As far as I am aware neither US nor Canada has ratified the protocol,
but in a prior post there was reference to RRSP/401K changes taking effect as of Jan 1 2008.
Which is correct?
US/Canada 5th Protocol - in effect now?
Moderator: Mark T Serbinski CA CPA
There is a subtle distinction.
The protocol, when it is ratified, will have an effective date of january 1, 2008. Some parts, most notably the handling of deemed disposition will have an effective date of september 2000. Some other parts will only have an effective date, at some point after the protocol is ratified.
You may recall that I have been advising now for close to EIGHT YEARS to use the deemed dispo provison, since eventually it will be enacted, with the 2000 effective date.
Canada HAS ratified (i thought I mentionned that here in december), I have not heard that US has or has not ratified, so I doubt it.
There is nothing stopping either country, of course, from enacting legislation that brings their tax code in line with the treaty.
For example canada has already gotten rid of Non-resident tax on bank interest, regardless of when the treaty protocol says it takes effect.
To sum up, canada has changed some statutes to line up with protocol, and has ratified the protocol. Us has done nothing yet.
But when US does ratify, the effective date will be as outlined in the protocol, which, for most changes, is 01/01/08.
Thus one can start using the protocol.
The protocol, when it is ratified, will have an effective date of january 1, 2008. Some parts, most notably the handling of deemed disposition will have an effective date of september 2000. Some other parts will only have an effective date, at some point after the protocol is ratified.
You may recall that I have been advising now for close to EIGHT YEARS to use the deemed dispo provison, since eventually it will be enacted, with the 2000 effective date.
Canada HAS ratified (i thought I mentionned that here in december), I have not heard that US has or has not ratified, so I doubt it.
There is nothing stopping either country, of course, from enacting legislation that brings their tax code in line with the treaty.
For example canada has already gotten rid of Non-resident tax on bank interest, regardless of when the treaty protocol says it takes effect.
To sum up, canada has changed some statutes to line up with protocol, and has ratified the protocol. Us has done nothing yet.
But when US does ratify, the effective date will be as outlined in the protocol, which, for most changes, is 01/01/08.
Thus one can start using the protocol.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
CCRA View
I looked at the CCRA web site.
This is a direct paste of the explaination for Line 104 Foreign Employment Income:
"Note
U.S. wages reported on a U.S. W-2 slip may be reduced by such contributions to a "401(k), 457 or 403(b) plan, US Medicare and Federal Insurance Contributions Act (FICA)". These contributions are not deductible on your Canadian return and must be added to your employment income at line 104."
The explaination shows an update date of Jan 3 2008, so it would appear to be current.
Do you mean that this will be retroactive to Jan 1 2008 if the US ratifies the protcol this year, so 2008 401K contributions would be deductible in Canada? What if US does not ratify until 2009 or later?
This is a direct paste of the explaination for Line 104 Foreign Employment Income:
"Note
U.S. wages reported on a U.S. W-2 slip may be reduced by such contributions to a "401(k), 457 or 403(b) plan, US Medicare and Federal Insurance Contributions Act (FICA)". These contributions are not deductible on your Canadian return and must be added to your employment income at line 104."
The explaination shows an update date of Jan 3 2008, so it would appear to be current.
Do you mean that this will be retroactive to Jan 1 2008 if the US ratifies the protcol this year, so 2008 401K contributions would be deductible in Canada? What if US does not ratify until 2009 or later?
You are looking at the instruction for the 2007 return, even if US and canada had ratified this in 20067, it would not have taken effect until Jaa 01, 2008, which means the 2008 tax year.
Presumably, when the forms for 2008 are prepared they will be updated. 2007 is correct as is. No 401(K0 deduction permitted.
Presumably, when the forms for 2008 are prepared they will be updated. 2007 is correct as is. No 401(K0 deduction permitted.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best