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.
DATE: August 17, 1987
Specialty Rulings Directorate R.A. Primeau 957-2122 This is in reply to your memorandum of July 9, 1987.
You have asked for our opinion as to whether non-resident crew members aboard a factory freezer trawler owned and operated. by the above-captioned Canadian corporation would be performing their duties of employment "in Canada" within the meaning of subsection 2(3) of the Income Tax Act (the "Act") and paragraph 104(2)(b) of the Income Tax Regulations while the trawler is outside the 12 nautical mile limit but inside the 200 nautical mile exclusive economic zone ("EEZ") of Canada.
We agree with the position taken by XXXX in her letter of May 21, 1987 that these crew members would not be performing their employment duties in Canada while in the above-described area, for the following reasons:
1) As indicated in paragraph 4 of IT-494 , subject to the provisions of section 255 of the Act, the term "in Canada" is considered to include the territorial sea of Canada, i.e. the seas within the 12 nautical mile limit.
2) The seas outside the 12 mile limit but inside the 200 mile EEZ of Canada cannot be considered, in this particular case, to be "in Canada" by virtue of section 255 of the Act because fishing is not an activity referred to in that section.
3) The above reasoning is confirmed by the find4ngs in Mersey Seafoods Limited v. M.N.R. (85 DTC 731).
We further agree with XXXX that the above answer applies to non-resident crew members from both the Faroe Islands (not a treaty country) and Denmark (a treaty country), and that in the latter case the meaning of the term "Canada" contained in section 5 of the Income Tax Conventions Interpretation Act as well as the provisions of paragraph 3 of Article XIII of the Canada-Denmark treaty are irrelevant to this question.
for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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