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.
October 3, 1984
Non-Corporate Rulings Revenue Canada Taxation 875 Heron Road Ottawa, Ontario K1A 0L8
Dear Sir/Madam:
One of our clients is a mutual fund trust as defined in subsection 132(6) of the Income Tax Act. This trust has investments in the United States which generate U.S. source interest and dividend income. A significant portion of the unit holders are registered pension plans and registered retirement savings plans which are generally exempt from Canadian income tax.
Paragraph two of Article XXI of the recently ratified Canada - U.S. Income Tax Convention concerns exempt organizations that receive dividend and interest income. Paragraph two of Article XXI provides that the trust must be formed and operated "exclusively to administer or provide pension or retirement benefits"
It is our view that Article XXI does not apply to the client described above.
This is due to the fact that the mutual fund trust is not established exclusively to administer or provide pension or retirement benefits under a plan or fund.
We ask that you comment on whether Revenue Canada would administratively be prepared to refund to those beneficiaries of the fund who are registered pension plans or retirement plans, amounts of foreign tax paid that are allocated to them on Form T3 for purposes of the foreign tax credit. In our view, this administrative practice would provide equitable treatment to those tax exempt entities described in our letter. Paragraph two of Article XXV of the Treaty which covers non-discrimination may, indirectly provide the basis for Revenue Canada to administratively adopt this practice.
We would appreciate your comments on the above. If you should have any questions, please call the writer.
Yours very truly.
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© Her Majesty the Queen in Right of Canada, 1984
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© Sa Majesté la Reine du Chef du Canada, 1984
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