811.512342 Shipping/19
The Secretary of State to the Canadian Chargé (Wrong)
Sir: Reference is made to your note No. 117, dated August 2, 1928, and the Department’s acknowledgment of August 13, 19285 in regard to the proposed reciprocal exemption from taxation in the United States and in Canada of the income of vessels of foreign registry.
A communication on this subject has now been received from the appropriate authority of this Government and it gives me pleasure to inform you that this Government agrees to the following undertaking:
- (1)
- that, in respect of the Dominion of Canada, citizens of the United States not residing in Canada and corporations organized in the United States owning or operating ships documented in the United States shall be exempt from Canadian income tax on the earnings from sources within Canada derived exclusively from the operation of such ships;
- (2)
- that, in respect of the United States, persons resident in Canada who are not citizens of the United States and corporations organized in Canada owning or operating ships documented in Canada shall be exempt from United States income tax on the earnings from sources within the United States derived exclusively from the operation of such ships;
- (3)
- that the exemption from income tax on the income derived from the operation of ships (including ferries) above provided shall be deemed to have come into force and shall be applicable to the income for the year 1921 and to all subsequent years, upon the understanding that no refunds of taxes paid will be made for any years which by virtue of statutory limitations governing refunds are barred.
The appropriate authority of this Government now has under preparation a Treasury Decision the purpose of which will be to give effect to the above mentioned agreement in so far as it relates to the United States. It is presumed that the appropriate authority of your Government will follow a similar course to give effect to the agreement in relation to Canada.
Accept [etc.]
- Not printed.↩