February 17, 1961

EXTERNAL AFFAIRS

ANNOUNCEMENT OP VISIT OF UNITED KINGDOM PRIME MINISTER

PC

John George Diefenbaker (Prime Minister)

Progressive Conservative

Right Hon. J. G. Diefenbaker (Prime Minister):

Mr. Speaker, I wish to inform the house that the Prime Minister of the United Kingdom, Right Hon. Harold Macmillan, has accepted my invitation to visit Ottawa after his forthcoming meeting with President Kennedy in Washington. Mr. Macmillan will be accompanied by Lady Dorothy. He expects to arrive in Ottawa on the evening of Friday, April 7, and to leave late in the evening of April 8.

Topic:   EXTERNAL AFFAIRS
Subtopic:   ANNOUNCEMENT OP VISIT OF UNITED KINGDOM PRIME MINISTER
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LIB

Paul Joseph James Martin

Liberal

Hon. Paul Martin (Essex East):

Mr. Speaker, I am sure that the announcement made by the Prime Minister of the intended visit of the Prime Minister of the United Kingdom to our country will be warmly received. The Prime Minister of the United Kingdom will, of course, be very welcome in Canada.

Topic:   EXTERNAL AFFAIRS
Subtopic:   ANNOUNCEMENT OP VISIT OF UNITED KINGDOM PRIME MINISTER
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CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. Hazen Argue (Assiniboia):

This is a welcome announcement by the Prime Minister. All Canadians will be pleased to once again have the opportunity of welcoming the Prime Minister of the United Kingdom to our country. I express the hope that arrangements may be made for Prime Minister Macmillan to address both houses of parliament while he is visiting Canada. I think the nation would welcome this if it is possible to make the arrangements.

Topic:   EXTERNAL AFFAIRS
Subtopic:   ANNOUNCEMENT OP VISIT OF UNITED KINGDOM PRIME MINISTER
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ESTATE TAX

ANNOUNCEMENT OF CONVENTION BETWEEN UNITED STATES AND CANADA

PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Hon. Donald M. Fleming (Minister of Finance):

Mr. Speaker, hon. members will no doubt be interested to know that a convention has been concluded between Canada and the United States for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on estates. Arrangements have been made to have the convention signed in Washington today by the Canadian ambassador and the United States secretary of state.

This convention is additional to the existing convention between Canada and the

United States signed June 8, 1944, which continues to apply to the estates of persons who died before January 1, 1959. The new convention applies to the estates of persons dying on or after that date, which is the date on which the Canadian Estate Tax Act superseded the dominion succession duty act. The convention follows the general pattern of the 1944 convention between Canada and the United States and the conventions between Canada and the United Kingdom, France, Ireland and South Africa.

The taxes included in the scope of the new convention are the Canadian estate tax, the United States estate tax and any other taxes of a substantially similar character subsequently imposed by the federal governments of either country.

The main purpose of the convention is to avoid double taxation which might otherwise result, particularly when the estate of a person dying domiciled in one country includes assets situated in the other country. This purpose is accomplished chiefly by a reciprocal system of tax credits whereby the country of domicile gives credit for the tax imposed by the country where the assets are situated, that is to say the country of situs. In order to make this system work smoothly specific rules of situs for assets of various classes are provided. These rules are almost identical with those in the Estate Tax Act.

Another method of avoiding double taxation is by providing that when one country is taxing solely on the basis of situs it will take into account only property situated in its territory and will restrict its tax by limiting its rates or by allowing an exemption, or both. Accordingly Canada has bound for the term of the convention the present flat rate tax of 15 per cent imposed by the Estate Tax Act on property situated in Canada of any foreign domiciled decedent. The convention also stipulates that Canada will not tax such property if its value is less than $15,000. This contrasts with the provision in the Estate Tax Act whereby such property will not be taxed if its value is less than $5,000. The United States in taxing Canadian domiciliaries is similarly required to restrict its tax base to property situated in the United States and not to tax if this property is valued at less than $15,000. However, the United States, which uses a schedule of graduated rates, is not obliged to restrict its rates; instead it is

Sale of Wheat

required to allow a deductible exemption of $2,000 in all cases where the property is valued at more than $15,000.

By the terms of the convention Canada will make two other changes of substance affecting the normal operation of the Estate Tax Act. The first is that Canada, in giving a credit for United States taxes on property situated therein, will give a credit for the United States federal tax before this tax is itself reduced by credits allowed in respect of taxes levied by the state governments. The United States will similarly give a credit for the Canadian federal estate tax before this tax is reduced by abatements in respect of provincial succession duties. This provision has much the same result as allowing a credit for the provincial or state taxes of the other country. The new provision will make Canadian practice reciprocal with long-standing United States practice and will benefit estates of certain Canadian domiciliaries by increasing the amount of credits given.

