Article 14


Wolf v. Canada, 2002 DTC 6853, 2002 FCA 96

The taxpayer, a U.S.-resident mechanical engineer was hired by a Canadian corporation ("Kirk-Mayer") so that his services could be provided to a Canadian aerospace company ("Canadair"). The taxpayer was assessed on the basis that his income from Kirk-Mayer was not exempted from Article XV of the Canada-U.S. Convention (Dependent Personal Services from Canadian income tax).

Notwithstanding that the French version of Article XV used the expression "professions", it was found that Article XIV referred to income derived from contracts for services (independent contractors) and Article XV to income derived from employment contracts.

In finding that the taxpayer was deriving his remuneration from a contract for services notwithstanding that he worked for various projects at Canadair for a five-year period, the court accepted evidence that "the Appellant in consideration for a higher pay gave up many of the benefits which usually accrue to an employee including job security" (p. 6871 - per Noël J.A.) and stated (p. 6870 - per Décary J.A.):

"When the hiring person wants to have no liability towards a worker other than the price of work and when the terms of the contract and his performance reflect those intentions, the contract should generally be characterized as a contract for services."

Canada v. Dudney, 2000 DTC 6169 (FCA)

The taxpayer (a U.S. resident) provided his services, as independent contractor, to a nonresident corporation which, in turn, was hired by a Canadian company ("PanCan") to assist it in creating a computer system.

Before concluding that Canadian premises of PanCan were not a fixed base of the taxpayer, Sharlow J.A. indicated that the factors to be considered included "the actual use made of the premises ... whether and by what legal right the person exercised or could not exercise control over the premises, and the degree to which the premises were objectively identified with the person's business", and noted that the taxpayer had access to the offices of PanCan only during PanCan's office hours and only for the purpose of providing services required by the contract and that he had no right to use the offices as a base for the operation of his own business. The fact that his contract subsisted for more than a year was relevant only to the question of permanence, and not that of whether the premises were his place of business.

See Also

Dudney v. The Queen, 99 DTC 147, [1999] 1 CTC 2267 (TCC), aff'd supra.

The taxpayer, who was an engineer resident in the United States, was hired by a U.S. corporation ("OSG") to provide services to a Canadian oil and gas company ("Pan Canadian") pursuant to a master services agreement between OSG and Pan Canadian. In finding that the taxpayer did not have a "fixed base" in Canada for purposes of Article XIV of the Canada-U.S. Convention notwithstanding that the taxpayer spent almost a year working out of the offices of Pan Canadian, Bowie TCJ. noted that the taxpayer had no control over the premises in which he worked (they were available to him only for the purpose of the contract and his access to the building was restricted to business hours) and he was not identified with the premises in any way. Bowie TCJ. noted that although "the expression 'permanent establishment' and 'fixed base' do not have identical meanings ... they are both intended to convey the sense of a place of business which is controlled by and identified with the enterprise carrying on the business there, in the case of Article VII, or the person providing personal services, in the case of Article XIV".

Hinkley v. MNR, 91 DTC 1336, [1991] 2 CTC 2778 (TCC)

The taxpayer, who was a U.K.-resident structural engineer, was hired by a Canadian-resident employment agency to work for a period of some months for one of the employment agency's Canadian clients ("Canadair"). If the taxpayer had been an independent contractor (which he was not), the Canadair premises at which he regularly worked would have constituted a "fixed base regularly available to him" for purposes of Article IV of the Canada-U.K. Income Tax Convention.

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Treaties 19

Administrative Policy

16 June 2014 Internal T.I. 2014-0527901I7 - Public Lending Right Payments under Art. 14

public lending right payments not royalties

Payments made by the Canada Council under the public lending rights program, i.e., payments to Canadian authors in order to compensate them for the free access to their works in Canadian libraries "would be in respect of their independent literary or artistic activities" rather than (royalty) "payments… made in consideration for the use of, or the right to use, the work being lent out (or their copyright in the work)," so that

in the case of a resident of Ireland receiving a PLRP payment, that payment would be taxable in Canada only to the extent that the author has a fixed base in Canada for the purposes of performing their "professional services" and only to the extent the PLRP can be attributed to that fixed base.

18 June 2013 Internal T.I. 2011-0393451I7 - Treaty Exemption - Fixed Base available in Canada

A non-resident of Canada who was resident in Ireland for purposes of the Canada-Ireland Treaty, worked as an independent contractor, under a short-term contract for service, for a provincial authority at facilities maintained and operated by it. After noting that under the OECD commentaries there was no intended difference between the fixed base and permanent establishment concepts, and referring to its statement in Income Tax Technical News No. 22 that, after Dudney, it did not propose to litigate another case based on the taxpayer's use of space within the premises of another person unless the taxpayer had more physical control of the space, CRA stated:

In the absence of facts that could otherwise be significantly distinguished from those considered in the Dudney case, we are unable to support a conclusion that a permanent establishment in Canada existed to the non-resident taxpayer in the case presented.

Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 5 Dudney folowed 156

2 January 2003 Internal T.I. 2002-0162287 - Fixed base in Canada

Although the non-resident taxpayer came to Canada on a recurring basis to perform the same or similar business activities (in respect of supervising the activities of independent contractors who sold financial products) and such activities were carried on at the same locations across Canada on a yearly basis, he did not have a fixed base in Canada because his visits to the various locations did not necessarily occur at the same spot, he did not spend more than a few days in each of the locations, he did not have physical control of the places where he worked and none of the premises could be identified with his business.

IC 75-6R "Required Withholding from Amounts Paid to Non-Resident Persons Performing Services in Canada"

Where an individual is present in Canada for a period not exceeding 60 days and is not entering Canada on a recurring basis, the individual will not be considered to have a fixed base in Canada.

23 July 1991 Memorandum (Tax Window, No. 7, p. 15, ¶1368)

By virtue of paragraph 1 of Article XIII of the Canada-Barbados Convention, the maximum withholding tax which Barbados may impose on management fees derived from Barbados is 5%. If Barbados tax in excess of 5% is withheld on management fees, the excess is not eligible for a foreign tax credit.

86 C.R. - Q.82

administrative policy re requests for reduced withholding based on Article XVII(2) of the U.S. Convention.


Lee, "Rent-a-Professional Arrangement Takes Advantage of Treaty Protection", Taxation of Executive Compensation and Retirement, December/January 1992, p. 536.