated in Canada as a result of changes to subsection 212(1) of the act, which took effect on January 1, 2008. 29 although articles xxix a(1) to (5) do not provide usco with the right to Canadian benefits under the treaty, usco can apply to competent aut...
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This note was uploaded on 11/03/2013 for the course ACCOUNTING 346 taught by Professor William during the Fall '12 term at DeVry Chicago.

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