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Our client's brother was a Canadian resident. He recently died and under his will his assets were transferred to our client, who is a UK resident. The assets included a lump sum death benefit from his Canadian pension scheme and, on payment of this to our client, a withholding tax of 25% was deducted under the Canadian income tax rules. We applied to the Canada Revenue Agency (CRA) for this to be refunded to our client on the grounds that the UK has a double taxation treaty with Canada.
Our client's brother was a Canadian resident. He recently died and under his will his assets were transferred to our client who is a UK resident. The assets included a lump sum death benefit from his Canadian pension scheme and on payment of this to our client a withholding tax of 25% was deducted under the Canadian income tax rules. We applied to the Canada Revenue Agency (CRA) for this to be refunded to our client on the grounds that the UK has a double taxation treaty with Canada. However the CRA has returned our application on the basis that the lump sum benefit is not exempt under the treaty.
The CRA advised us to file a Canadian tax return under section 217 of CRA rules; this would declare the UK income (which is only about £3 500) on the return in which case there...
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