
1 
These Regulations may be cited as the Double Taxation Relief (Taxes on Income) (Canadian Dividends and Interest) (Amendment) Regulations 1987 and shall come into force on 1st January 1988.
2 
In these Regulations, “the Principal Regulations” means the Double Taxation Relief (Taxes on Income) (Canadian Dividends and Interest) Regulations 1980 and other expressions have the same meaning as they have in those Regulations.
3 

(1) In Regulation 2(2) of the Principal Regulations—
(a) for the proviso to the definition of “agreement territory” there shall be substituted—“
 Provided that—
(a) where any such provisions as are referred to above so limit the rate at which Canadian tax is to be withheld from dividends but not from interest, or from interest but not from dividends, the territory in relation to which such provisions are in force shall be treated as an agreement territory only with respect to dividends or, as the case may be, to interest; and
(b) where the Canadian taxation authorities have notified the Board that, in relation to an agreement territory, the rate at which Canadian tax is withheld from interest derived from Canadian sources by residents of that territory is limited so as not to exceed 10 per cent., that territory shall be treated for the purposes of these Regulations as a 10 per cent. territory in relation to interest;”;
(b) in the definition of “gross amount”, for the words “15 per cent” there shall be substituted “the Agreement rate for the time being with respect to that Canadian dividend or interest”.
(2) After Regulation 2(2) of the Principal Regulations there shall be added—“
(3) The Agreement rate for the time being with respect to any Canadian dividend or interest is the rate in excess of which Canadian tax may not be charged on that dividend or interest under the provisions of any Agreement referred to in paragraph (1) above, where the beneficial owner of the dividend or interest is an individual resident in the United Kingdom.”
(3) In Regulations 3(1) and 4 of the Principal Regulations, for the words from “an amount” to “dividend or interest” there shall be substituted “such amount as, when added together with Canadian tax on the gross amount of that dividend or interest at the Agreement rate for the time being with respect thereto, equals 25 per cent. of that gross amount”.
(4) In the proviso to Regulation 3(1) of the Principal Regulations, for the words “this paragraph shall not apply” there shall be substituted—“
(a) subject to sub-paragraph (b), where the person beneficially entitled to the dividend or interest is resident in an agreement territory, the chargeable person shall withhold on account of Canadian tax, out of moneys in his hands, such amount (if any) as, when added together with Canadian tax on the gross amount of that dividend or interest at the Agreement rate for the time being with respect thereto, equals 15 per cent. of that gross amount;
(b) where the person beneficially entitled to the interest is resident in an agreement territory which is a 10 per cent. territory in relation to interest, this paragraph shall not apply with respect to that interest; and
(c) where the person beneficially entitled to the dividend or interest is resident in Canada, this paragraph shall not apply.”
(5) In Regulation 3(2)(b)(ii) of the Principal Regulations, after the words “payment of interest” there shall be inserted “, the amount (if any) withheld by him on account of Canadian tax”.
(6) In the proviso to Regulation 4 of the Principal Regulations, for the words “this Regulation shall not apply” there shall be substituted—“
(a) subject to paragraph (b), where the person beneficially entitled to the dividend or interest is resident in an agreement territory, the Board shall withhold on account of Canadian tax, out of any such repayment, such amount (if any) as, when added together with Canadian tax on the gross amount of that dividend or interest at the Agreement rate for the time being with respect thereto, equals 15 per cent. of that gross amount;
(b) where the person beneficially entitled to the interest is resident in an agreement territory which is a 10 per cent. territory in relation to interest, this Regulation shall not apply with respect to that interest; and
(c) where the person beneficially entitled to the dividend or interest is resident in Canada, this Regulation shall not apply.”
4 
The amendments made to the Principal Regulations by these Regulations shall have effect in relation to dividends and interest from Canadian sources to which the Principal Regulations apply, where on or after 1st January 1988 a chargeable person—
(a) obtains payment of, or
(b) sells or otherwise realises or purchases coupons for,such foreign dividends or interest.
A. J. G. Isaac
T. J. Painter
Two of the Commissioners of Inland Revenue
27th November 1987