US-Canada Treaty Lets Foreign Tax Credits Offset Investment Tax

A US-Canada tax treaty entitled a taxpayer to more than $263,500 in refunds because the countries’ agreement provided an independent basis for him to claim foreign tax credits on his net investment income tax, the US Court of Federal Claims said.

Paul Bruyea, a resident of British Columbia, Canada during the 2015 tax year, paid nearly $2 million in taxes to Canada and claimed a nearly $1.4 million foreign tax credit to offset his regular US tax liability. He later filed an amended return to claim a $263,500 refund, saying he was entitled to further foreign tax credits offsetting his ...