6 November 1974 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.

DATE November 6, 1974

TO-A Mr. C.W. Mavor Director

FROM-DE W.B. Blanche

ATTENTION

RE: Canada-Australia Income Tax Agreement (Teachers)

The interpretation of the Teacher article of our Australia agreement is causing problems again as evidenced by the attached correspondence 'from External Affairs..

Apparently External Affairs (Canadian Consulate in Melbourne) are using an August 7, 1973 letter sent by our Winnipeg District to a Canadian teacher in Australia, as the correct interpretation of Article XII and they are providing copies of that letter to other teachers who inquire about the Article. The letter (copy attached) indicates that a teacher who gives up residence and goes to Australia for 2 years may upon his return to Canada file a Canadian return reporting world income and he can then claim a refund of tax paid to Australia. I assume that Winnipeg is suggesting that the taxpayer could file returns as a resident of Canada in respect of the years when he was a resident of Australia. As you know, we have always taken the position that residence is a question of fact and a teacher does not have any choice as to filing Canadian returns. Unless he continued to be a resident of Canada (which would not be the usual case) we have no basis under the Act to tax a teacher who spends two years teaching in Australia. 19(i;

As you know, I recently had an enquiry from XXXX who enquired about Canada's interpretation of the treaty. In addition XXXX a letter from one of our districts asking what type of "certification of Canadian residence" Australia required before exempting a teacher from Canada. Since our Consulate in Melbourne is apparently getting enquiries from the Government of Australia, it may be that they are also providing them with the Winnipeg D.O. interpretation.

In view of the confusion about this Article, consideration should be given to sending a branch letter to all districts setting out the interpretation of Article XII and also advising districts that any enquiries should be directed to Head Office and not to the Australian Government.

W.B. Blanche Provincial and International Relations Division