CRA considers that there generally is no Treaty relief from double taxation for a Cdn-resident LLC with U.S.-source income and single Canadian-resident member unless it can elect to be an S-Corp

A single-member disregarded U.S. limited liability company (“SMLLC”), whose member is a resident of Canada, is factually resident in Canada and, thus subject to Part I tax, whereas U.S. source income (e.g., business income from a U.S. permanent establishment) would also be subject to U.S. income tax in the hands of the member, without the SMLLC being entitled to claim any foreign tax credit for such U.S. tax paid by its member.

Notwithstanding that from the U.S. perspective, the member is double-taxed on the same U.S. source income, CRA did not consider that there would be any potential redress under Art. 26(1) of the Treaty (re taxation not according with the Treaty).

If the member was a dual resident or U.S. citizen, and the LLC elected to be taxed as an S-Corp after electing to be taxable as a C-Corp, it would be subject to pass-through taxation for U.S. income tax purposes like a typical disregarded US LLC. However, the member might be able to request competent authority assistance pursuant to Art. 29(5).

Neal Armstrong. Summary of 13 June 2017 STEP Roundtable, Q.8 under s. 125(1) and Treaties Art. 26 and Art. 29.