Friday April 26, 2024

1.8.3 Canada

Canada

Trusts: Trustees must withhold 30% of the taxable amount paid from a U.S. non-grantor trust to a nonresident alien who is a resident of Canada.

CGAs: U.S. charities issuing charitable gift annuity payments to nonresident aliens who are residents of Canada must withhold 15% of the taxable amount.

Contributions by U.S. citizens or residents to Canadian charities may be deductible against U.S. source income if the charity would be tax exempt if located in the United States. The gifted amounts are deductible to the extent that they do not exceed an amount determined by applying the percentage limitations of the laws of the United States (i.e. 30%/50% of AGI) to the Canadian source income of the donor. Article 21.

Canadian donors may claim a deduction against Canadian income tax up to the amount that would be allowable against U.S. income tax. Yet the deduction may not exceed 75% of the net U.S. income a donor reports on their Canadian return. However, the donor may be able to claim the eligible amount of a gift to certain U.S. organizations up to 75% of their net world income if they live near the border in Canada throughout the year and commute to their principal workplace or business in the United States if that employment is their main source of income for the year.

However, gifts made to a college or universities at which the donor or a member of his/her family is or was enrolled are deductible in either country. Prior to 2019, gifts made to universities outside of Canada and listed on Schedule VIII of the Canadian income tax regulations are deductible against Canadian source income. C.R.C. Sec. 3503. Currently, the Canada Revenue Agency (CRA) maintains a list of qualified donee organizations that may issue official donation receipts for gifts received.

Gifts made to charitable organizations outside Canada to which the Government of Canada (Including His Majesty in right of Canada) has made a gift during the donor's tax year, or in the 12 months just before that period are also deductible against Canadian source income. IC84-3R (replaced by the CRA's List of charities and other qualified donees).

Trusts

Trustees must withhold 30% of the taxable amount paid from a U.S. non-grantor trust to a nonresident alien who is a resident of Canada. Sec. 1441(a)

CGAs

U.S. charities issuing charitable gift annuity payments to nonresident aliens who are residents of Canada must withhold 15% of the taxable amount. Pub. 515, Table 1.