Cases
Société Générale Valeurs Mobilières Inc. v. Canada, 2017 FCA 3
At issue was whether Art. XXII(2) of the Canada-Brazil Treaty contemplated that a Canadian foreign tax credit should be allowed only on the basis...
See Also
Marin v. The Queen, 2022 TCC 49
France started imposing income tax on rental income as it was earned rather than the tax being payable one year in arrears, as previously. ...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Non-Business-Income Tax | taxes for which FTC accorded must be imposed on the income which generates the Canadian taxes from which the credit is claimed | 451 |
| Tax Topics - Treaties - Income Tax Conventions - Article 6 | may-be-taxed language does not confer an exclusive right to tax | 195 |
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | FTC domestic and Treaty provisions are applied re the particular year in which the subject income was earned | 193 |
G E Financial Investments v.The Commissioners for Her Majesty's Revenue & Customs, [2021] UKFTT 0210 (Tax Chamber), ultimately aff'd [2024] EWCA Civ 797
A US company (“GEFI Inc.”) and UK company (“GEFI”) in the GE group formed a Delaware LP (the “LP”) with GEFI Inc. as the 1% general...
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| Tax Topics - Treaties - Income Tax Conventions - Article 4 | a deemed US resident was not a US treaty resident | 374 |
| Tax Topics - Treaties - Income Tax Conventions - Article 5 | somewhat isolated (albeit in large amounts) loan activity in US did not represent a business under UK concepts and therefore did not entail a US PE under the UK-US Treaty | 508 |
Zong v. The Queen, 2019 TCC 270 (Informal Procedure)
A resident of both Canada and the UK who was employed full-time in the UK for several years was not entitled to claim a foreign tax credit under...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Non-Business-Income Tax | mandatory contributions to the UK’s national insurance scheme did not qualify for FTC purposes | 208 |
Burton v Commissioner of Taxation, [2019] FCAFC 141
An Australian-resident individual was taxed at the 15% long-term U.S. capital gains rate on his gains on the disposal of U.S. oil and gas drilling...
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| Tax Topics - Income Tax Act - Section 91 - Subsection 91(4) | credit “in respect of” income only included the taxable ½ of capital gain | 212 |
Burton v Commissioner of Taxation, [2018] FCA 1857, aff'd [2019] FCAFC 141
An Australian-resident individual was taxed at the 15% long-term U.S. capital gains rate on his gains on the disposal of U.S. oil and gas drilling...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | a foreign tax credit was reduced by ½ when only ½ of a capital gain was brought into income | 223 |
Satyam Computer Services Limited v Commissioner of Taxation, [2018] FCAFC 172
In Tech Mahindra, computer services provided by employees of the taxpayer located in India to Australian companies were found to be royalties...
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| Tax Topics - Treaties - Income Tax Conventions | wording of Treaty sourcing rule had the effect of expanding scope of domestic provision | 271 |
Commissioner of Inland Revenue v. Lin, [2018] NZCA 38
As a result of having a 30% interest between 2005 and 2009 in four companies which were resident in China, the taxpayer had the active business...
Arsove v. The Queen, 2016 TCC 283 (Informal Procedure)
A Canadian-resident individual and U.S. citizen was subject to US. income tax of 15% on a distribution to her out of her IRA. However, she filed...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | no credit for U.S. taxes which should have been imposed but were not | 391 |
Société générale valeurs mobilières inc. v. The Queen, 2016 TCC 131, aff'd 2017 FCA 3
The Crown brought a motion under Rule 58(1) for determination of questions of law respecting the application of Art. XXII(2) of the Canada-Brazil...
