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.
1993 CORPORATE MANAGEMENT TAX CONFERENCE
CANADIAN CORPORATION CONTINUING IN A FOREIGN JURISDICTION
Under proposed subsection 250(5.1) of the draft technical amendments released December 21, 1992 (the "draft amendments"), if a company incorporated in Canada is granted articles of continuance in another jurisdiction, the corporation is deemed to have been incorporated in the other jurisdiction and not to have been incorporated in Canada.
A company incorporated in Canada which is continued into a foreign jurisdiction may still maintain residency in Canada under the common law principles for the determination of residency.
Subsection 250(5) deems a corporation to be not resident in Canada if by virtue of a tax treaty with another country, the corporation would not be subject to Canadian tax on income earned from a source outside Canada.
If a company incorporated in Canada or one of the provinces continues into the United States but remains resident in Canada under the common law principles for the determination of residency, would such corporation be considered to have been created in the United States for the purposes of the tie-breaker rule in paragraph 3 of Article IV of the Canada - U.S. Income Tax Convention (1980) (the "Convention") by virtue of the application of draft subsection 250(5.1)?
Department's Position
No. Notwithstanding the application of draft subsection 250(5.1), for the purposes of paragraph 3 of Article IV of the Convention such corporation would be considered to have been created in Canada.
Prepared by: Olli Laurikainen
Date: November 23, 1993
File: 931572
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