Canada–United States Tax Convention Act, 1984 — C-10.7 “ARTICLE XXIX B
A new Article XXIX B (Taxes Imposed by Reason of Death) shall be added to the Convention as follows: “ARTICLE XXIX B Taxes Imposed by Reason of Death 1 Where the property of an individual who is a resident of a Contracting State passes by reason of the individual’s death to an organization referred to in paragraph 1 of Article XXI (Exempt Organizations), the tax consequences in a Contracting State arising out of the passing of the property shall apply as if the organization were a resident of that State. 2 In determining the estate tax imposed by the United States, the estate of an individual (other than a citizen of the United States) who was a resident of Canada at the time of the individual’s death shall be allowed a unified credit equal to the greater of (a) The amount that bears the same ratio to the credit allowed under the law of the United States to the estate of a citizen of the United States as the value of the part of the individual’s gross estate that at the time of the individual’s death is situated in the United States bears to the value of the individual’s entire gross estate wherever situated; and (b) The unified credit allowed to the estate of a nonresident not a citizen of the United States under the law of the United States. The amount of any unified credit otherwise allowable under this paragraph shall be reduced by the amount of any credit previously allowed with respect to any gift made by the individual. A credit otherwise allowable under subparagraph (a) shall be allowed only if all information necessary for the verification and computation of the credit is provided. 3 In determining the estate tax imposed by the United States on an individual’s estate with respect to property that passes to the surviving spouse of the individual (within the meaning of the law of the United States) and that would qualify for the estate tax marital deduction under the law of the United States if the surviving spouse were a citizen of the United States and all applicable elections were properly made (in this paragraph and in paragraph 4 referred to as “qualifying property”), a non-refundable credit computed in accordance with the provisions of paragraph 4 shall be allowed in addition to the unified credit allowed to the estate under paragraph 2 or under the law of the United States, provided that (a) The individual was at the time of death a citizen of the United States or a resident of either Contracting State; (b) The surviving spouse was at the time of the individual’s death a resident of either Contracting State; (c) If both the individual and the surviving spouse were residents of the United States at the time of the individual’s death, one or both was a citizen of Canada; and (d) The executor of the decedent’s estate elects the benefits of this paragraph and waives irrevocably the benefits of any estate tax marital deduction that would be allowed under the law of the United States on a United States Federal estate tax return filed for the individual’s estate by the date on which a qualified domestic trust election could be made under the law of the United States. 4 The amount of the credit allowed under paragraph 3 shall equal the lesser of (a) The unified credit allowed under paragraph 2 or under the law of the United States (determined without regard to any credit allowed previously with respect to any gift made by the individual), and (b) The amount of estate tax that would otherwise be imposed by the United States on the transfer of qualifying property. The amount of estate tax that would otherwise be imposed by the United States on the transfer of qualifying property shall equal the amount by which the estate tax (before allowable credits) that would be imposed by the United States if the qualifying property were included in computing the taxable estate exceeds the estate tax (before allowable credits) that would be so imposed if the qualifying property were not so included. Solely for purposes of determining o