Treaty-Protected Business

Article VII, para. 4 of the Canada-U.S. Convention would exempt from Canadian tax the profits of a U.S. resident's Canadian branch operations derived from point-to-point cross-border motor vehicle delivery of passengers or properties but intra-Canada profits would be subject to tax under s. 115(1)(a)(ii) of the Act. Because the definition of "treaty-protected business" refers to "any income" that is treaty exempt, the entire loss from the business would be non-deductible by virtue of ss.111(9) and 115(1)(c).