The appellant, Emergis Inc., appealed reassessments for its 2000 and 2001 taxation years that disallowed deductions claimed under subsection 20(12) of the Income Tax Act for U.S. withholding taxes paid on interest income received from a U.S. partnership.
The Tax Court of Canada dismissed the appeal, finding that the U.S. tax paid could reasonably be regarded as having been paid in respect of income from a share of the capital stock of a foreign affiliate, thus triggering the exclusionary clause in subsection 20(12).
