International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Canada: Residence not a prohibited ground of treaty discrimination

A recent decision of Canada's Federal Court of Appeal considered the non-discrimination provision of the Canada-UK Tax Convention finding that it did not apply because the Canadian domestic legislation in question discriminated based on residency rather than nationality.

The Federal Court of Appeal confirmed that Canada is not prohibited under the treaty from discriminating against taxpayers based on their residency.

In Saipem UK Limited v The Queen, the taxpayer, a non-resident of Canada, claimed deductions in computing its taxable income for purposes of the Canadian Income Tax Act, from activities carried on by it in Canada through a permanent establishment (PE) within the meaning of the treaty. The deductions related to certain non-capital losses from business activities carried on in Canada by a corporation, SEI, that at all material times was related to the taxpayer within the meaning of the act and that was wound up into the taxpayer. The Minister of National Revenue denied the deductions on the basis that the Act required each of the taxpayer and SEI to be a Canadian corporation as defined in the act, and that definition required each corporation to be resident in Canada and either (i) incorporated in Canada, or (ii) resident in Canada throughout the period that began on June 18 1971.

Article 22(1) of the treaty prohibits discrimination on the basis of nationality, and the taxpayer asserted that the provision of the act restricting the deduction to Canadian corporations violated its rights as a UK national, and for purposes of the treaty, to non-discriminatory treatment guaranteed by Article 22. In early 2011, the Tax Court of Canada rejected the taxpayer's position.

Janette Pantry & Rebecca Levi

Blake, Cassels & Graydon

Tel: +1 416 863 2400

Fax: +1 416 863 2653

Website: www.blakes.com

more across site & bottom lb ros

More from across our site

With the M&A market booming, ITR has partnered with correspondents from firms around the globe to provide a guide to the deal structures being employed and how tax authorities are responding.
Xing Hu, partner at Hui Ye Law Firm in Shanghai, looks at the implications of the US Uyghur Forced Labor Protection Act for TP comparability analysis of China.
Karl Berlin talks to Josh White about meeting the Fair Tax standard, the changing burden of country-by-country reporting, and how windfall taxes may hit renewable energy.
Sandy Markwick, head of the Tax Director Network (TDN) at Winmark, looks at the challenges of global mobility for tax management.
Taxpayers should look beyond the headline criteria of the simplification regime to ensure that their arrangements meet the arm’s-length standard, say Alejandro Ces and Mark Seddon of the EY New Zealand transfer pricing team.
In a recent webinar hosted by law firms Greenberg Traurig and Clayton Utz, officials at the IRS and ATO outlined their visions for 2023.
The Asia-Pacific awards research cycle has now begun – don’t miss on this opportunity be recognised in 2023
An intense period of lobbying and persuasion is under way as the UN secretary-general’s report on the future of international tax cooperation begins to take shape. Ralph Cunningham reports.
Fresh details of the European Commission’s state aid case against Amazon emerge, while a pension fund is suing Amgen over its tax dispute with the Internal Revenue Service.
The OECD’s rules may be impossible for businesses to manage, according to tax experts from companies including Shell.