Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Application of paragraph 3 of Article 15 of the Canada-Cyprus Income Tax Convention to hypothetical situation
Position: see attached letter
Reasons: see attached letter
XXXXXXXXXX 2000-005560
Tim Kuss
February 21, 2001
Dear XXXXXXXXXX:
Re: Article 15 of the Canada-Cyprus Income Tax Convention (the "Convention")
Request for Technical Interpretation
This is in reply to your letter dated November 9, 2000 requesting an technical interpretation in respect of the following hypothetical situation.
Mr. X is a resident of Canada for purposes of the Income Tax Act (the "Act") and for purposes of the Convention.
Mr. X is employed by a company (Airco) incorporated in Cyprus.
Mr. X's employment duties consist of aircrew duties aboard aircraft operated by Airco in international traffic.
Technical Interpretation
Pursuant to paragraph 3 of Article 15 of the Convention, remuneration in respect of an employment exercised aboard a ship or aircraft operated by an enterprise of a contracting state shall be taxable only in that state. Pursuant to subparagraph 1(e) of article 3 of the Convention, the term "enterprise of a Contracting state" means an enterprise carried on by a resident of a Contracting state. Pursuant to paragraph 1 of Article 4 of the Convention, the term "resident of a Contracting state" means any person who under the laws of that state is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.
Provided that Airco is a resident of Cyprus for purposes of the Convention, remuneration of Mr. X in respect of his employment aboard an aircraft operated by Airco in international traffic will not be taxable in Canada.
Pursuant to paragraph 3 of Article 29 of the Convention, the Convention does not apply to companies entitled to any special tax benefit under paragraph (w) of Section 8 and Section 28A of the Income Tax Laws 1961 to 1977, or under any similar law subsequently enacted by Cyprus in addition to, or in place of, the Laws mentioned above. If Airco is entitled to any special tax benefit under such laws, it would not be a resident of Cyprus for purposes of the Convention and paragraph 3 of Article 15 of the Convention would not apply in respect of Mr. X's remuneration from Airco. In such a case Mr. X's remuneration would be subject to tax in Canada.
In accordance with paragraph 22 of Information Circular 70-6R4 dated January 29, 2001, technical interpretations are not income tax rulings and are not binding on the Canada Customs and Revenue Agency.
Yours truly,
for Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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