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| Tax Topics - Income Tax Act - Section 4 - Subsection 4(1) - Paragraph 4(1)(a) | foreign source interest reduced by related expenses | 412 |
| Tax Topics - Treaties - Income Tax Conventions | OECD commentaries applied to Brazil (not an OECD member) | 231 |
Anson v. HMRC, [2015] UKSC 44
The taxpayer, who was resident in the UK, paid US income taxes on his share of the profits of an LLC of which he was a member, and also paid UK...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation | profits of LLC earned directly by members | 42 |
| Tax Topics - Treaties - Income Tax Conventions - Article 3 | scheme in Treaty article for allocating income between jurisdictions amounted to a definition of "source" | 88 |
| Tax Topics - Treaties - Income Tax Conventions - Article 4 | pragmatic approach to determining "same" - also appearing in IV,7(b) of Cda-US Treaty | 142 |
HMRC v. Anson, [2013] EWCA Civ 63, rev'd supra
The taxpayer, who was resident in the UK, paid US income taxes on his share of the profits of an LLC of which he was a member, and also paid UK...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation | LLC not fiscally transparent | 438 |
FLSmidth Ltd. v. The Queen, 2012 DTC 1052 [at at 2745], 2012 TCC 3, aff'd 2013 DTC 5118 [at 6147], 2013 FCA 160
In order to finance the acquisition of U.S. companies, the taxpayer set up a "tower structure," a chain of subsidiaries which had different tax...
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| Tax Topics - Income Tax Act - Section 16 - Subsection 16(1) | regard to economic substance | 138 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(12) | 303 | |
| Tax Topics - Income Tax Act - Section 68 | 138 | |
| Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. | 42 |
Meyer v. The Queen, 2004 DTC 2393, 2004 TCC 199 (Informal Procedure)
The taxpayer, who was a U.S. citizen resident in Canada, did not claim treaty benefits when filing his U.S. return, with the result that his...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Non-Business-Income Tax | amount paid in error not a tax | 131 |
| Tax Topics - Treaties - Income Tax Conventions - Article 26 | 85 |
Canada- Israel Development Ltd. v. MNR, 85 DTC 718, [1985] 2 CTC 2460 (TCC)
The taxpayer, a Canadian resident corporation, owned all the shares of an Israeli corporation (“CAN-IS”) that received a dividend from another...
Administrative Policy
11 April 2023 Internal T.I. 2023-0964101I7 - Tax issues for cross-border employees
A portion of the employment duties of a cross-border employee (with a hybrid work arrangement) is exercised from Canada in the year but the...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | employment income does not arise in the U.S. for Treaty purposes to the extent the duties are performed in a Canadian home office | 140 |
| Tax Topics - Treaties - Income Tax Conventions - Article 8 | contributions to 401(k) plan not deductible to the extent the duties of employment were performed from a Canadian home office | 151 |
3 February 2022 Internal T.I. 2021-0922301I7 - Art. XIII(7) Canada -US Treaty and Trusts
A Canadian-resident trust (the “Trust”) will realize a capital gain on a deemed disposition (the “Deemed Disposition”) pursuant to s....
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| Tax Topics - Treaties - Income Tax Conventions - Article 13 | CRA lacks jurisdiction to determine whether a trust can elect under Art. XIII(7) of the U.S. Treaty to avoid double taxation of a s. 104(4)(b) gain | 196 |
9 July 2021 Internal T.I. 2021-0893981I7 - CERB received by non-residents
After noting that payments (“CERB Payments”) made pursuant to the Canada Emergency Response Benefit Act (the “CERB Act”) to a non-resident...
