The board decided to make the following recommendation :
(a) That there be included in the proposed revised United States-Canadian double taxation convention, on a reciprocal basis, the exemption from Canadian income taxation (on income derived from outside Canada) of:
(1) U.S. service personnel serving in Canada,
(2) U.S. civilians employed by the U.S. government in Canada,
(3) The wives and minor children of (1) and (2).
(b) That, by an exchange of diplomatic notes, the provisions of article XVII of the leased bases agreement conferring the exemptions described in (a) above be cancelled as of the date of the coming into force of the proposed revised double taxation convention in a form justifying such cancellation.
(c) That the exemption from Canadian income taxation, under article XVII of the leased bases agreement, of the following categories be discontinued by an exchange of notes:
(1) U.S. contractors, or contractors ordinarily resident in the United States, in respect of their profits arising from work at the leased bases,
(2) U.S. civilians employed by contractors at the leased bases,
(3) The wives and minor children of (2).
(d) That the foregoing be without prejudice to the remaining taxation exemptions conferred by article XVII of the agreement.
Customs and Excise Exemptions
(a) That the customs and excise exemptions accorded to contractor-owned equipment under the terms of article XIV (1) (a) of the leased bases agreement be suspended by an exchange of notes:
(b) That it be agreed by exchange of notes that article XIV (1) (d) does not accord customs and/or excise exemptions in personal belongings and household effects of contractors and their U.S. employees (after first arrival) or customs and/or excise exemption on purchases in Canada, outside the leased areas, by U.S. military or civilian personnel, or their families:
(c) That the U.S. authorities continue to exercise every precaution to prevent abuse of the customs and excise privileges enjoyed under the leased: bases agreement.
That it be agreed by exchange of notes that the U.S. military postal system in operation at the Newfoundland bases conform to the following stipulations:
(a) That they provide military postal services only for U.S. military agencies, U.S. military personnel, authorized U.S. civilians, and their dependents,
(b) That they dispatch mail only to the United States, its possessions and territories and its military postal installations,
(c) That geographical locations be not indicated by date stamp or cancellation stamp.
(a) That the government of the United States, through an exchange of diplomatic notes, agree to waive its rights of jurisdiction under the leased bases agreement over Canadian citizens, other British subjects, and alien civilians other than those subject to U.S. military law by reason of their accompanying or serving with the U.S. forces.
(b) (1) That the governments of the United States and of Canada, through an exchange of diplomatic notes, agree to suspend the exercise of their rights of jurisdiction under article IV of the leased bases agreement other than those waived by the U.S. government under (a) above, for a period of five years, and thereafter subject to six months' notification of termination, except that in the event of war or other emergency the suspension shall, on notification given by either government, cease to operate;
(2) That the Canadian government, as a condition precedent to the waiver and suspension of the exercise of rights under article IV and to the extension to Newfoundland of an amended Visiting Forces (United States of America) Act, give satisfactory assurances that the U.S. officials in Newfoundland will have a degree of jurisdiction comparable to that which they now in fact exercise. In this connection, the U.S. section would regard the proposed letter from the government of Canada to the government of Newfoundland, with a reply from the Newfoundland government that jurisdictional conditions would remain substantially as now exercised, as the basis for satisfactory assurances to be given by the Canadian government.
(c) That the Canadian government undertake to seek legislation to protect U.S. interests in security offences as envisaged by article V of the leased bases agreement.
(dj That the Canadian government seek amendment to the Visiting Forces (United States of America) Act to provide for the compulsory attendance of witnesses required by U.S. service courts.
(e) That either government should be free to raise through appropriate channels the matter of any difficulties arising out of the working of the foregoing jurisdictional arrangements.