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.
February 27, 1985
This is in answer to your letter of January 29 in which you describe a hypothetical situation involving a company (U.S./U.K. Ltd.) that would be incorporated under a United States state law but whose mind and management would be located in the United Kingdom.
We agree with your conclusion that, in these circumstances, U.S./U.K. Ltd. would be considered to be a resident of the United States for the purposes of the Canada-United States Income Tax Convention and a resident of the United Kingdom for the purposes of the Canada-United Kingdom Income Tax Convention.
In the hypothetical example U.S./U.K. Ltd. would have a wholly-owned Canadian subsidiary (Canco) which would pay dividends and have other dealings with its non-resident parent company to which the provisions of both Conventions might be applicable.
We agree with your suggestion that the companies should be free to choose which of the two Conventions should apply in such cases. We would expect, however, that a choice would be made once and for all and applied consistently in all cases.
Yours sincerely, Original Signed By
Director Provincial and International Relations Division
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