7 December 1990 Income Tax Severed Letter - Privileges and Immunities under Canada-Philippines Tax Convention

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 XXX

We are writing in follow-up to your telephone conversation with Mr. Jim Wilson of this division on November 23, 1990, concerning the Canadian tax status of Canadian citizens employed with the XXX. The following comments may be of some assistance:

• 1. Pursuant to Article 26 of the Canada-Philippines Income Tax Convention, the Convention XXX Accordingly, Canada's right to tax remuneration received by officials of the XXX will be determined by domestic laws (i.e. theIncome Tax Actand the Privileges and Immunities (International Organizations Act).
• 2. Under ourIncome Tax Act, residents of Canada (whether factual or deemed) are subject to tax on their world income. This would include employment income from services rendered abroad that were not exempt from Canadian tax pursuant to a treaty (see “1” above). However, pursuant to the Privileges and Immunities (International Organizations) Act, remuneration paid to officials of the XXX. This exemption does not apply to a Canadian citizen residing or ordinarily resident in Canada.
• 3. Officials of the XXX who are considered factual residents of Canada are subject to Canadian tax on remuneration earned therefrom (see “1” and “2” above). In this regard, we have enclosed IT-221R2 entitled “Determination of an Individual's Residence Status”. We have also enclosed several copies of Form NR73 “Determination of Residency Status”. Where you and your colleagues have not already done so, we suggest you complete this form and mail it to the address identified on the top of the form.

Note: Where you are not an official of the XXX the tax convention between Canada and the Philippines will apply and would likely provide the Philippines exclusive right to tax such remuneration. In order for us to confirm treaty status, however, we would require full details concerning Canadian and Philippines residency status.

• 4. We are currently reviewing the tax implications of International Organization officials who are not factually resident in Canada but do meet our deemed resident provisions. In your example, this would include those XXX officials who have severed their residential ties with Canada but are on a “leave of absence” from the Canadian government and are still classified as “officers or servants of Canada”. We will write back to you immediately upon completion of this review.
• 5. In respect to Family Allowance eligibility while abroad, we have enclosed Information Circular 79-9R for your reference. Generally, persons who are considered residents of Canada (whether factual or deemed) are eligible for benefits. If you require more information regarding Family Allowance eligibility, we suggest you write to the Department of Health and Welfare, Tunney's Pasture, Ottawa, Ontario, Canada, K1A 0K9.
• 6. With regard to C.P.P. coverage while abroad, we have forwarded your query to our Source Deductions Division (C.P.P. and U.I. Coverage Section). You should receive a letter from them shortly providing general information concerning C.P.P. coverage for employees of international organizations temporarily living abroad.

If you have any further questions, please call Mr. Ed Campbell of this division at (613) 957-2067. In the meantime, we hope the above comments will be of some assistance.