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.
March 11, 1999
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to reply to your letter of December 23, 1998, concerning a newspaper article from the Calgary Herald. I note that previous letters have been sent to you on the taxation of property when the owner leaves Canada.
Although the confidentiality provisions of the Income Tax Act prevent me from discussing specific cases, I can explain that the Act currently provides that any individual or trust residing in Canada who owns taxable Canadian property may leave Canada without having to pay tax on this type of property at the time of departure. However, when the former resident actually sells the taxable Canadian property, any capital gain realized on the sale is subject to tax in Canada unless the application of this law is affected by a tax treaty Canada has with the new country of residence.
The role of Revenue Canada is to administer and enforce the Income Tax Act as passed by Parliament, while the Department of Finance is responsible for tax policy and any proposed changes to the Act. The concern raised in your correspondence on the taxation of property leaving Canada was one of several tax policy issues raised in the Auditor General's 1995 report. Those issues were subsequently considered by the House of Commons Standing Committee on Finance in its report released on September 18, 1996.
Even though the committee found that the specific cases referred to in the Auditor General's report were dealt with in accordance with the existing provisions of the Income Tax Act, the committee recommended that changes be made to the Act to address the tax policy issues. The Department of Finance responded to those recommendations on October 2, 1996, by announcing draft amendments to the Income Tax Act, which, when enacted, will be effective as of that date. As a result, all persons, including trusts, who leave or transfer property from Canada, will pay tax on most capital gains that have accrued in Canada up to the time of departure. Exceptions to this rule will include gains that accrue on Canadian real estate and Canadian business property, which can always be taxed when they are ultimately sold. On December 23, 1998, the Honourable Paul Martin, Minister of Finance, released detailed proposals to implement the draft amendments announced on October 2, 1996.
Your letter seems to indicate that you may have concerns about the requirements for certain individuals to make instalment payments. The requirement to pay taxes by quarterly instalments was legislated to pr6mote the fair treatment of all; taxpayers,. most of whom have tax deducted from their salaries and are not free to choose when to make payments of tax. This requirement applies to many types of income, including interest, dividend and business income, that may be received at different times during the year and from which little or no tax is withheld at the time the income is earned. The instalment rules ensure that all taxpayers not subject to sufficient tax deductions at source pay a reasonable estimate of their tax in instalments throughout the year.
As indicated above, it is the responsibility of Revenue Canada to administer the Income Tax Act as enacted by Parliament. Our continuing goal is to carry out this responsibility in a manner which is uniform for all taxpayers. The rules governing instalment payments relate to tax policy, which is the responsibility of the Department of Finance. Any changes to tax policy would have to be considered by that department.
Thank you for expressing your concerns on this matter.
Yours sincerely,
Bill McCloskey
Assistant Deputy Minister
Policy and Legislation Branch
Martine Lemire (957-4363)
February 19, 1999
990398
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