21 June 1984 Income Tax Severed Letter A-9866

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

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This is in reply to your letter of April 5, 1984 concerning the income tax treatment of alimony paid to you and your mother.

First of all, we must point out that we are precluded by the provisions of the Income Tax Act from discussing the income tax affairs of any taxpayer without the written authorization of that individual. We cannot therefore comment specifically on 19(1)

The following are some general comments which would apply to any resident of Canada who pays alimony to a resident of Germany:

• 1. The income tax laws of 19(1) have no application to the income tax position of a resident of Canada (other than a provision of the Canada-Germany Tax Treaty).
• 2. Whether a resident of Canada is entitled to claim a deduction from income in respect of alimony payments is a matter which is governed solely by the provisions of the Income Tax Act of Canada.
• 3. A resident of Canada who pays alimony to a non-resident person generally must deduct non-resident tax from those payments, unless the payments are exempted from withholding tax by virtue of a tax treaty. The general withholding rate is 25 per cent. The Canadian payor must remit the non-resident tax to Revenue Canada, Taxation on behalf of the non-resident person receiving the alimony.
• 4. By virtue of Article 18, paragraph 3(d) of the new Canada-Germany Income Tax Agreement (which became effective on September 23, 1983), the withholding of non-resident tax is no longer required when alimony is paid by a resident of Canada to a resident of Germany (and vice versa). We enclose a copy of Article 18 for your information.

We have forwarded a copy of your letter to Mr. Brian Graves, Chief of Source Deductions in the Saskatoon District Taxation Office and have asked him to ensure that the provisions of the Canada-Germany Income Tax Agreement have been applied correctly in your case and to reply to you directly concerning this matter.

We trust these comments will be of assistance to you.