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.
September 22, 1980
Corporate Rulings Division Revenue Canada, Taxation 875 Heron Road Ottawa, Ontario K1A 0L8
Attention: Bill Toyota
Dear Sir:
Re: Interpretation of Article 6 of Canada-UK Tax Agreement
We are writing to you to obtain your confirmation of our understanding of the application of Article 6 of Canada-UK Tax Agreement to the following situation.
SITUATION
X Co. Ltd. is a company incorporated and resident in the United Kingdom. It does not have a permanent establishment in Canada.
X Co. Ltd. is in the business of chartering ships to third parties such that the income from the charter would constitute its "Industrial and Commercial Profits" (as defined by Paragraph 6 of Article 6 of Canada-UK Tax Agreement).
In the course of carrying its business, X Co. Ltd. charters a supply vessel registered in the UK to an exploration company resident in Canada. The operations of the supply vessel include moving materials from the Canadian shore to the off-shore drilling rigs, assist in moving the rigs and perform other duties as directed by the exploration company.
APPLICATION
We believe that in the situation outlined above, Article 6 of the Canada-UK Tax Agreement will apply to exempt from Canadian tax the income derived by X Co. Ltd. from chartering its supply vessel to a Canadian company because X Co. Ltd. does not have a permanent establishment in Canada. We also believe that Article VII of the Canada-UK Income Tax Convention signed in 1978 but not yet ratified will exempt from Canadian tax the income derived by X Co. Ltd. from chartering its supply vessel to a Canadian company because X Co. Ltd. does not have a permanent establishment in Canada.
We would appreciate receiving your comments regarding the above at your earliest convenience. If you have any questions, please do not hesitate to let us know.
Please inform XXXX in our Ottawa office XXXX when your reply is ready.
Yours very truly,
XXXX
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© Her Majesty the Queen in Right of Canada, 1980
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© Sa Majesté la Reine du Chef du Canada, 1980
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