Words and Phrases - "borne by"

A Canadian resident was seconded to a U.S. corporation related to his Canadian employer in 2001 for a period of less than 183 days, with the U.S. corporation assuming full responsibility for the Canadian resident's employment regarding the employee’s duties in the U.S. Once the employee was paid by the Canadian corporation, it would be reimbursed by the U.S. corporation. In finding that the employee’s remuneration was “borne” by the U.S. corporation, so that the individual’s remuneration was subject to tax in both jurisdictions, the Directorate stated:

For the employee's remuneration to be "borne by" the US corporation, it is sufficient that it is deductible in computing the US corporation's income. [Here] the employee's salary is deductible in computing the US corporation's income. This would not be the case if the U.S. corporation's deduction was for a service provided by the Canadian corporation.

… Nevertheless, the Act will apply to avoid double taxation through the foreign tax credit mechanism.