PLEASE NOTE: THIS INFORMATION WAS ORIGINALLY SUBMITTED BY COOPERS & LYBRAND, CANADA
Revenue Canada has announced that the new tax treaty protocol agreement reached with the United States may provide refunds for U.S. residents receiving Canadian social security benefits. Under the new agreement, which came into force December 16, 1997, Canadian Old Age Security ("OAS") and Canada Pension Plan ("CPP")/Quebec Pension Plan ("QPP") benefits paid to U.S. residents will be taxable only in the United States. Beginning in January 1998, Canadian tax will not be withheld from such benefit payments made to U.S. residents.
Previously, the Canada-U.S. tax treaty allowed Canada to withhold non-resident tax at a rate of 25% on all outbound Canadian social security benefits, starting with the payment for January 1996.
The new protocol provides that Canadian tax withholdings in 1996 and 1997 may be retroactively refunded (net of other Canadian income tax owing) to any U.S. resident whose U.S. tax on the benefit would be less than the Canadian tax, and who files an application with Revenue Canada. This means that U.S. residents receiving OAS and CPP/QPP benefits can apply for a refund of tax paid to Canada for 1996 and 1997 if they choose to be taxed in the U.S.
U.S. residents who choose to be taxed in the United States on their Canadian benefits for the 1996 or 1997 tax years are required to file the applicable income tax return in the United States, or to amend the United States income tax return already filed, to include their Canadian social security benefits.
It is the responsibility of the U.S. resident to determine if it is more beneficial to be taxed in the United States. By the end of February 1998, Revenue Canada intends to have application forms mailed to all individuals who received Canadian benefits in 1996 or 1997 and whose records indicate they are resident in the U.S. Affected U.S. residents who do not receive an application form by the end of February 1998 may contact Revenue Canada's International Tax Services Office at 1-800-661-7896.
The information provided herein is for general guidance on matters of interest only. The application and impact of laws, regulations and administrative practices can vary widely, based on the specific facts involved. In addition, laws, regulations and administrative practices are continually being revised. Accordingly, this information is not intended to constitute legal, accounting, tax, investment or other professional advice or service.
While every effort has been made to ensure the information provided herein is accurate and timely, no decision should be made or action taken on the basis of this information without first consulting a Coopers & Lybrand professional. Should you have any questions concerning the information provided herein or require specific advice, please contact your Coopers & Lybrand advisor, or: David W. Steele, Coopers & Lybrand, 145 King Street West, Toronto, Ontario M5H 1V8 Canada on Fax: 1-416-941-8415 or E-mail: firstname.lastname@example.org
David W. Steele
145 King Street West
Toronto, Ontario M5H 1V8
E-mail: Click Contact Link
Click Contact Link
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).