1 June 1990 Ministerial Correspondence 59194 F - Canada-U.S. Income Tax Convention on Taxation of Estates

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.

June 1, 1990

Dear Sir:

Re:  Article XXV of the Canada-U.S. Income Tax Convention, 1980 U.S. Estate Taxes

This is in reply to your letter dated December 4, 1989.

The administration and enforcement of tax laws of the United States are solely within the jurisdiction of the United State Internal Revenue Service and the Courts of the United States. Canada has no authority in connection therewith.

It is our understanding that the us Internal Revenue Service is of the view that the provisions of the Technical and Miscellaneous Revenue Act of 1988 referred to in your letter are not discriminatory and that accordingly Article XXV of the Canada-United States Income Tax Convention, 1980 has no application thereto.  In particular we understand that the US Internal Revenue Service takes the position that the provisions of Article XXV do not extend or relate to equality of treatment of beneficiaries of the deceased's estate and that because the tax is imposed on the deceased's estate without regard to the deceased's nationality, no discrimination exists.  We are not experts or qualified to comment on the tax laws of the United States and thus cannot comment as to whether the position of the US Internal Revenue Service is likely to be upheld by the United States Courts.

In order to obtain a direct answer to your inquiries we recommend that you communicate with the US Internal Revenue Service.  The US competent authority pursuant to Article XXVI of the Canada-United States Income Tax Convention, 1980 is:

     Mr. Donald E. Bergherm Assistant Commissioner International Department of the Treasury Internal Revenue Service 950 L'Enfant Plaza South, South West Washington, D.C.  20024

We also bring to your attention that negotiations are ongoing between Canada and the United States concerning amendments to the 1980 Convention and that Canada has raised the application of the US estate taxes to Canadian citizens and residents as one of the issues for discussion and negotiation.  However, it is impossible at this time to predict what the outcome of such negotiations will be.

We trust that the foregoing is of assistance to you.

Yours truly,

DirectorReorganizations and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch