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.
Mr. Garnet M. Bloomfield, M.P. Parliamentary Secretary Revenue Canada House of Commons Room 478-WB Ottawa, Ontario K1A 0A6
Dear Mr. Bloomfield:
Thank you for your letter of May 17 and the enclosed copy of a letter you received from your constituent, XXXX.
XXXX
Article XVII of the Canada-United Kingdom Tax Convention (1978) titled Pensions and Annuities, a copy of which is attached for your perusal, provides that pensions paid out of the public funds of the United Kingdom to an individual in respect of services rendered to that Government may be taxed in the United Kingdom.
It is our understanding that the basic United Kingdom withholding tax rate for pensions paid to non-residents of the United Kingdom is 30 per cent. Taxation laws of the United Kingdom do provide for reducing this rate of tax in accordance with section 27 of the United Kingdom Income and Corporation Taxes Act, 1970. However, in order to obtain such relief, individuals are required to provide the United Kingdom with details of their world income and any other information they may require to administer their law.
Accordingly, it would appear that the reason for the United Kingdom requesting such information from XXXX is to ascertain whether he continues to qualify for the reduced rate of withholding tax and to adjust the rate of withholding in accordance with the relevant world income in the particular year.
Since the United Kingdom Government has retained the right to tax certain government pensions under the terms of the Canada-United Kingdom Tax Convention, Canadian residents are required to provide the United Kingdom authorities with whatever information they require if they wish to obtain the reduced rate of withholding on their pension income. It should also be noted that the United Kingdom has the authority to verify such information provided by the Canadian resident with the Canadian authorities pursuant to Article XXIV of the Canada-United Kingdom Tax Convention (copy attached).
While we are not certain as to the purpose of the United Kingdom request for information from XXXX we would suspect it is for the purpose of ascertaining whether XXXX qualifies for the reduced rate of withholding on his pension income. If this is not the reason for the United Kingdom request, we would be prepared to review this matter again if we are provided with additional details.
We regret our reply could not be more specific, but this is as a result of the limited information provided by XXXX.
Your sincerely
KBH/jb
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