25 November 1997 E9730188.txt - ARTICLE XXII - CANADA - U.S. TREATY

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.

ADM’S OFFICE (2)
PENDING
RETURN TO IT RULINGS, 15TH FLOOR, ALBION TOWERS

XXXXXXXXXX

Dear XXXXXXXXXX:

I am writing in response to your letter of October 31, 1997, regarding the concerns of your constituents, XXXXXXXXXX, with respect to the taxation of U.S. gambling winnings by the U.S. Internal Revenue Service.

Prior to January 1, 1996, residents of Canada were subject to a withholding tax at the rate of 33% on the gross amount of any gambling winnings realized in the United States without any offset for gambling losses which may have been incurred. While Canadian residents will still be subject to the withholding tax on any U.S. source gambling winnings realized after January 1, 1996, U.S. source gambling losses incurred after that date will, as a result of amendments to the Canada - U.S. Income Tax Convention, be deductible to offset any U.S. gambling winnings to the same extent that such losses would have been deductible if incurred by a U.S. resident. While XXXXXXXXXX consider these steps as a good start, they believe that the provisions concerning U.S. gambling losses should be given retroactive effect.

While I understand the XXXXXXXXXX concern that the practice of taxing U.S. source gambling winnings of Canadian residents while not recognizing any such losses was unfair, their recommendation that the provisions of the convention dealing with U.S. source gambling losses be given retroactive effect would require renegotiation of the convention. Since the Department of Finance is responsible for negotiating Canada’s tax conventions, I have forwarded a copy of your letter and related attachments to my colleague, Mr. Donald Drummond, Assistant Deputy Minister, Tax Policy Branch, Department of Finance, for his consideration.

I appreciate having this matter brought to my attention.

Yours sincerely,

	                   Denis Lefebvre
		                   Assistant Deputy Minister
		                   Policy and Legislation Branch

T. Harris
(957-2114)
November 18, 1997