26 February 1975 Income Tax Severed Letter

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.

XXXX

February 26, 1975

Dear Sir:

Your letter of January 24, 1975 concerning your liability to Canadian tax as Australian teacher employed in Canada, was forwarded to us by the Winnipeg District Office for reply.

The visiting teacher's exemption to which yon refer, is provided for in Article XII of the Canada-Australia Income Tax Agreement, which reads as follows:

"There a professor or teacher, who is a resident of one of the Contracting States, is temporarily present in the other Contracting State for the purpose of teaching during a period not exceeding two years at a university, college, school or other educational institution in that other Contracting State, remuneration derived by him for so teaching for that period shall be exempt from tax by that other Contracting State".

You state in your letter that on arriving in Canada Is June 1970, you believed you "had an option of two tax-free years". This, as you can see from the wording of Article XII, is incorrect. What the Article provides is that where a resident of one country is temporarily present in the other country for the purpose of teaching for a period not exceeding two years, he is exempt from Income tax in the country visited.

Since you have been in Canada for over four years, and, we understand, hew been employed as a teacher during that time, we must advise that yon would not be entitled to claim exemption from tax under the provisions of Article III. On the other hand, your wife may be eligible for the exemption if she was employed as a teacher for only one year, as your letter sears to indicate. In the circumstances, we suggest you send full details of bar claim for the consideration of the Winnipeg District Taxation Office.

With regard to your tax position on your return to Australia, this is a question which should be directed to the Australia tax authorities and we therefore suggest that you write to:

XXXX

for advice on this matter.

We have noted your statement that several of your acquaintances, whose circumstances are similar to yours, have enjoyed the benefit of tax exemption. In particular, we are at a loss to understand how a teacher, having been employed in Canada for more than four years, could subsequently claim and obtain an income tax refund in respect of her first two years of teaching in Canada. Me know of no tax treaty that would authorize such an exemption and would be glad to look into this case if you would provide further details.

We enclose for your information a copy of Interpretation Bulletin 1T-66R, which outlines the Department's present policy and method of administering to the visiting teacher's exemption.

Yours truly, Original Signed by

for Director Rulings Division Legislation Branch

75-100

Enclosure