April 12, 1957


Hon. J. J. McCann (Minister of National Revenue) moved the second reading of Bill No. 415, to implement an agreement between Canada and the Union of South Africa for the avoidance of double taxation with respect to death duties. 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:

May I make a short statement. This is the fifth convention or agreement to be made with other countries by Canada for the purpose of removing double taxation and preventing fiscal evasion in relation to death duties. The others were with the United States, the United Kingdom, France and Ireland. The principal aims of this agreement are, first, exchange of information to prevent evasions; second, the granting of credits by the country of domicile, or residence in the case of South Africa, for duty paid by the same estate on the same assets to the other contracting country.

Succession Duty Agreement

Some of the other agreements have included agreed rules for situs of property but this agreement with South Africa leaves this question open for determination by the governments involved in each case. Otherwise the agreement is similar in its provisions to the others. We can deal with the separate articles as we go along.

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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:

Is it agreed that I shall call the articles in the schedule for discussion?

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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 should like the minister to deal with the questions he himself raised in his statement, and that is the question of situs. What arrangement has been made regarding it? My understanding is that there was difficulty in reaching an agreement and in fact an agreement was not reached. I presume that had something to do with the peculiar law in South Africa. I am struck by the words the minister used in saying how it was to be dealt with. As I took it down, he said that if any question arose it was open for determination by the government in each case. It seems to me like saying you have not any agreement and you have to make an agreement when the time arises. Might that be explained?

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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 there is no trouble arising from this. We continue to apply death duties on property that is situated in Canada, and they continue to apply duty on properties or assets that are situated in South Africa. There did not come about a general agreement with regard to that.

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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 not quite understood that. I thought this was an agreement for the avoidance of double duties. As I have understood the minister it seemed to me he said that each government was to levy its own duty. How does that fit in with the idea of avoiding double taxation?

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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 probably article III would explain the hon. gentleman's difficulty. It removes the double taxation incident, if one occurs. This article provides for credits by the country of domicile in the case of Canada and the country of residence in the case of South Africa where property in the estate is also taxed by the other country on the basis of situs, thus eliminating double taxation. If a South African had property in Canada, in the case of death duties the property would be taxed in Canada; and if a Canadian held property in South Africa and they claimed that the property was there it would be taxable in South Africa, and the other country would give credit for duties paid. May I read the rest of this. It also provides in the second paragraph for

tMr. McCann.]

the sharing of credits in the estate of any person who was both domiciled in Canada and resident in South Africa.

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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:

Where was the minister reading from?

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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:

Article III.

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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:

Would the minister draw my attention to that again?

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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:

May I read it again.

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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:

Which paragraph is it?

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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:

Paragraph 1 and 2 of article III on page 3.

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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 am still not quite clear. The minister began by saying there had been no agreement on situs yet. As I read this it seems a very clear-cut way of dealing with the situation. Are we satisfied that we have a workmanlike and practical way of dealing with this situation even if there was difficulty in arriving at agreement on the technical aspects of it? Is this a workmanlike method, and is the minister satisfied?

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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 that it is so.

Articles III to VIII inclusive agreed to.

Clauses 1 to 5 inclusive agreed to.

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

Schedule agreed to. Title agreed to.


LIB

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

Liberal

The Chairman:

Shall I report the bill?

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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:

May I by leave ask for an explanation of clause 3 of the bill, which reads:

In the event of any inconsistency between the provisions of this act, or the agreement, and the operation of any other law, the provisions of this act and the agreement prevail to the extent of the inconsistency.

I am sorry I did not notice that when we were going through it. I would like to have an explanation of the words "prevail to the extent of the inconsistency".

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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:

This article is customary and almost standard in any of these agreements, and it means pretty much what it says. It means that the section would take precedence.

Topic:   INTERIM SUPPLY
Subtopic:   SUCCESSION DUTY
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:

That means that it is the last word?

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

April 12, 1957