Anti-discrimination clause of the Cdn tax treaty

[shyboy]

[quote]when filing your 2008 return, you are denied the credit, then you will have to use the anti-discrimination clause of the Cdn tax treaty (as it applies to dependants) to get the money.[/quote]

can you shed us some more light on this "anti-discrimination clause"? and how to effect this claim...if the need ever arises?

[nelsona]

The treaty allows for Cdns to be treated no worse than americans in the same situation.

Until the situation arises, I'll leave it at that.

[telly1]

nelsona,

I filed the treaty (article XXV) for 2007 (married & living in Canada, working in the US) and recently received a notice from the IRS that I owe them 2007 taxes plus interest (instead of getting a return). They recalculated my return based on an NR and totally disregarded form 8833 that I filled out.

Do you know information I can send them to rectify this? I tried to have a tax professional take care of it but she seems to be stalling. I have also received a notice from CRA asking for proof of US taxes paid so I'd like to get my US return settled before submitting info to CRA.

Any help would be greatly appreciated.

[nelsona]

If your 8833 stated the correct treaty article, and you submitted a 1040NR with the correc tax as determined on your pro forma 1040, I don't see why they could deny it.

You will need to appeal, repeating, if needed, the text of the treaty article.

Watch for these mistakes on your part:

1. Failing to use 1040NR in the first place.
2. Failing to include the pro forma 1040
3. failing to indicate the correct treaty article XXV(4), and not showing the corrected taxrate on 8833, and how you transpose this to your 1040NR.

As to CRA, you should have sent them your 1040NR along with your return in the first place. I would send this while waiting for your appeal to be considered. If it is denied,m you will simply need to get a refund from CRA.

[telly1]

Thanks nelsona. It sounds like I just need to resend the package because I did send all the info as you mentioned. It's been awhile since I've looked at it but I'm quite certain I didn't miss anything. I submitted the same thing I did the year prior and no issues but I've heard from two others that their returns were disputed this year as well.

I sibmitted my Canadian returns online so I suppose it makes sense that they're asking for more info from me.

Thanks again.

[nelsona]

Be assured, that although there are some changes to Article XXV in the new protocol, nothing has affected that provision (except that papr 4 will, once ratified, become para. 3).

There is certainly no reason that previously successful XXV(4) filers would now be denied.