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Unformatted text preview: er us Holdco was eligible to benefit from the preferential 5 percent dividend withholding tax rate under article x of the treaty, the Cra focused on the active trade or business test. it specifically commented on whether the income in question (the dividend income paid by CanuLC to us Holdco) was derived in connection with this us trade or business. because all or substantially all of CanuLC’s income was derived from dividends paid by usco (essentially out of dividends received by usco from the us Opcos), the Cra concluded that the dividend income of us Holdco was derived in connection with the us trade or business.
During the 2008 round table,37 the Cra provided an example in which a uK parent corporation owns usco, which in turn owns Canco. usco and Canco each carry on an active trade or business, and usco has a substantial active business in the united states. The active trade or business activities of Canco are the same as or complementary to the active trade or business activities of...
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