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| Tax Topics - Income Tax Act - Section 120 - Subsection 120(1) | CERB payments subject to the additional federal tax under s. 120(1) | 117 |
| Tax Topics - Treaties - Income Tax Conventions - Article 15 | Other Income Art. accords Canada full right to tax CERB payments | 225 |
26 November 2020 STEP Roundtable Q. 4, 2020-0838001C6 - Foreign Tax Credit
A Canadian-resident individual (the “Taxpayer”), wholly owns a U.K.-resident corporation which, in turn, wholly-owns an Australia-resident...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | UK source of gain re-sourced to Australia for s. 126 purposes under Australia-Canada Treaty sourcing rule | 114 |
3 December 2019 CTF Roundtable Q. 2, 2019-0824381C6 - Foreign taxes paid
Art. XXIV(2)(a)(i) of the Canada-US Treaty provides that “income tax paid or accrued to the United States on profits, income or gains arising in...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | taxpayers can translate under s. 126 foreign taxes at the exchange rate applied to the related income | 186 |
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(2) - Paragraph 261(2)(b) | translation of foreign taxes at same FX rate as that used for related income is acceptable | 86 |
13 April 2017 External T.I. 2015-0601781E5 - U.S. tax paid in respect of an LLC's income
A Canadian-resident individual who is a member of a U.S. LLC pays tax in the U.S. on his or her share of profit of the LLC for a particular...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | Post-Anson, no credit for U.S. taxes paid by a Canadian member on undistributed LLC income | 205 |
3 February 2016 External T.I. 2014-0548111E5 - U.S. tax paid in respect of an LLC's income
Mr. A, Canadian resident and citizen subject to a Canadian marginal rate of tax of 50%, was a member of an LLC carrying on a U.S. active business...
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| Tax Topics - Income Tax Act - Section 88 - Subsection 88(3) - Paragraph 88(3)(d) | no deemed dividend | 133 |
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Non-Business-Income Tax | LLC tax paid by Cdn member not re business | 169 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(11) | only income was taxable capital gains | 136 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(12) | s. 20(14) deduction for US operating-income taxes imposed on Cdn LLC member even where his only Cdn income from LLC is taxable capital gain | 439 |
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | FTC for US operating-income taxes imposed on Cdn LLC member even where his only Cdn income from LLC is taxable capital gain | 331 |
[U.K] Revenue and Customs Brief 15 (2015): HMRC response to the Supreme Court decision in George Anson v HMRC (2015) UKSC 44 25 September 2015
…[T]he [Anson] decision is specific to the facts found in the case. This means that where US LLCs have been treated as companies within a group...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation | Anson specific to its facts | 104 |
23 July 2014 Internal T.I. 2014-0525231I7 - Foreign tax credit
Canco paid Japanese income tax on the capital gain reported on the distribution by it of its shares of a Japanese subsidiary ("Forco") to its...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | s. 40(3) gain had Cdn source/foreign tax not a "tax" if no refund sought | 426 |
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Non-Business-Income Tax | foreign tax not a "tax" if no refund sought | 210 |
16 June 2014 Internal T.I. 2014-0525961I7 - ON Tax and Brazilian Tax Sparing
Was tax deemed to have been paid (a "tax spared amounts") under Art. 22, para. 3 of the Canada-Brazil Treaty eligible for a foreign tax credit...
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| Tax Topics - Other Legislation/Constitution - Ontario - Taxation Act 2007 - Section 34 - Subsection 34(1) | Brazilian tax-sparing rules operate independently of s. 126 so that they do not generate an Ontario FTC | 231 |
13 January 2014 External T.I. 2013-0512581E5 - Sale of shares of Brazilian corporation
The capital gain realized by a resident of Canada ("Canco") on disposing of shares of a Brazilian company was taxed by Brazil in accordance with...
10 June 2013 STEP CRA Roundtable, 2013-0480301C6 - 2013 STEP CRA Roundtable Question 4
A U.S. citizen is required to pay U.S. tax on dividends and capital gains at a 20% rate (increased from the previous 15% rate). Does this mean...
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| Tax Topics - Income Tax Act - Section 20 - Subsection 20(11) | Art. XXIV(5) rules in US Treaty supplant s. 20(11) and (12) rules | 117 |
5 November 2012 Internal T.I. 2012-0462151I7 - Foreign Tax Credits
Canco held portfolio investments in shares of U.S. companies in connection with funding its insurance liabilities. The shares were mark-to-market...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(6) - Paragraph 126(6)(c) | 303 |
6 July 2012 Internal T.I. 2012-0453461I7 F - rental losses Canada-France Treaty
Respecting a French rental property (the "Immovable") of the Canadian-resident individual taxpayer, CRA stated:
[B]y virtue of Article XXIII of...
