| 19(1) | 900647 |
| K.B. Harding | |
| (613) 957-2123 | |
| August 24, 1990 | EACC9270 |
19(1)
This is in reply to your letter of April 27 and July 28, 1990 concerning the treatment in Canada of taxes paid to the United States.
24(1) You have questioned whether you will be entitled to claim a refund of such withholding tax in Canada.
Since the withholding tax on your 24(1) represent a final tax paid to the U.S. government, such income or profit tax will qualify as a tax paid to a foreign government for Canadian income tax purposes. As your 24(1) are not included in income for Canadian income tax purposes, the income tax paid to the United States on those 24(1) can only be used to calculate a foreign tax credit if you have other U.S. sourced income taxed in Canada. Should other income taxes have been paid to the United States on any other source of income, your total foreign tax credit, you will be entitled to claim a deduction from income under subsection 20(12) of the Income Tax Act. Provided you have made payments on account of tax to the Canadian government on your sources of income in the year you may be entitled to a refund, as the foreign tax credit or the deduction from income described above will reduce Canadian income taxes otherwise payable.
If the 24(1) relate to the 1989 calendar year, you may request in writing to have that return amended to reflect the withholding tax paid to the U.S. government provided you submit adequate information to support your claim for tax withheld on your 24(1) to the Toronto District Taxation Office, 26 Adelaide Street East, Toronto, Ontario, M5C 1J7.
Where the 24(1) relate to the 1990 calendar year, you will be entitled to claim a foreign tax credit or deduction from income when filing your return after the end of the year.
We trust the above is adequate for your purposes and if you have any further questions, you should contact the Toronto District Taxation Office at 869-1500.
Yours truly,
for Director Reorganizations and Non-Resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch