Principal Issues: Whether a corporation resident in Canada (CRIC) that has late-filed the form required by subparagraph 212.3(7)(d)(i) could be:
• assessed interest on the late remittance of any Part XIII tax required by subsection 212(2) to be withheld from a subparagraph 212.3(7)(d)(ii) deemed dividend, and
• assessed a penalty under subsection 227(8) for failing to withhold Part XIII tax on such a dividend.
Position: Where a CRIC has late-filed the form required by subparagraph 212.3(7)(d)(i), the Minister may assess interest on the late remittance of any Part XIII tax required by subsection 212(2) to be withheld from any resulting subparagraph 212.3(7)(d)(ii) deemed dividend. However, the CRIC would not be assessed a penalty under subsection 227(8) for failing to withhold Part XIII tax on such a dividend.
Reasons: Paragraph 227(8.3)(b) authorizes the Minister to assess interest on an amount required by section 215 to be withheld, beginning on the day on which the amount was required to be withheld and ending on the day that it is paid, or deemed paid by paragraph 227(6.2)(c), to the Receiver General.
Paragraph 227(8.5)(b) states that a subsection 227(8) penalty will not apply to a CRIC in respect of Part XIII tax in respect of a dividend it has been deemed to have paid under subparagraph 212.3(7)(d)(ii).