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.
Dear Sirs:
This is in reply to your letter of August 4, 1987 in which you requested our opinion as to whether tax under Part XIII of the Income Tax Act (the "Act") is exigible on management fees paid by a corporation resident in Canada to a person resident in either the United States or the United Kingdom.
It is our opinion that reasonable management fees paid to a person resident in the United States will fall within Article VII or Article XIV of the Canada-U.S. 1980 Tax Convention and reasonable management fees paid to a resident of the United Kingdom will fall within Article 7 or Article 14 of the Canada-U.K. Convention. Accordingly, such fees would only be taxable in Canada if the United States or United Kingdom resident, as the case may be, carries on business In Canada through a permanent establishment or fixed base situated in Canada, and only to the extent the fees are attributable thereto. The topic of reasonable management fees is discussed in Interpretation Bulletin IT-468.
We trust this information will be of assistance to you.
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© Her Majesty the Queen in Right of Canada, 1987
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© Sa Majesté la Reine du Chef du Canada, 1987
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