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| Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) - Business Source/Reasonable Expectation of Profit | no requirement to establish reasonable expectation of profit re deducting loss from French rental property if no personal element | 105 |
11 May 2012 External T.I. 2011-0428791E5 - Foreign Tax Credit
Respecting a question as to the availability of a foreign tax credit for state franchise tax paid by a Canadian taxpayer (Canco), CRA (after...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Business-Income Tax | 106 |
15 March 2004 External T.I. 2003-0022651E5 - Canada-Mexico Income Tax Convention - Assets Tax
The Mexican assets tax (levied annually at the rate of 1.8% on all business property, commencing after four years of business operations) was not...
20 February 2003 External T.I. 2002-014360
A s. 20(12) deduction may not be taken by a U.S. citizen resident in Canada on the withholding from U.S. source property income that is in excess...
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | 164 |
20 February 2003 External T.I. 2002-0143605 - Deductions-US Citizens resident in Canada
Respecting a U.S. citizen who was resident in Canada and received U.S.-source interest income, the correspondent queried whether the amount of...
19 October 1998 Memo 8M18146
Re-sourcing to Canada of U.S. employment income of U.S. citizen resident in Canada under Art. XXIV, para. 3 of Canada-U.S. Convention
With respect...
3 March 1997 Internal T.I. 9641327 - SUBSECTION 20(11) AND TAX TREATIES
Discussion of the interaction of s. 20(11) and paragraph 5 of Article XXIV of the U.S. Convention.
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| Tax Topics - Income Tax Act - Section 20 - Subsection 20(11) | 20 |
1995 Alberta CICA Round Table, Q. 13 (C.T.O. "U.S. Alternative Minimum Tax")
Discussion of double taxation situation where a U.S. citizen who is resident in Canada and earning only Canadian-source income is subject to U.S....
7 November 1994 External T.I. 9400965 - U.S. REAL PROPERTY INTEREST & FTC (5638-2)
Canco elects under Code s. 897(i) to be treated as a U.S. domestic corporation. Consequently, its shares become "United States real property...
Halifax Round Table, February 1994, Q. 5
As paragraph 1 of Article 24 of the Canada-U.S. Convention is subject to paragraphs 4, 5 and 6, and these paragraphs are not subject to U.S....
Articles
Nathan Boidman, "How Will Revised Sourcing Rules Affect Sales of U.S.-Made Goods Abroad?", Tax Notes International, 10 February 2020, p. 655
Allocation of income on sale of U.S.-produced goods all to the U.S. for U.S. FTC purposes under revised Code s. 863 (p. 655)
[There is] a...
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| Tax Topics - Income Tax Act - Section 115 - Subsection 115(1) - Paragraph 115(1)(a) - Subparagraph 115(1)(a)(ii) | 181 | |
| Tax Topics - Treaties - Income Tax Conventions - Article 7 | 375 |
Brian J. Arnold, "The Relationship between Controlled Foreign Corporation Rules and Tax Sparing Provisions in Tax Treaties: A New Zealand Case", Bulletin for International Taxation July 2018, p. 430
Lin decision accorded with literal wording of Relief from Double Taxation Article (p. 8)
[T]he situation appears to be as follows:
- the...
Manjit Singh, Andrew Spiro, "The Canadian Treatment of Foreign Taxes", 2014 Conference Report, (Canadian Tax Foundation), 22:1-37
Re-sourcing of capital gains and derivative gains (p.7)
A common scenario in which a treaty re-sourcing rule may apply is where a Canadian...
Kevyn Nightingale, "The Net Investment Income Tax: How it applies to U.S. Citizens Abroad", International Tax, No. 73, December 2013, p. 9.
What is the NIIT? (p.9)
To help fund "Obamacare", the United States instituted a new tax: the Net Investment Income Tax ("NIIT"). [Note 1:...
Tremblay, "Foreign Tax Credit Planning", 1993 Corporate Management Tax Conference Report, c. 3.
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| Tax Topics - Income Tax Act - Section 126 - Subsection 126(2) | 0 |