The reason for this is that the United States is one of the few countries in the world that levies taxes based on citizenship, not residency. This policy leaves some Americans responsible for taxes in two countries – once in the United States and once in their country of residence. One of the purposes of tax treaties is to solve this problem of double taxation, and the U.S. agreement with Canada is no different. (1) Nationals of a Contracting State may not be subject in the other Contracting State to any taxation or related obligation more onerous than taxation and to the related requirements to which nationals of that other State are or may be subject in the same circumstances, in particular with regard to the taxation of world income. This provision shall also apply to natural persons who are not resident in one or both Contracting States. 3. Losses suffered by a resident of a Contracting State in respect of betting transactions the profits of which may be taxed in the other Contracting State shall be deductible for the purposes of taxation in that other State to the same extent as such losses would have been deductible if they had been incurred by a resident of that other State. (2) Except as provided in paragraph 3 of this article, the Convention shall not be construed as preventing a State Party from taxing its residents (within the meaning of article IV (residence)) and, in the case of the United States, its nationals (including a former citizen whose loss of nationality had as its primary purpose tax evasion); B. however, only for a period of ten years after such a loss) and corporations that choose to be treated as domestic corporations as if there were no U.S.-Canada income and capital tax treaty. 1.
12. For the purposes of taxation by the United States, the benefits provided for in paragraph 10 shall not exceed those provided by the United States to its residents in respect of contributions to a pension plan or pension plan of general application or otherwise under a pension plan of general application established in the United States and recognized by the United States for tax purposes: would be granted. For the purpose of determining a person`s eligibility to participate in a pension plan that is eligible in Canada or on behalf of the individual and to receive tax benefits in respect of a pension plan, pension plan or other pension plan established in the United States and recognized for tax purposes by the United States, contributions or benefits provided under a pension plan that is eligible in Canada or made on behalf of the a person, as contributions or benefits under a pension plan or pension plan of general application established and approved by the United States. 8. Where property resident in a Contracting State disposes of property in the course of a company or other organization, restructurings, mergers, divisions or similar transactions and the profits, profits or income related to such a sale shall not be recognized in that State for the purposes of taxation in that State if the person acquiring the property: requested it; The competent authority of the other Contracting State may, for the avoidance of double taxation and under conditions satisfactory to that competent authority, agree to defer the recognition of profits, profits or income thereof for the purposes of taxation in that other State until and in accordance with the manner provided for in the Convention. 7. If, at any time, an individual is treated by a Contracting State for tax purposes as if he had disposed of property and is taxed in that State on the basis of that object, and the domestic law of the other Contracting State deferred (but does not cancel) taxation at that time, that individual may choose in his annual income tax return for the year of that sale: if it is taxable in the other Contracting State. that year, as if he had sold and bought these properties immediately before that date for an amount corresponding to their market value at the time. 7. The exchange of notes between the United States and Canada on 2 August and 17 September 1928, which provided for an exemption from double taxation of the profits of ships, was terminated.
Its provisions shall cease to apply to taxable years beginning on or after the first day of January following the date of entry into force of this Convention. .