PLEASE NOTE: THIS INFORMATION WAS ORIGINALLY SUBMITTED BY COOPERS & LYBRAND, CANADA
A draft protocol to amend the current income tax treaty between Canada and the United States was initialled in Washington on April 9, 1997. When signed in final form and ratified by both countries, the amendments will:
- exempt U.S. residents selling shares of U.S. corporations holding Canadian real estate or resource property from exposure to Canadian income tax arising from proposed Canadian domestic law changes, and
- give the recipient's country of residence the exclusive right to tax social security benefits.
CAPITAL GAINS ON REAL ESTATE
The current Canada-U.S. tax treaty provides that Canada can tax capital gains realized by a resident of the U.S. on the shares of (or an interest in) any corporation, trust or partnership whose value is mostly made up of Canadian real estate. Similarly, the United States can tax gains realized by a resident of Canada on what is known in U.S.
