811.512342 Shipping/11

The Canadian Minister (Massey) to the Secretary of State

No. 86

Sir: With reference to your note of January 10th. 19281 and previous correspondence regarding the exemption from taxation of the income of vessels of foreign registry granted in Canada and the United States, I have the honour to enclose a copy of a Bill which was introduced during this Session of the House of Commons of Canada for the purpose of amending the Income War Tax Act.2 This Bill has been enacted into law without amendment and received the Royal Assent on March 30th. last in its present form.

It will be observed by Section 3 of this Bill, Section 4 paragraph (m) of the Income War Tax Act (chapter 97 Revised Statutes of Canada 1927) has been so amended as to provide as regards United States ships operating in Canadian waters for the equivalent exemption from taxation referred to in Section 213 (b) (8) of the United States Revenue Acts of 1921, 1924 and 1926.

I have the honour to bring to your attention the enactment of this legislation by the Parliament of Canada and to suggest that an understanding now be entered into by which each country shall agree to levy income tax upon its own citizens in this respect. In this connection I desire to state that His Majesty’s Government in Canada is willing to regard the legislation now enacted as being reciprocal for all prior years, and to forego any claim which might have been made to tax the earnings of United States ships in Canadian waters.

I have [etc.]

Vincent Massey
  1. Not printed.
  2. Bill 156, 2d sess., 16th Parliament, 1928 (Ottawa, F. A. Acland, 1928).