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.
Dear XXX:
We are writing in reply to your letter of August 17, 1989, concerning the Canada-Netherlands Income Tax Convention.
Unfortunately, certain 1988 assessments were made under the assumption the old treaty was still in effect. The taxation centres are now aware of the problems and corrective action is being taken to re-assess the affected tax returns. We have initiated procedures to ensure a situation like this does not happen again. We apologize for any inconvenience this may have caused.
Dutch social security pensions must be included in the computation of income pursuant to paragraph 56(1)(a) of the Income Tax Act. An equivalent deduction to arrive at taxable income will then be allowed under subparagraph 110(1)(f)(i) of the Income Tax Act. Pursuant to subclause 126(1)(b)(ii)(A)(III) of the Income Tax Act, the denominator in the foreign tax credit calculation (ie. net income) does not include amounts deducted under subparagraph 110(1)(f)(i).
The concerns which you discussed with Jim Wilson of this office were taken into consideration while reviewing the 1989 General Tax Guide. The 1989 guide will now require the exempt pension income to be included in net income and deducted to arrive at taxable income. The Schedule 2 foreign tax credit calculation will have a footnote ensuring this exempt income is not included in its net income figures.
We appreciate your concern and thank you for bringing these items to our attention.
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© Her Majesty the Queen in Right of Canada, 1989
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1989
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