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.
January 24, 1974
XXXX
This is in reply to your letter of November 19, 1973 regarding the interpretation of the words "fixed base" in Article 13 of the Canada - United Kingdom Income Tax Agreement. We understand, from conversations between you and Mr. Gunning of our Toronto District Office, that you are essentially interested in a general interpretation and not in a particular case.
The lack of an exact definition in the aforementioned treaty leaves this Department in the position of examining each case and the particular circumstances of the case. We are guided by the draft double taxation convention on income and capital that has been prepared by the Organization For Economic Co-operation and Development, a body in which Canada is a member. Having regard to the fact that Article 13 of the Canada - U.K. Agreement is reasonably parallel to paragraph 1 of Article 14 of the OEM model conventions the OECD commentary on Article 14(1) should be a relevant guide. The published commentary is, unfortunately, somewhat limited but an OECD working party, under the Committee on Fiscal Affairs, has been studying model Article 14. While their recommendations have not yet been formally adopted by the OECD we have the impression that there is an inclination to look to the rules for determining when a permanent establishment exists, for purposes of business income, and perhaps using similar rules when considering whether a fixed base exists in relation to income from independent personal services.
XXXX
If you are aware of particular cases in which you think taxpayers' claims for exemption under Article 13 of the Canada - U.K. Agreement have been unreasonably denied, please have the taxpayers submit relevant information and each case will be carefully examined.
Yours sincerely,
Assistant Deputy Minister (Legislation)
GWM/cab
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