Zong – Tax Court of Canada finds that mandatory contributions by a dual resident to the UK’s national insurance scheme did not qualify for FTC purposes

A resident of both Canada and the UK who was employed full-time in the UK for several years was not entitled to claim a foreign tax credit under s. 126(1) for mandatory contributions that he made in 2016 to the UK’s national insurance scheme, on the basis that such contributions were not foreign income “taxes”. Bocock J found that such contributions did not in this regard satisfy the test of being “made for a public purpose,” stating:

Because the payor receives a direct personal and financial benefit from his or her contributions in the future, the Minister and this Court [citing Yates] have held that such contributions are not a tax for public purposes.

Bocock J also found that there also was nothing providing a deduction under the wording of the Canada-UK Income Tax Convention.

Neal Armstrong. Summaries of Zong v. The Queen, 2019 TCC 270 under s. 126(7) – non-business-income tax and Treaties – Income Tax Conventions – Art. 24.