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.
Rents from Movable Property
Canada-Norway Income Tax Convention (the "Convention")
This will follow up a telephone conversation with Mr. McIntyre concerning the treatment of rental payments paid by a resident of Canada in respect of movable property used in Canada to a resident of Norway.
As a result of a legal opinion received in respect to Information Circular 76-12R4, a reversal by the Australian High Court of the Thiel v. Federal Commissioner of Taxation case and recent discussions with the Department of Finance, we now support the position set out in the above mentioned Circular.
Generally, all amounts received by a resident of Norway from a resident of Canada would be included in the profits of the enterprise of the Norwegian resident for the purposes of Article 6 (Business Profits) of the Convention unless such amounts are carved out by another article of the Convention.
Since the definition of royalties in Article 11 (Royalties) of the Convention does not include bareboat rents paid or credited by a resident of Canada to a resident of Norway such amounts will fall within Article 6 (Business Profits) of the Convention and will be exempt from tax in Canada unless the Norwegian resident carries on business in Canada through a permanent establishment. Accordingly, the position set out in the above-mentioned Circular is correct that there is no withholding tax with respect to payments made for the use of movable property by a resident of Canada to a resident of Norway.
We trust this is satisfactory for your purposes.
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© Sa Majesté la Reine du Chef du Canada, 1991
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