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.
June 19, 1984.
Mr. P. Pinkus, Director, Provincial and International Relations Division, Revenue Canada Taxation, Room 472, Metcalfe Building, 88 Metcalfe, Ottawa, Ontario.
I refer to your letter of March 21, 1984 concerning the non-discrimination Article of the Canada-United Kingdom Double Taxation Convention.
Your letter raises two different problems. The first one has to do with the discriminatory or non-discriminatory aspect of Section 99 of the United Kingdom Income and Corporation Taxes Act, 1970. In our view, paragraph 1 of Article XXII of the Canada-United Kingdom tax treaty does not prevent the United Kingdom from applying Section 99 of their law since the U.K. branch of the Canadian bank is not "in the same circumstances" as a U.K. bank -- the branch is not a resident of the U.K. but the U.K. bank is. That paragraph is restricted to discrimination on the basis of nationality, not residence, and would have no relevance for branches. It might be argued that some discrimination does exist if Section 99 is read in relation to paragraph 2 of Article XXII. It is certainly not obvious that if gains are not included and losses are excluded in determining the income for U.K. tax purposes this could be said to be discrimination and I understand that the U.K. authorities would reject the argument that while gains are exempt, losses are deductible because of that Article.
The other problem you raised is with respect to the taxation of the Canadian bank on its U.K. branch income and the availability of foreign tax credit. I see little basis for not deducting the losses from other U.K. branch income on the sale of securities, assuming that they were held by the U.K. branch in the ordinary course of their operations were not capital assets, for the purposes of the foreign tax credit limitation.
General Director, Tax Policy and Legislation Branch.
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1984
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, 1984
Email this Content