Treaty based deferal of income accrued inside RPP ?

[JR1]

I have two basic questions about interest posting to a defined contribution Canadian Registered Pension Plan (RPP) held by a U.S. citizen residing in Canada.

1. I first just want confirm if my understanding is correct that the U.S - Canada tax treaty treats this interest as automatically tax deferred until the time that the pension pays out? In other words, it is treated in the same way as an RRSP for which an election has been taken, except that no election is needed for the RPP -its deferral is automatic under the treaty? Is that right?

2. Can anyone point me to the best passage of the treaty or other document to refer to if I need to convince someone of this? (I've looked at the treaty, but find much of it confusing and hard to read.)

Thanks so much.
JR

[nelsona]

XVIII(7). Exactly as you said, this is the clause that exempts income from RRSPs, by using form 8891, except that IRS has no "rules established", for any special reporting.

[nelsona]

Just for completeness, the taxation of RRSPs is not quite handled that same as Pensions. No portion of a Cdn RPP is exempt from US taxation upon withdrawal (except where a portion of it is not taxable in canada), but there are circumstances, where the undeducted contributions to a private RRSP (non-employer sponsored) may be tax-free in US.

This is discussed elsewhere.