April 12, 1957

LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Hon. J. J. McCann (Minister of National Revenue) moved

the second reading of Bill No. 414, to implement an agreement between Canada and the Union of South Africa for the avoidance of double taxation with respect to income tax.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink

Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Robinson (Simcoe East) in the chair. On clause 1-Short title.


LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

Mr. Chairman, the purpose of this bill is to give legal effect in Canada to the agreement which, as the result of negotiations and subsequent exchanges, has been reached between the government of Canada and the government of the Union of South Africa for the avoidance of double taxation and the establishment of rules for reciprocal fiscal assistance in the matter of income taxes, which agreement was signed at Ottawa on the 28th September, 1956.

The agreement follows the pattern established in the present income tax agreements which Canada has made with the United States, the United Kingdom, Sweden, New Zealand, Ireland, Denmark, France and the Federal Republic of Germany, as well as the treaty with the Netherlands which has been before the house today. It has for its purpose the avoidance of double taxation and the exchange of information. Double taxation as avoided chiefly by the reciprocal system of tax credits in which the country of residence gives credit for the tax imposed by the country where the income has its source.

The agreement contains the usual provision limiting the taxation of trading profits to the permanent establishment rule. In addition, certain special provisions are made. Profits from the operation of ships and aircraft will be taxed solely in the country of residence of the operator.

If we follow the same procedure and turn to the schedule we can take the articles one by one.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink
LIB

William Alfred Robinson (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

The Chairman:

For purposes of discussion, is it agreed that I call the articles in the schedule?

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink
?

Some hon. Members:

Agreed.

Clause 1 stands.

On the schedule, Article I.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink
PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

I have the same question that I asked the last time. I presume these taxes, though phrased differently, cover the same ground. I should like to know whether in this case it was possible to reach full agreement or whether, as I understand happened in the case of Bill No. 415, there was certain difficulty. I am also curious to know why it takes only about half as many words to make an agreement with South Africa as it does with the Netherlands. Can that question be answered?

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink
LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

I am informed, Mr. Chairman, that the taxation systems of different countries differ widely. This provision has been made because of the fact that there were certain sections in other agreements for which this country did not wish to ask or which did not apply.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink
PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

Could the minister indicate in general just what is the difference?

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink
LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

I think that will come out as explanations are made of the different articles. Article I contains specific references to the respective taxes to which the agreement applies. In Canada it applies to the income tax, including surtaxes imposed by the government of Canada, and in South Africa it applies to the normal tax, supertax and non-resident shareholders' tax. The agreements shall apply also to any other taxes of a substantially similar character imposed by either contracting government during the time the agreement may be in force. In the agreement with which we dealt a few minutes ago that was spelled out in greater detail, and as a result there was a longer-appearing agreement.

Article I agreed to.

Articles I to IV inclusive agreed to.

On the schedule, Article V.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink
PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

I notice that in the two agreements affecting income taxes the operation of ships and aircraft are treated in a specified way. What is the reason for that?

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink
LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

The difficulty lies in determining just where the profits are made. A ship may call at a port and take on cargo from which certain profits are derived. It is because of the difficulty in determining

Succession Duty Agreement exactly where the profits are earned that both countries agree that profits of that type should not be taxed.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink
PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

They are only taxed in the country of residence of the operator.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink
LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

That is right.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink

Article agreed to. On the schedule, Article VI.


PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

Again I ask for information. Is there a similar article concerning the period of 183 days residence in the agreement with the Netherlands?

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink
LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

Yes, there is.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink

Article agreed to. Articles VII to XIII inclusive agreed to. Clauses 1 to 5 inclusive agreed to. Schedule agreed to. Title agreed to. Bill reported.


LIB

William Alfred Robinson (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

When shall this bill be read a third time? Now?

Mr Knowles: By leave.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink
LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann moved

the third reading of the bill.

Motion agreed to and bill read the third time and passed.

Topic:   INTERIM SUPPLY
Subtopic:   INCOME TAX
Sub-subtopic:   AGREEMENT BETWEEN CANADA AND THE UNION OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION
Permalink

SUCCESSION DUTY

April 12, 1957