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.
XXXX
November 23, 1973
XXXX
It is our understanding that, effective April 6, 1973 certain tax reform measures became effective concerning the system of taxation of company profits in the United Kingdom. As part of the revision in the system, the previous tax withholding system for dividends remitted from U.K. sources was superseded by a system which levies a tax called "Advance Corporation Tax" at a rate of 3/7 of such payments We understand that residents of Canada who are recipients of income subject to A.C.T. are being informed that they are not entitled, under the Canada - United Kingdom Income Tax Agreement, to any refund of the excess of 3/7 of the gross dividends over the 15% rate stipulated in Article 9 of the Agreement.
It would be appreciated if you could outline your position and interpretation concerning this matter so we may be in a position to reply to the many Canadian residents who are writing us asking for information in this connection. We would also be interested to know your position concerning such dividends paid through trusts in the United Kingdom to residents in Canada.
It is our understanding that the A.C.T., for residents of the U.K. who receive applicable income, is available as a tax credit, although we are not sure of the exact technicalities of how this is accomplished under U.K. law.
We have, incidentally, received numerous letters from residents of Canada, in many cases pensioners who have retired here from the United Kingdom, stating that your interpretation of the new provisions is disadvantageous to them.
In addition to the foregoing, we would appreciate your advising us if the treatment of other U.K. source income paid to residents of Canada, such as royalties, interest, pensions and annuities, has been affected by the introduction of the provisions that came into force on April 6. As you know we stock, in our district offices, a supply of your forms for the purpose of certifying residence of recipients of certain types of U.K. source income. It will be greatly appreciated if you will let us know as soon as possible if any changes are necessary in these forms and procedures. Our taxpayers normally account for income on a calendar year basis and we anticipate a volume of inquiries regarding U.K. source investment income.
Thank you very much for your co-operation in this matter and we look forward to hearing from you.
Yours sincerely,
Director General Tax Policy
WSH/mls
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