The Double Taxation Relief (Taxes on Income) (Canada) Order 2003

7th May 2003

PART II EXCHANGE OF NOTES

Excellency:

I have the honour to refer to the Protocol amending the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Canada for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains, signed at London on 8th September 1978, as amended by the Protocol signed at Ottawa on 15th April 1980 and as further amended by the Protocol signed at London on 16th October 1985, which has been signed today and to make on behalf of the Government of the United Kingdom of Great Britain and Northern Ireland the following proposals:

With reference to Articles IV, V and VI:

It is understood that, in the event that, pursuant to an agreement or convention concluded after the date of signature of this Protocol with a country that is a member of the Organisation for Economic Co-operation and Development, Canada agrees to a rate of tax on dividends, interest, or royalties lower than that provided for in the Convention, the appropriate authorities of the Contracting States shall consult at the earliest opportunity with respect to further reductions in the withholding taxes provided for in the Convention.

With reference to paragraph 1 of Article VII:

It is understood that an individual who becomes a resident of the United Kingdom and is treated as resident for any year of assessment from the date of arrival shall be charged to capital gains tax only in respect of chargeable gains from the alienation of property made after the date of arrival, provided that the individual has not been resident or ordinarily resident in the United Kingdom at any time during the six years immediately preceding the alienation of the property and that the gain in question is not one that is chargeable on the individual as the settlor of a settlement under sections 77–79 or section 86 and Schedule 5 of the Taxation of Chargeable Gains Act 1992.

With reference to Article XII:

It is understood that the provisions of Article 24 (Exchange of Information) of the Convention, as amended by Article XII of the Protocol signed today, shall have effect from the date of entry into force of the Protocol, without regard to the taxable or chargeable period to which the request for information relates.

If the foregoing proposals are acceptable to the Government of Canada, I have the honour to suggest that the present note and Your Excellency’s reply to that effect, which is equally authentic in English and French, shall be regarded as constituting an agreement between the two Governments in this matter, which shall enter into force at the same time as the Protocol.

I avail myself of this opportunity to extend to Your Excellency the assurance of my highest consideration.

Dawn Primarolo

7th May 2003

Excellency

I have the honour to refer to your note dated 7th May 2003 which reads as follows:

“I have the honour to refer to the Protocol amending the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Canada for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains, signed at London on 8th September 1978, as amended by the Protocol signed at Ottawa on 15th April 1980 and as further amended by the Protocol signed at London on 16th October 1985, which has been signed today and to make on behalf of the Government of the United Kingdom of Great Britain and Northern Ireland the following proposals:

With reference to Articles IV, V and VI:

It is understood that, in the event that, pursuant to an agreement or convention concluded after the date of signature of this Protocol with a country that is a member of the Organisation for Economic Co-operation and Development, Canada agrees to a rate of tax on dividends, interest, or royalties lower than that provided for in the Convention, the appropriate authorities of the Contracting States shall consult at the earliest opportunity with respect to further reductions in the withholding taxes provided for in the Convention.

With reference to paragraph 1 of Article VII:

It is understood that an individual who becomes a resident of the United Kingdom and is treated as resident for any year of assessment from the date of arrival shall be charged to capital gains tax only in respect of chargeable gains from the alienation of property made after the date of arrival, provided that the individual has not been resident or ordinarily resident in the United Kingdom at any time during the six years immediately preceding the alienation of the property and that the gain in question is not one that is chargeable on the individual as the settlor of a settlement under sections 77–79 or section 86 and schedule 5 of the Taxation of Chargeable Gains Act 1992.

With reference to Article XII:

It is understood that the provisions of Article 24 (Exchange of Information) of the Convention, as amended by Article XII of the Protocol signed today, shall have effect from the date of entry into force of the Protocol, without regard to the taxable or chargeable period to which the request for information relates.

If the foregoing proposals are acceptable to the Government of Canada, I have the honour to suggest that the present note and Your Excellency’s reply to that effect, which is equally authentic in English and French, shall be regarded as constituting an agreement between the two Governments in this matter, which shall enter into force at the same time as the Protocol.”

The foregoing proposals being acceptable to the Government of Canada, I have the honour to confirm that your note and this reply, which is equally authentic in English and French, shall be regarded as constituting an agreement between the two Governments in this matter which shall enter into force at the same time as the Protocol.

Please accept the renewed assurance of my highest consideration.

Mel Cappe