U.S. Internal Revenue Code Section 1446(f) comes into effect on January 1, 2023

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December 2022

As communicated in CIBC Mellon’s Tax Forum in May 2022 and Straight Talk articles on September 7, 2021, and December 1, 2020, the U.S. Treasury Department (Treasury) and the U.S. Internal Revenue Service (IRS) have 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). These regulations will come into effect on January 1, 2023.

All publicly traded partnerships, U.S. or Non-U.S. (including Canadian PTPs), are in scope for U.S. withholding tax under Section 1446(f), unless an exception applies. Clients are responsible for reviewing their holdings report to determine if they or their clients hold any PTP assets. The IRS has not published a PTP list, and there is no current industry-wide list available in the U.S.

For more information, read the summary of some of the key requirements that will impact CIBC Mellon and some of its clients.

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Contributors

Simon Lee

Simon Lee

Vice President, Tax




This article is provided for general information purposes only and CIBC Mellon and its 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. This article should not be regarded as legal, accounting, investment, financial or other professional advice nor is it intended for such use.

About CIBC Mellon

CIBC Mellon is a Canadian company exclusively focused on the investment servicing needs of Canadian institutional investors and international institutional investors into Canada. Founded in 1996, CIBC Mellon is 50-50 jointly owned by The Bank of New York Mellon (BNY) and Canadian Imperial Bank of Commerce (CIBC). CIBC Mellon's investment servicing solutions for institutions and corporations are provided in close collaboration with our parent companies, and include custody, multicurrency accounting, fund administration, recordkeeping, pension services, exchange-traded fund services, securities lending services, foreign exchange processing and settlement, and treasury services.

As at September 30, 2024, CIBC Mellon had more than C$2.9 trillion of assets under administration on behalf of banks, pension funds, investment funds, corporations, governments, insurance companies, foreign insurance trusts, foundations and global financial institutions whose clients invest in Canada. CIBC Mellon is part of the BNY network, which as at September 30, 2024 had US$52.1 trillion in assets under custody and/or administration. CIBC Mellon is a licensed user of the CIBC trade-mark and certain BNY trade-marks, and is the corporate brand of CIBC Mellon Trust Company.

For more information – including CIBC Mellon's latest knowledge leadership on issues relevant to institutional investors active in Canada – visit www.cibcmellon.com