June 28, 1990
| Mr. R.A. Short | |
| General Director | |
| Tax Policy and Legislation Branch | BY HAND |
| Department of Finance | |
| 140 O'Connor Street | A.B. Adler |
| 16th Floor, L'Esplanade Laurier | 957-2066 |
| Ottawa, Ontario | File No. I-3705 |
| K1A 0G5 |
Dear Al:
Re: Foreign Tax Credit
Enclosed, for your use, is a photocopy of a recent memorandum from this Department's Appeal Branch concerning an income or profits tax paid to a foreign government for purposes of paragraphs 126(7)(a) or (c) of the Act.
In the particular case reviewed by Appeals 24(1)
We concur with Appeal's view that since the disposition of U.S. capital property occurred at a time when the two taxpayers were U.S. residents there is to basis for including deferred portions of the resulting capital gains in their incomes for Canadian income tax purposes in any year subsequent to the time that they became residents of Canada. Further, we share their concern that the U.S. tax respect of any such deferred portion of a U.S. capital gain would generally constitute an "income or profits paid...to the government of any country other than Canada" for purposes of paragraphs 126(7)(a) or (c) of the Act.
21(1)(b)
Yours sincerely,
B.J BrysonActing DirectorCurrent Amendments and Regulations Division
Enclosure
c.c.: H. Krakower