11 September 1974 Income Tax Severed Letter

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.

OTTAWA, K1A OG2

September 11, 1974

Dear Mr. Whittaker,

I refer to your letter dated August 14, 1974 and the attached correspondence concerning the tax and pension status of XXXX

XXXX plight is one shared by a number of U.K. pensioners living in Canada. The background and circumstances are complicated by a number of factors. Until now, Canada's basic social security position has been. that we will take care of those who reside here. In keeping with that position, existing Canadian legislation already provides for a number of benefits to be paid to former residents of other countries now resident in Canada and to former residents of Canada now resident in other countries without the need for international agreements. Many such benefits are not paid in the corresponding circumstances by other countries, including the United Kingdom, unless they have an agreement with the other country concerned.

In recent years a number of countries have approached Canada to express an interest in having agreements or conventions relating to various aspects of social security. Canada's policy on this basic question is therefore under review. In contemplating the possibility of entering into such arrangements it is incumbent upon us to seek terms which will be equitable for residents of Canada. In our discussions with the United Kingdom, payment by that country of increases in its pensions to beneficiaries living in Canada is one of the items being considered.

The U.K. Social Security Act includes provision for a wide variety of types of social security benefits which in Canada are provided for in different pieces of legislation and administered by several jurisdictions. Our discussions with the United Kingdom have not, therefore, been confined to old age pensions but have perforce involved Canadian programs. I am not in a position to elaborate on the details of our discussions with the United Kingdom to date because of the confidential nature of these discussions. Constructive exchanges have taken place and we hope important progress can be made. We have not yet reached a point, however, where we believe that conclusive negotiations can begin, in spite of the best will and efforts of all parties concerned.

It is therefore difficult to predict when a reciprocal agreement on social security will be concluded with the United Kingdom. In the meantime, non-payment in Canada of increases in U.K. retirement pensions is not a question which Canada is in a position to solve unilaterally.

The negotiation of a new double taxation treaty is similarly complicated by the variety of legislation involved. Recent proposals by the present U.K. government for a wealth tax have introduced another factor. While we are unable to say when a double taxation agreement will be achieved, we would hope that, in the interim, XXXX will obtain the desired tax relief directly from the British authorities.

I regret that the complex nature of social and taxation legislation in both Canada and the U.K. precludes early agreements in these fields. We are attempting to resolve these issues on a mutually equitable basis as rapidly as possible while ensuring that the agreements will prove to be both complete and durable. Copies of your letter and the attached correspondence have been forwarded to other departments with an interest in this subject.

Yours sincerely,