26 August 1992 Income Tax Severed Letter 9221515 - Renunciation of a Canadian Citizenship

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.

922151
19(1) K.B. Harding
(613) 957-2111

August 26, 1992

Dear Sirs:

Re: Renunciation of Canadian Citizenship

This is in reply to your letter to Mr. Tommy Ellis of the Department of Finance, dated June 29, 1992, which was forwarded to this Division of the Department of National Revenue, Taxation for reply as this Division has the responsibility for interpreting the Canadian Income Tax Act (the "Act) and the Canada-U.S. Income Tax Convention (1980) (the " Convention").

Your letter indicates that you are a Canadian citizen
working for the 24(1)

We have presumed, for purposes of our reply, that at some time during your lifetime you were resident in Canada.

You are concerned with the interpretation of Article XIX of the Canada U.S.Income Tax Convention (the "Convention") and the related problem concerning the renunciation of your Canadian citizenship.

Article XIX of the Convention provides that :

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"Remuneration, other than pension, paid by a Contracting State (Canada), or a political subdivision or a local authority thereof to a citizen of that State (Canada) in respect of services rendered in the discharge of functions of a governmental nature shall be taxable only in that State (Canada). ("Underling for emphasis only). In accordance with Article XIX of the Convention, the U.S. cannot tax remuneration received by a citizen of Canada from a political subdivision of Canada as that Article gives Canada the sole right to tax such remuneration. Since the United States does not have the right to tax such remuneration under the Convention in this situation, Canada has the authority to tax non-residents of Canada on such remuneration by virtue of subsection 115(2) of the Canadian Income Tax Act (Paragraphs 1 and 5 of the attached Interpretation Bulletin IT 161R3).

Subsection 7 of Part II of the Citizenship Act, a copy of which is attached, provides that:

"A person who is a citizen shall not cease to be a citizen except in accordance with this Part. 1974- 75-76,c. 108, s. 7."

Subsection 9(1) of Part II of the Citizenship Act states that:

• "A citizen may, on application, renounce his citizenship if he
• (a) is a citizen of a country other than Canada or, if his application is accepted, will become a citizen of a country other than Canada;..."

Subsection 9(3) of Part II of the Citizenship Act further states that:

• "Where an application for renunciation is approved, the Minister shall issue a certificate of renunciation to the applicant and the applicant ceases to be a citizen after the expiration of the day on which the certificate is issued or such later day as the certificate may specify."

Based on the wording of Section 9 of the Citizenship Act, it appears that an individual may request to renounce his citizenship and the Minister may approve such request. We suggest you contact Department of Multiculturalism and Citizenship, Jules Léger Building, Terrasses de la Chaudière, 15 Eddy Street, Hull, Quebec, K1A OM5 or phone (613) 994-1569 for further information if you wish to renounce your Canadian citizenship.

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In order for you to be exempt from taxation in Canada it would be necessary for you to make and application to renounce your citizenship in accordance with subsection 9(1) of the Citizenship Act and submit a copy of the "Certificate of Renunciation " (the "Certificate") to this Department and request that we advise your employer that you are no longer taxed in Canada by virtue of the fact that Article XIX of the Convention no longer applies and the remuneration you receive in the United States, while working for the 24(1), is subject to an income or profits tax imposed by the United States.

If prior to the receipt of the Certificate the U.S. authorities should assess in such a manner so as to create double taxation you would have the right, in accordance with Article XXVI of the Convention, to request that the competent authorities review you case with the view of relieving you from double taxation. In this case, the Canadian competent authorities would probably request that the United States abide by the provisions of the Convention.

In summary, it is our view that an individual who is a dual citizen in a situation such as yours is clearly taxable in Canada on the remuneration received from the Province of Quebec and the United States is prevented from taxing such income by virtue of Article XIX of the Convention.

Yours truly,

for Director
Reorganizations and Foreign Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch

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