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into force on August 16, 1984. Article XXIV of the U.S.-Canada
treaty generally prohibits double taxation by the United States
and Canada, where one country has a right to tax income as the
country of source and the other country may tax on the basis of
residence. The U.S. foreign tax credit allowed by the treaty
applies to certain taxes imposed by Canada with respect to income
from Canadian sources. Paragraph 1 of Article XXIV provides the
general rule as follows:6
In the case of the United States, subject to the
provisions of paragraphs 4, 5, and 6, double taxation
shall be avoided as follows: In accordance with the
provisions and subject to the limitations of the law
of the United States (as it may be amended from time
to time without changing the general principle hereof),
the United States shall allow to a citizen or resident
of the United States, or to a company electing to be
treated as a domestic corporation, as a credit against
the United States tax on income the appropriate amount
of income tax paid or accrued to Canada * * * [U.S.-
Canada treaty, art. XXIV, par. 1.]
Paragraph 4 of Article XXIV provides the following rule
applicable to U.S. Citizens who are residents in Canada:
4. Where a United States citizen is a resident of
Canada, the following rules shall apply:
(a) Canada shall allow a deduction from the
Canadian tax in respect of income tax paid or accrued
5(...continued)
Protocol).
6 This portion of art. XXIV, par. 1, as cited herein, was
not amended by the First or Second Protocol. Under the First
Protocol, we note that the only change to paragraph 1 was the
deletion of the last sentence defining “appropriate amount”. The
Second Protocol made no amendments to art. XXIV.
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