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.
July 26, 1977
W. I. Linton, Esq., Director, Technical Interpretations Division, Department of National Revenue, Taxation, 875 Heron Road, Ottawa, Ontario K1A 0L8
Re: Canada-U.K. Tax Convention Registered Retirement Savings Plan
XXXX
Dear Sir:
We are writing to you to seek your interpretation of the application of Part XIII of the Income Tax Act and the Canada- U.K. Tax Convention with respect to payments under a registered retirement savings plan (the "plan"). Specifically, we contemplate the situation where a taxpayer has purchased an annuity under the plan and, while a non-resident of Canada, is receiving the periodic annuity payments under the plan.
By virtue of paragraph 212(1)(1) of the Income Tax Act, the entire amount of such payments are subject to Canadian withholding tax at 25% unless reduced by treaty. Paragraph 1 of Article 16 of the Canada-U.K. Tax Convention provides:
"any pension ... or any annuity derived from sources within one of the territories by an individual who is a resident of the other territory shall be exempt from tax in the first-mentioned territory"
It seems clear that an annuity purchased under the plan is an annuity for the purposes of paragraph 1 of Article 16. Therefore, the full amount of each payment received under the plan by an individual resident in the United Kingdom and not resident in Canada would be exempt from Part XIII tax. Would you please confirm that our understanding is correct.
Thank you for your assistance in this matter. Should you have any questions regarding the foregoing, please do not hesitate to telephone us.
XXXX
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© Sa Majesté la Reine du Chef du Canada, 1977
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