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.
Halifax District OfficeRulings Directorate
Attention: Angus McIssac E.O.E.
Overseas Employment Tax Credit (OETC)-Definition of Canada
This is in reply to your Round Trip Memorandum dated May 20, 1993 wherein you requested our opinion concerning the meaning of the words "outside Canada".
Section 255 of the Canadian Income Tax Act (the "Act") provides that "Canada" is hereby declared to include and to have always included
(a) the sea bed and subsoil of the submarine areas adjacent to the coasts of Canada in respect of which the Government of Canada or of a province grants a right, license or privilege to explore for, drill for or take any minerals petroleum, natural gas or any related hydocarbons: and
(b) the seas and airspace above the submarine areas referred to in paragraph (a) in respect of any activities carried on in connection with the exploration for or exploitation of the minerals, petroleum, natural gas or hydrocarbons referred to in that paragraph.
The Income Tax Conventions Interpretation Act defines Canada as follows;
"Canada" means the territory of Canada, and includes
(a) every area beyond the territorial seas of Canada that, in accordance with international law and laws of Canada, is an area in respect of which Canada may exercise rights with respect to the sea bed and subsoil and their natural resources, and
(b) the seas and airspace above every area described in paragraph (a).
As can be seen from the above definitions of Canada, Canada is not limited to a specific number or miles offshore, but in accordance with international law the term "Canada" includes the area within which Canada has the right to exercise its control with respect to the offshore activities. Accordingly, provided Canada or a province has the right to grant permission for the employer to exercise the activities outlined in paragraph 255(a) of the Act, that employer will be considered to carry on his business in Canada whether he is 186 or 250 miles offshore. You may wish to read the comments in paragraph 4 of Interpretation Bulletin IT-494 as it relates to the definition of the term "in Canada".
Accordingly, all rigs operating on the continental shelf off the east coast of Canada will be considered to be located in Canada and therefore employees working on such rigs will be considered to perform their duties of employment in Canada for purposes of subsection 122.3(1) of the Act.
We trust the above comments are adequate for your purposes.
for DirectorReorganizations and Foreign DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1993
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