Article 16

See Also

Cheek v. The Queen (2002), docket 1999-1113-IT-G (TCC)

In finding that the taxpayer, who was a U.S. resident who provided radio commentary for each Blue Jays game, was not an artiste or athlete for purposes of Article XVI of the Canada-U.S. Convention, Mogan T.C.J. found that the taxpayer was not a radio artiste but, rather, a very skilful and experienced radio journalist.

Locations of other summaries Wordcount
Tax Topics - Treaties 39

Khabibulin v. The Queen, 00 DTC 1426 (TCC)

Article 12 of the Canada-USSR treaty provided an exemption from Canadian income tax in respect of the personal activities of a USSR athlete exercised in Canada if such income was "derived in respect of two performances and other public performances". When the taxpayer signed a contract with the Winnipeg Jets he was entitled, in addition to a guaranteed salary of U.S.$60,000 per year, to a signing bonus of U.S.$125,000 payable in two installments. The parties agreed that the signing bonus would be exempt only if he was paid for hockey rather than for signing the contract. Bowie TCJ. found that the first installment (which was at issue) was exempt given that the taxpayer was entitled to receive the second installment only if he performed stipulated services and given that the taxpayer considered that all of the money was being paid to him for playing hockey, and not that part of it was paid simply to sign his name.

Administrative Policy

27 July 2016 External T.I. 2015-0603271E5 - Subsection 216.1(1) and permanent establishment

Art. 16 of US Treaty permits gross withholding taxation even if PE

A U.S.-resident actor provides Canadian acting services through an LLC or S corp. The 23% withholding tax under ITA s. 212(5.1) on the gross consideration paid could be avoided if the corporation files a Part I return for the year by its filing due date therefor and elects therein to have s. 216.1 apply. CRA considered that if the non-resident corporation misses this deadline, there is no ability to access s. 216.1, and (based on s. 115(2.1)) the non-resident corporation cannot late-file a “regular” Part I return where the provision of the acting services had resulted in it having a Canadian permanent establishment under the Treaty. CRA then added:

[I]ncome from the acting services provided in Canada by the actor through another person (such as a company owned by the actor) may be taxed in Canada notwithstanding Article VII of the Treaty. In other words, Article XVI overrides Article VII and allows Canada to tax such income irrespective of whether the company maintains a permanent establishment in Canada.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 216.1 - Subsection 216.1(1) late filing under s. 216.1 not accommodated 208
Tax Topics - Income Tax Act - Section 115 - Subsection 115(2.1) prohibition against acting income being filed on a net basis in absence of timely s. 216.1 election 103

15 July 1992 T.I. 920480 (January - February 1993 Access Letter, p. 9 ¶C9-253)

An association of professional racing car teams is not a league "with regularly scheduled games" for purposes of paragraph 3(a) of Article XVI of the U.S. Convention because the racing car teams would generally not be required to enter each event.