In 2013-0486011E5, the CRA concluded that the preferential 5% dividend withholding tax (WHT) rate under the Canada-Netherlands tax treaty (Treaty) should apply where a Canadian corporate partnership in a group lends funds to the group’s foreign parent. The facts involved a Canadian partnership with two Canadian companies (in the group) as the corporate partners. The partnership lent excess funds from its Canadian business to a parent company and a grandparent company in the group, each of which was resident in the Netherlands. The loans were outstanding a sufficient length of time to trigger the rules in s. 15(2) and s. 214(3)(a), which together deemed a dividend to be paid to the foreign parent and the foreign grandparent from “a corporation resident in Canada”. In this context, the CRA said that s. 96 does not apply for purposes of Article 10(2)(a) of the Treaty. Accordingly, the Canadian corporate partners were considered to have paid these deemed dividends. Further, as the foreign parent and the foreign grandparent each controlled (directly or indirectly) at least 10% of the voting power of the Canadian corporate partners, the preferential 5% WHT rate under the Treaty applied to the deemed dividends.