28 June 2006 Internal T.I. 2006-0182461I7 - DTC in respect of a US Resident Dependant

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.

Principal Issues: Whether there may be allowed under subsection 118.3(2) in respect of a dependant resident in the US, the amount that would have been allowed had that dependant been resident in Canada.

Position: Yes

Reasons: Pursuant to paragraph 3, Article XXV (as amended) of the 1980 Canada-US Tax Treaty, there may be allowed under subsection 118.3(2) in respect of a dependant resident in the US, the amount that would have been allowed had that dependant been resident in Canada

		June 28, 2006

	Sharon Yetts, Senior Programs Officer	HEADQUARTERS
	Legislation and Partnership Section	D Tiu
	Benefit Programs Directorate	(613) 957-8961
	Canada Post Building, East Tower
	750 Heron Road
		2006-018246

Disability Tax Credit ("DTC") of a Supporting Canadian Resident in respect of a US Resident Dependant

We are writing in response to your April 19, 2006 inquiry on the above subject and our subsequent telephone discussions (Yetts/Tiu). You inquired whether there may be allowed under subsection 118.3(2) in respect of a dependant resident in the US, the amount that would have been allowed had that dependant been resident in Canada.

You indicated the following in your inquiry:

? the dependant US resident meets the eligibility criteria for the DTC under sections 118.3 and 118.4 and would presumably be filing the appropriate non-resident T1 return;

? the DTC eligible US resident is dependant on the supporting Canadian resident for at least some of his or her basic necessities in life, i.e., the supporting person's contributions are not to sustain a higher standard of living; and

? the supporting Canadian resident is able to claim in his or her T1 return the DTC eligible US resident as an infirm adult dependant, or could so claim if the dependant's income is zero and on the basis that the DTC eligible US resident is treated as if he or she is a Canadian resident for purposes of the subsection by the Canada-US Tax Treaty.

It is our opinion that pursuant to paragraph 3, Article XXV (as amended) of the 1980-Canada-US Tax Treaty, there may be allowed under subsection 118.3(2) in respect of a dependant resident in the US, the amount that would have been allowed had that dependant been resident in Canada.

We trust that the foregoing is satisfactory.

Robin Maley
Section Manager
For Division Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch