Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
whether paragraph 5 of Article XXIX B of the Canada-U.S. Income Tax Convention also applies to subsection 70(5.2) transfer.
Position:
No
Reasons:
Paragraph 5 of Article XXIX B is only for the purposes of subsection 70(6)
960299
XXXXXXXXXX S. Leung
Attention: XXXXXXXXXX
May 13, 1996
Dear Sirs:
Re: Subsection 70(5.2) of the Income Tax Act (the "Act")
Paragraph 5 of Article XXIX B of the Canada-United States
Income Tax Convention (1980), as Amended, (the "Convention")
We are writing in response to your letter of January 12, 1996 wherein you requested our opinion as to whether Article XXIX B or any other provisions of the Convention allows a tax-deferred transfer of Canadian resource property from a deceased taxpayer to his or her surviving spouse or spousal trust in the case where the decedent was a resident of the United States immediately before the date of death.
Paragraph 5 of Article XXIX B of the Convention, among other things, deems an individual who was a resident of the United States immediately before the individual's death and the spouse of such individual to have been resident in Canada before the individual's death. However, this deeming provision as it reads operates only for purposes of subsection 70(6) of the Act which applies with respect to capital property only. In addition, there is no indication in the Technical Explanation to the Third Protocol that this provision was intended for transfers on death other than those provided for in subsection 70(6) of the Act. Therefore, in our opinion, paragraph 5 of Article XXIX B of the Convention does not apply to tax-deferred transfers described in paragraphs 70(5.2)(b) or 70(5.2)(d) or subsection 70(6.1) of the Act.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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