Final Regulations for Withholding on Transfers of Certain Partnership Interests: U.S. Internal Revenue Code Section 1446

December 01, 2020

Straight Talk – December 1, 2020

Final Regulations for Withholding on Transfers of Certain Partnership Interests: U.S. Internal Revenue Code Section 1446

Simon Lee

On October 7, 2020, the U.S. Treasury Department (Treasury) and the U.S. Internal Revenue Service (IRS) released final regulations under U.S. Internal Revenue Code (IRC) Section 1446(f) with respect to the withholding tax on a transfer by a non-U.S. person of an interest in a partnership that carries on a trade or business in the U.S. or otherwise realizes income effectively connected with such a trade or business (ECI).

The final regulations retain the overall approach and structure of the proposed regulations issued in May 2019, with certain revisions based on comments received.

The final regulations require any broker that effects a transfer of a PTP interest on behalf of a foreign partner and receives the amount realized on behalf of the transferor must generally withhold a tax equal to 10 per cent of the amount realized, subject to certain exceptions. The final regulations do not require a PTP withhold on a transferee, but instead add provisions imposing liability for under-withholding if the partnership issued an incorrect qualified notice upon which brokers relied to not perform the required withholding.

For more information, read the article.

Join us for CIBC Mellon’s Final Asset Servicing Client Update Call of 2020

On December 8, CIBC Mellon is closing its twice-monthly series of calls to provide perspective on our operational status, key trends and top questions from clients amid the ongoing COVID-19 pandemic. The final call of the year will feature a CEO update as well as perspectives on how CIBC Mellon is evolving toward the future of work. The series will resume on January 12, 2021.

To learn more or request an invitation, please contact your relationship manager.

The Future of the U.S. Dollar

The below is an excerpt from CIBC Asset Management’s latest whitepaper, “The Future of the U.S. Dollar.”

The U.S. dollar is widely recognized as the pre-eminent global reserve currency, this status quo has persisted for an unprecedented eight decades. A gradual but permanent shift in the status of the dollar is underway. Evidence suggests the embryonic emergence of a multi-currency reserve system. Credible long-term rivals to the dollar include the euro, renminbi, and gold. This long-term trend has important implications for every investor with global investments, including in equities, bonds, and alternatives.

For more information, read The Future Of The U.S. Dollar.

The Tunes of 2021: Year Ahead Outlook

CIBC Capital Markets recently released its latest report, “The Tunes of 2021: Year Ahead Outlook.” The report features a series of articles on FICC strategy, provincial economies, and equity research.

For more information, read The Tunes of 2021: Year Ahead Outlook.

The 2020 Canadian Responsible Investment Trends Report

The 2020 Canadian Responsible Investment Trends Report reveals that responsible investment (RI) continues to grow rapidly in Canada. The biennial report tracks the scale, trends and outlook for responsible investment, which refers to investments that incorporate environmental, social and corporate governance (ESG) issues into the selection and management of investments.

For more information, view the report.

Canadian Association of Pension Supervisory Authorities Publishes a Consultation Draft for Pension Plan Funding Policy Guideline

The Canadian Association of Pension Supervisory Authorities (CAPSA) recently released a consultation draft of revisions to CAPSA Guideline No. 7 Pension Plan Funding Policy (Guideline). CAPSA notes that the revised Guideline provides guidance on the development and adoption of funding policies for pension plans that provide defined benefits or target benefits.

Furthermore, according to CAPSA, the revised Guideline includes best practices that plan administrators and sponsors should consider and incorporate into a plan’s funding policy.

CAPSA requests feedback on the draft of the revised Guideline by January 11, 2021. For more information, view the consultation.

Canadian Securities Regulators Outline Recent Developments on Interest Rate Benchmarks

The Canadian Securities Administrators (CSA) recently published a staff notice to ensure that market participants are aware of recent developments regarding interest rate benchmarks and can consider their impact.

In its staff notice, the CSA reports that on November 12, 2020, Refinitiv Benchmark Services (UK) Limited (RBSL), the administrator of Canadian Dollar Offered Rate (CDOR), announced that the six-month and 12-month tenors of CDOR will cease to be published effective May 17, 2021 (the effective date). The one, two and three-month tenors of CDOR will continue to be published after the effective date.

For more information, view the CSA’s staff notice.

Canada’s Office of the Superintendent of Financial Institutions Releases Issue 23 of InfoPensions

Canada’s Office of the Superintendent of Financial Institutions (OSFI) recently released the latest issue of InfoPensions. OSFI’s publication provides an update on management team changes in the Private Pension Plan Division, an update on temporary portability freeze, an extension to filing deadlines and more.

For more information, view issue 23 of InfoPensions.

Straight Talk is provided for general information purposes only and CIBC Mellon Global Securities Services Company, CIBC Mellon Trust Company, CIBC, The Bank of New York Mellon Corporation and their affiliates make no representations or warranties as to its accuracy or completeness, nor do any of them take any responsibility for third parties to which reference may be made.  Readers should be aware the content of this publication should not be regarded as legal, accounting, investment, financial, tax or other professional advice nor is it intended for such use.