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
August 31, 1973
XXXX
This is in reply to your letter of August 20, 1973 in which you request information concerning dividends that you are receiving from United Kingdom sources.
It is our understanding that, as from April 6, 1973, when a company in Britain pays a dividend or makes a qualifying distribution it will be treated as a net distribution and the company will make a payment of Advance Corporation Tax (ACT) to the Inland Revenue of 3/7 of the dividends or distri- bution.
Regarding the position of a resident of Canada who receives a dividend from British sources as from April 6, 1973 it is our view that only the amount actually received by the Canadian resident should be included in income for Canadian tax purposes, and that the advance Corporation Tax is not relevant for determining the computation of the Canadian resident's income or for the purpose of obtaining a foreign tax deduction under the provisions of the Canadian Income Tax Act. It is our opinion that ACT is a tax on the British company and is not a tax that may reasonably be regarded as having been paid by or on behalf of the resident of Canada who ultimately receives the dividend. We are also of the view that the provisions of the existing Canada-United Kingdom Income Tax Agreement do not appear to alter the aforementioned results.
The Department of Finance is responsible for the renegotiation of Canada's income tax agreements with other countries. It is our understanding that the Canada-U.K. Income Tax Agreement is under consideration, and that representatives of both nations have been meeting in this connection. We are, however, unable to provide you with any indication when such an agreement will be concluded, or of the particular provisions that might be included in such a renegotiated agreement.
If you have any further questions in this regard, please do not hesitate to write.
Yours sincerely,
Director Provincial and International Relations Division
WSH/cab
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© Her Majesty the Queen in Right of Canada, 1973
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© Sa Majesté la Reine du Chef du Canada, 1973
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