11 September 1989 Income Tax Severed Letter ACC8565 F - Remuneration Paid by Resident of Germany

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.

September 11, 1989

We are writing in reply to your letter of January 13, 1989, concerning the application of Article 19 of the Canada-Germany Tax Treaty by the German taxing authority with respect to the income you earned in Germany.

As we understand it, you were invited to teach at 19(1)

We contacted our German counterparts and by letter dated August 10, they agreed that your situation is not covered by Article 19 of the treaty.  It is their view that since you derived income from dependent employment, the Federal Republic of Germany has the right by virtue of Article 15 to tax you.  This is so, even though you were present there for less than 183 days in the calendar year, because your remuneration was paid by a resident of Germany.

Since you are a resident of Canada, you are taxable on your world income which would include the remuneration received from Germany.  This does not result in double taxation since you are allowed to claim a foreign tax credit against your Canadian tax for taxes paid by you to the Federal Republic of Germany.  However, the amount of the foreign tax credit can not exceed the amount of Canadian tax that would have been payable on the foreign income had it been earned in Canada.

In order to claim the foreign tax credit for the 1988 taxation year, you may request a reassessment and support your claim with a proof of payment.  For the 1989 taxation year, the foreign tax credit may be claimed when you file your tax return.

We trust that this will be of assistance.

Yours sincerely,

C. Savage A/DirectorProvincial and International Relations Division

c.c.       Joe Hartwick Non-Resident Division

c.c.       Denise Dalphy Foreign Section Specialty Rulings Directorate

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