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 applies to property described in subsection 70(5.2) of the Income Tax Act and transferred to his or her spouse by the deceased taxpayer.
Position: No.
Reasons: A reading of paragraph 5 of Article XXIX B indicates that that paragraph is only applicable for the purposes of subsection 70(6) of the Act.
June 12, 2001
Donna Cheesman International and Trusts Section Verification & Enforcement S. Leung
Regina Tax Services Office 957-2115
2000-005395
Paragraph 5 of Article XXIX B of the Canada-United States Income Tax Convention and Subsection 70(5.2) of the Income Tax Act
We are writing in reply to your memorandum of October 27, 2000 in which you requested our view as to whether paragraph 5 of Article XXIX B of the Canada-United States Income Tax Convention (the "Convention") would apply for the purpose of subsection 70(5.2) of the Income Tax Act (the "Act") to deem both the deceased person and his or her spouse who were U.S. residents and citizens to be residents of Canada immediately before the death of the deceased person such that subsection 70(5.2) of the Act would apply to allow a rollover of the resource property transferred to the spouse of the deceased person as a consequence of death of that person.
Paragraph 5 of Article XXIX B of the Convention states that "[W]here an individual was a resident of the United States immediately before the individual's death, for the purpose of subsection 70(6) of the Income Tax Act, both the individual and the individual's spouse shall be deemed to have been resident in Canada immediately before the individual's death". (Underlining for emphasis)
As the words used in paragraph 5 of Article XXIX B of the Convention are clear, we feel that we must interpret the provision in accordance with the plain meaning of the words written therein. Therefore, we maintain the position expressed in our previous technical opinion letter #9602995 that paragraph 5 of Article XXIX B of the Convention would not apply to the transfer of property described in subsection 70(5.2) of the Act. We have recently discussed this issue with the Department of Finance and have advised them that amendments to paragraph 5 of Article XXIX B of the Convention would be necessary before the Agency could apply this provision to situations other than that described in subsection 70(6) of the Act.
We trust you will find the above to be of assistance. If you have any question regarding the above, please do not hesitate to contact us.
For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the CCRA's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their database. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Request for this latter version should be made by you to Jackie Page at (819) 994-2898. The severed copy will be sent to you for delivery to the client.
for Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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