No. Again, I apologize. I saw the heading and was scrolling a bit too quickly.
Clause 52 relates to a measure that prevents the avoidance of withholding tax in respect of securities lending arrangements. Securities lending arrangements are fairly common and provide liquidity in the securities markets.
I might have a number of shares of a company. I can lend them to a counterparty and take them back at a future time. That can help facilitate things like short sales and provide liquidity in the market as well as serve as a form of financing.
What the securities lending rules basically try to do is that if you're in a securities lending transaction, they put you back in the same place, as if you had never legally disposed of the securities that were lent. Planning had developed that allowed entities to avoid withholding tax on amounts paid by a Canadian resident to a non-resident through the use of securities lending arrangements, or what are called “broken” securities lending arrangements. How it worked was they technically avoided the definition by not qualifying. This, essentially, closes that loophole and ensures that withholding tax applies appropriately.
I should also note that there's a relieving aspect to it, in that it removes the withholding tax obligation for the Canadian entity when the underlying share—the share that's being lent—is a foreign share that would not normally attract Canadian withholding tax. It has those two relieving and tightening aspects, but in essence it makes sure the securities lending rules work appropriately in the context of part XIII withholding tax.
