HC Deb 01 August 1978 vol 955 cc240-1W
Mr. Ward

asked the Chancellor of the Exchequer whether he will make a statement about the Canadian death duties double taxation agreement.

Mr. Denzil Davies

The Government, in agreement with the Government of Canada, have today given written notice that they intend to terminate with effect from 30th September 1978 the agreement between the United Kingdom and Canada for the avoidance of double taxation and prevention of fiscal evasion with respect to duties on the estates of deceased persons, signed in London on 5th June 1946. The Estate Tax Act of Canada does not apply to the estates of persons who died after 31st December 1971, and it is the view of the authorities in both countries that the agreement has had no effect for the estates of persons dying after 1971.

The provisions of the agreement will continue to apply in relation to the estates of persons who died before 1972. The Government have told the Government of Canada that if they should reintroduce an estate tax or a duty of a substantially similar nature the United Kingdom would be willing to open negotiations with a view to the conclusion of a new double taxation agreement.

The Canadian estate tax was replaced by an income tax charge on capital gains deemed to arise on the occasion of a person's death. The Inland Revenue is today issuing a statement explaining how any income tax in Canada charged on capital gains deemed to arise on death will be dealt with for capital transfer tax purposes.