The second of these changes is that where Canada allows a deduction for a bequest to a charitable organization in Canada, as it now does under the Estate Tax Act, it will also allow a deduction for a bequest to any charitable organization in the United States that would have qualified according to the Canadian definition of a charitable organization, if it had been in Canada. An example would be a university, Mr. Speaker. The provision affecting this amendment is reciprocal and again will bring Canadian practice into conformity with long-standing United States practice. It will also be beneficial to the estates of Canadian domiciliaries where such a bequest exists.

The convention will come into force when it receives legislative approval and is ratified by the governments of the two countries. When the convention comes into force it will be retroactive to January 1, 1959, so as to provide continuity with the existing convention. Consequently benefits resulting from its terms will apply to the estates of persons dying on or after that date. A bill to implement the convention will be introduced in the house in due course.

Topic:   ESTATE TAX
Subtopic:   ANNOUNCEMENT OF CONVENTION BETWEEN UNITED STATES AND CANADA
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ANNOUNCEMENT OF PURCHASE BY CZECHOSLOVAKIA

PC

Francis Alvin George Hamilton (Minister of Agriculture)

Progressive Conservative

Hon. Alvin Hamilton (Minister of Agriculture):

I am pleased to announce that the Canadian wheat board has concluded an agreement with KOOSPOL, the Czechoslovakian purchasing agency for foodstuffs, for the purchase of approximately 200,000 metric tons of Canadian wheat or approximately

7.3 million bushels of No. 2 and No. 3 wheat, with a small amount of Durum. The wheat is to be shipped from St. Lawrence ports following the opening of navigation. The wheat will be purchased on a credit basis and, by agreement between the governments of Czechoslovakia and Canada, export credits insurance has been provided in order to facilitate this sale. The terms of payment are 10 per cent cash at date of shipment; 30 per cent payable one year from date of shipment; 30 per cent payable two years from date of shipment; 30 per cent payable three years from date of shipment. The Canadian grain trade, acting as agents of the Canadian wheat board, will negotiate individual contracts with the official purchasing agency of the Czechoslovakian government.

Topic:   ANNOUNCEMENT OF PURCHASE BY CZECHOSLOVAKIA
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LIB

Paul Joseph James Martin

Liberal

Hon. Paul Martin (Essex East):

Mr. Speaker, the house will welcome this announcement, as it did the announcement the other day of the proposed sale of wheat to China. The minister has given us some details as to the method of payment, but it may be that he will expand on this on some other occasion or perhaps on orders of the day. In any event, this welcome news will assist the farmer who needs assistance at this time in Canada.

Topic:   ANNOUNCEMENT OF PURCHASE BY CZECHOSLOVAKIA
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CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. Hazen Argue (Assiniboia):

The Minister of Agriculture seems to be developing the habit in connection with his announcements of extra Canadian wheat sales, to make them when they involve countries that might not, under present conditions, be expected to buy their supplies from the United States. These sales are welcome. I may say that over the years I have had some part to play myself-

Topic:   ANNOUNCEMENT OF PURCHASE BY CZECHOSLOVAKIA
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?

Some hon. Members:

Oh, oh.

Topic:   ANNOUNCEMENT OF PURCHASE BY CZECHOSLOVAKIA
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CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. Argue:

Hon. members can laugh if they like-in assisting in the conclusion of sales to such countries.

Topic:   ANNOUNCEMENT OF PURCHASE BY CZECHOSLOVAKIA
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?

An hon. Member:

How many bushels?

Topic:   ANNOUNCEMENT OF PURCHASE BY CZECHOSLOVAKIA
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CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. Argue:

The record is quite clear and I could spell it out if hon. members would give me the opportunity, Mr. Speaker.

Topic:   ANNOUNCEMENT OF PURCHASE BY CZECHOSLOVAKIA
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PC

Daniel Roland Michener (Speaker of the House of Commons)

Progressive Conservative

Mr. Speaker:

Order. I am not sure what was the cause of the reaction, but perhaps hon. members will allow the member for Assiniboia to finish his comments.

Topic:   ANNOUNCEMENT OF PURCHASE BY CZECHOSLOVAKIA
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CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. Argue:

I was about to go on to say that I hope any future announcements the government makes will demonstrate that the government is being just as successful in holding or increasing our sales to our normal or regular markets.

The fact that this wheat will be shipped through the St. Lawrence ports is welcome

news indeed because producers in Manitoba, eastern Saskatchewan and central Saskatchewan in recent months have found difficulty in marketing their grain because of a lack of markets which took wheat through eastern Canada. This, Mr. Speaker, could be of some help in allowing the Canadian wheat board to raise the quotas in Manitoba and the parts of Saskatchewan to which I have referred.

Topic:   ANNOUNCEMENT OF PURCHASE BY CZECHOSLOVAKIA
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RESEARCH

PERSONNEL OF SPECIAL COMMITTEE TO CONSIDER POLICY, OPERATIONS AND EXPENDITURES

February 17, 1961