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.
Principal Issues: Whether the CRA will treat a Qualified Subchapter S Subsidiary as a resident of the United States for the purposes of the Canada-U.S. Income Tax Convention
Position: Yes
Reasons: Consistent with the position adopted in 9816355 and 2005-0144621E5
2009-035276
XXXXXXXXXX M. Gauthier
(613) 957-2095
February 26, 2010
Dear XXXXXXXXXX :
Re: Qualified Subchapter S Subsidiary
We are writing in response to your letter of December 18, 2009 in which you asked us to confirm that the Canada Revenue Agency (CRA) will continue to treat a qualified subchapter S subsidiary (QSub), as defined in section 1361 of the United States Internal Revenue Code, as a resident of the United States within the meaning of Article IV(1) of the Canada-U.S. Income Tax Convention (the "Treaty"). It is our understanding that a QSub is a wholly-owned subsidiary corporation of a subchapter S corporation ("S Corp") for which the S Corp has filed a QSub election. In your letter, you referred to our documents 9816355 and 2005-0144621 in which we indicated that as long as we consider the S Corp to be a resident of the United States, we would also consider its QSub to be a resident of the United States.
We confirm that the CRA has not modified its views on whether the S Corp is a resident of the United States under the Treaty and that the above-noted documents (9816355 and 2005-0144621) continue to reflect the position of the CRA.
We trust this information is of assistance to you.
Yours truly,
Daryl Boychuk
Manager, International Section I
International and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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