September 21 2007
New protocol to the Canada-U.S. Income Tax Convention - interest payments from non-arm's length residents
New protocol was adopted on September 21st, 2007, to the Canada-U.S. Income Tax Convention relating interest payments from non-arm's length residents.
On September 21st, 2007, Canadian and American authorities signed a new protocol to the Canada-U.S. Income Tax Convention. The protocol will reduce the rate applicable on income taxes payable on Canada by residents of the United States who receive interest payments from non-arm's length residents of Canada. This rate will be reduced progressively to zero per cent during the three years following the entry into force of the protocol. The protocol will be deemed to have entered into force on January 1st, 2008, if, as expected, both governments ratify it before the end of 2008. As for interest payments made by a Canadian resident to an arm's length non-resident (American or other), the Canadian government has announced that the income taxes payable in Canada on such payments (with certain exceptions) will be eliminated as of January 1st, 2008.