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.
March 16, 1987 M.D. Praulins (613) 957-2123
XXXX
This is in reply to your letter of February 6, 1987 in which you made further enquiries concerning the taxation of your Canadian source pension income by Finland.
Attached is a copy of the Canada-Finland income Tax Convention (the "Convention"). As outlined in our earlier letter of January 27, 1987, Article X(1) of the Convention states that "... any pension or annuity derived from sources within Canada by an individual who is a resident of Finland shall be exempt from Canadian tax". Therefore the international treaty negotiation process secured Finland's exclusive right to tax its residents on all pension income originating in Canada. You may wish to note that according to the Convention, the reverse is also true, i.e. were you and your spouse residents of Canada receiving pensions or annuities derived from sources within Finland, you would be exempt from Finnish tax, and you would be taxable exclusively in Canada on your pension income.
You express disappointment in the manner in which the Convention treats Canadian-source pension income of residents of Finland, as well as in the tax rate imposed by the government of Finland on your Canadian-source pensions. However, I am sure you can appreciate that Revenue Canada, Taxation is not in the position to alter either the provisions of the Convention, or the rates of pension income taxation by Finland.
Finally, even if the Canadian payor did for some reason withhold income taxes from your Canadian source pension income (e.g. by error), under the Convention, Finland would nevertheless tax you on that income and it would be possible and appropriate for you to apply to Canada for a refund of taxes withheld.
Since, under the Convention, your tax position would not improve by the filing of Canadian personal income tax returns, we are not forwarding any forms to you.
We regret that our reply could not have been more favourable.
Yours truly,
for Director Reorganizations and Non-Resident Division. Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1987
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© Sa Majesté la Reine du Chef du Canada, 1987
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