Distribution from Individual Retirement Account in U.S. to Cdn resident upon death of the original plan holder found to be taxable in Canada (Tax Court).


In a May 9, 2018 Tax Court of Canada case (Owen vs. H.M.Q., 2016-2903(IT)I), the Court ruled that the distribution from an IRA to a Canadian resident upon the death of the original plan holder would be a taxable amount (Clause 56(1)(a)(i)(C.1)). An IRA is a U.S. tax sheltered savings plan. While it was noted that the receipt of an inheritance from an estate would not generally trigger tax, this payment came directly from the IRA and not the estate.

U.S. taxes withheld on the payment were allowed as a foreign tax credit.

For further information see Video Tax News Monthly Tax Update Newsletter, Issue No. 446.