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.
December 10, 1985
K.B. Harding
XXXX
Dear XXXX
This is in reply to your letter of November 14, 1985, concerning the application of paragraph 9 of Article XIII of the Canada-United States Income Tax Convention (Convention).
Your question relates to the application of subparagraph 9(c) in a situation where a resident of Canada elected in 1980, pursuant to Article XIII A of the 1942 Convention, to be taxed in the United States on his net rental income from real property located in the United States as if such resident were engaged in a trade or business through a permanent establishment in the United States. You are concerned whether the election made under the 1942 Convention would result in the Canadian taxpayers having a permanent establishment in the United States for purposes of subparagraph 9(c) of Article XIII of the Convention and therefore not eligible for the valuation day protection.
We contacted the Internal Revenue Service in Washington concerning this matter, and it is our understanding that an election made pursuant to Article XIII A of the 1942 Convention would not prevent the Canadian taxpayer from claiming the benefit of the valuation day rule. Since the matter requires the interpretation by the Internal Revenue Service of paragraph 9(c) of Article XIII of the Convention, we would suggest you contact them in order to confirm their position. We trust that this is adequate for your purposes.
Yours sincerely,
Original Signed by
Acting Director Provincial and International Relations Division
KBH/jb
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© Her Majesty the Queen in Right of Canada, 1985
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© Sa Majesté la Reine du Chef du Canada, 1985
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