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4 October 2006 Internal T.I. 2006-0204341I7- Cyprus Limited Liability Company Unedited CRA Tags Canada-Cyprus tax Convention Principal Issues: Whether a Cyprus Limited Liability Company is entitled to the treaty benefits under the Canada-Cyprus Tax Convention (the "Treaty"). ... Seidel, CMA International Audit Section (613) 957-2058 Calgary Tax Services Office Encor Building (8048) Attention: Lauri Robinson 2006-020434 Cyprus Limited Liability Company We are writing in response to your September 5, 2006 memorandum in which you requested our comments concerning a Cyprus limited liability company's ("Cyprus LLC") entitlement to the benefits contained in the Canada-Cyprus Tax Convention (the "Treaty"). ...

Income Tax Convention and in the Canada-Netherlands Income Tax Convention do not include payments for marketing and distribution rights. ... Department's Response As preliminary comments, we note the following:- You have asked about rights in respect of the use of software; however, Article XII of both the U.S. and Netherlands Conventions does not use the words "in respect of" before "the use of, or the right to use".- It would be expected that payments for distribution rights would only be in respect of exclusive rights to distribute. ...

Income Tax Convention (the “Convention”) pursuant to the tie-breaker rules in Article IV of the Convention. ...

Income Tax Convention (the "Convention"), Canada may tax the benefit to the extent that the employment that gave rise to the benefit was exercised in Canada. ... However, we realize that applying both the U.S. method and the Canadian method of allocating the benefit can result in double taxation, since both countries are asserting their right to tax the stock option benefit in accordance with Article XV of the Convention. ...

Income Tax Convention, the pension is not subject to Canadian income tax if it would be exempt from U.S. income tax if the recipient had received it while resident in the U.S. ... Income Tax Convention ("Convention") states: Pensions and annuities arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State, but the amount of any such pension that would be excluded from taxable income in the first-mentioned State if the recipient were a resident thereof shall be exempt from taxation in that other State. ...

Une convention unanime entre actionnaires prévoit notamment ce qui suit:-      Chaque actionnaire détiendra un droit exclusif d'occupation de l'appartement qui lui est assigné comme s'il détenait un titre de propriété de cet appartement, généralement les droits des occupants découlent d'un bail en propriété;-      Certains actionnaires détiendront un droit exclusif d'usage d'un espace de stationnement et /ou d'un espace de rangement; certains autres détiendront un droit exclusif d'usage d'une case au sous-sol de l'immeuble;-      L'un des objectifs de la convention consiste en la conversion éventuelle de l'immeuble en copropriété divise.  A cet effet, les actionnaires ont donné aux administrateurs "le mandat de réaliser ladite convention dès que les circonstances le permettront selon les Lois de la province du Québec". ...

However, pursuant to paragraph 81(1)(a) of the Act, an amount is not to be included in computing the income of a taxpayer for a taxation year where that amount is declared to be exempt from income tax by any other enactment of Parliament, other than an amount received or receivable by an individual that is exempt by virtue of a provision contained in a tax convention or agreement with another country that has the force of law in Canada. ... Where a pension in respect of past employment is paid to a resident of Canada and the pension arises in France, Article XVIII(1) of the Convention Between Canada and France for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital, As Amended by The Protocol Signed January 16, 1987 (“Canada-France Treaty”) provides that the pension shall only be taxable in France. ... Unlike the Canada-France Treaty, the Convention Between The Government Of Canada And The Government Of The Kingdom Of Belgium For the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income and on Capital (“Canada-Belgium Treaty”) does not restrict the taxation of a pension to the state in which it arises. ...

Per the provisions of Article VII of the Canada-Pakistan Income Tax Convention, the income earned by the PAOP cannot be taxed in Canada, as the Business is not carried on in Canada. ... However, section 6.2 of the Income Tax Conventions Interpretation Act states that "notwithstanding the provisions of a convention between Canada and another state or the Act giving it the force of law in Canada, it is hereby declared that the law of Canada is that, for the purposes of the application of the convention and the Income Tax Act to a person who is a resident of Canada, a partnership of which that person is a member is neither a resident nor an enterprise of that other state". Accordingly, it is our view that Article VII of the Canada-Pakistan Income Tax Convention does not apply in this situation such that the New Owner's share of the income from the PAOP is included in computing the New Owner's income for purposes of the Act. ...

Per the provisions of Article VII of the Canada-Pakistan Income Tax Convention, the income earned by the AOP cannot be taxed in Canada, as the business is not carried on in Canada. ... However, as pointed out in the Memo, section 6.2 of the Income Tax Conventions Interpretation Act provides that "notwithstanding the provisions of a convention between Canada and another state or the Act giving it the force of law in Canada, it is hereby declared that the law of Canada is that, for the purposes of the application of the convention and the Income Tax Act to a person who is a resident of Canada, a partnership of which that person is a member is neither a resident nor an enterprise of that other state". Accordingly, it is our view that Article VII of the Canada-Pakistan Income Tax Convention does not apply to deny Canada's right to tax a Canadian partner's share of the income of the AOP. ...

Tax Convention? 1 In your scenario, we consider that the payment is made to the trust because the trust is deemed to be an individual under the Act. 2 Accordingly, when a trust is resident a non-treaty country, the trust would not benefit from any treaty and the applicable withholding rate is the basic rate provided under the Act. ... Yours truly, Alain Godin Section Manager for Division Director International and Trusts Division Income Tax Rulings Directorate Policy and Planning Branch c.c.: Joanne Perrin, Calgary TSO ENDNOTES 1 Convention Between the Government of Canada and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income and Capital as Amended by Protocol Signed April 15, 1980 and October 16, 1985. ...