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
J.R. O'Hara
August 13, 1976
Dear Sir:
Further to our conversation with XXXX in connection with the U.K. Advance Corporation Tax (ACT) we have the following comments:
When the U.K. introduced their ACT in 1973 there was no intention to refund any of this tax when a U.K. corporation paid a dividend to a non-resident person. At that time we drafted up instructions to our operations personnel explaining the tax and advised them that the Canadian recipient of dividends from U.K. corporations were not entitled to claim a foreign tax credit in respect of the ACT. Our Technical Interpretations Division viewed this tax as a tax on the corporation and not on the shareholder and consequently does not consider that the shareholder is eligible for a foreign tax credit under section 126.
The U.K. authorities are now refunding a portion of the ACT when dividends are paid to non-residents who are British subjects and resident in a country having an Income Tax Agreement with the U.K. which has not been revised since 1973. They are refunding the difference between the ACT pertaining to the dividend payment and 15% of the aggregate of the ACT and the dividend payment received by the non-resident. To obtain this refund a Trans-Credit Form (a copy of which is attached) along with a FORM N/Individual must be sent to the Inspector of Foreign Dividends (see form N for address). A Canadian citizen is considered by the U.K. tax authorities as being a British subject. The refund of ACT received by the shareholder is not considered subject to Canadian Income Tax by our Technical Interpretations Division. This is the situation under the existing Income Tax Agreement. A new treaty has been under negotiation and once it is signed we may reconsider the treatment accorded recipients of dividends from U.K. corporations.
If you have any further queries in this matter, please let us know.
Yours sincerely,
A.C. Bonneau Director Provincial and International Relations Division
CC - Director Montreal District Office
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