Principal Issues: 1. Whether a single member limited liability company ("LLC") created pursuant to the laws of the United States (“U.S.”) which is treated as a disregarded entity for U.S. tax purposes, is entitled to the benefits of the Canada-United States Income Tax Convention ("Treaty")?
2. If so, what documentation should be provided and in whose name (the LLC or the single owner)?
3. Are payments from an unlimited liability company created pursuant to the laws of Canada (“ULC”) to a resident of the U.S. eligible for a reduced Canadian withholding tax rate pursuant to the Treaty?
Position: 1. The LLC described above is entitled to the benefits of the Treaty in respect of any amount of its income profit or gain to the extent that such income, profit or gain is considered to have been derived by a person who is a resident of the United States pursuant to paragraph 6 or Article IV of the Treaty. 2. Form NR303 must be completed by the LLC 3. In certain circumstances, the payments may be eligible for Treaty benefits
Reasons: 1. A single member LLC created pursuant to the laws of the U.S. which is treated as a disregarded entity for U.S. tax purposes is not considered to be a resident of the U.S. under paragraph 1 of Article IV of the Treaty. However, if the provisions of paragraph 6 of Article IV of the Treaty are satisfied in respect of the amounts of any income profit or gains of the LLC, they will be considered to be derived by a resident of the U.S. and as a result the LLC will benefit from the provisions of the Treaty in respect of those amounts. 2. The LLC completes Form NR303 and includes a complete list of all of its members on Worksheet A. 3. See below.
