Cases
Chua v. MNR, 2001 DTC 5104 (FCTD)
McKeown J. issued an order (with which counsel for the Minister was in agreement) that would permit Parliament two years in which to provide new legislation failing which Article 21, paragraph 3 of the Third Protocol to the U.S. Convention would become unconstitutional and invalid.
See Also
Emballages Starflex Inc. v. ARC, 500-80-019409-110 (Court of Quebec)
The taxpayer, which derived much of its income from sales to the U.S., donated $493,000 to U.S. charities which were not Canadian registered charities. In finding that the taxpayer was not entitled to deduct this amount as a charitable deduction under the Taxation Act (Quebec), Pokomandy JCQ referred to Art. XXI, para. 7 of the Canada- U.S. Income Tax Convention and stated (at paras. 86, 89-91, TaxInterpretations translation):
…Quebec is not bound by this convention, entered into between the Government of Canada and the United States, in a matter within its jurisdiction. …
The following provision is set out in the Taxation Regulations:
488R1…
(e) an amount…that is exempt from income tax in Québec or in Canada by virtue of a provision of a tax agreement entered into with a country other than Canada;
This provision is directed at avoiding double taxation and for that purpose only a tax convention concluded by Canada with another country applies to Quebec if its provisions exempt otherwise-taxable income from tax in Canada.
…Paragraph 7 of Article XXI…confers tax relief and not exemption from tax on income otherwise taxable in Canada.
Administrative Policy
2007 Ruling 2005-014968
Activities undertaken in Canada, including through leased premises, that related primarily to fund raising would not constitute a business of the U.S. exempt organization.
12 April 1999 Memorandum 981272
Before any consideration could be given to allowing an exemption for investment income paid to a U.S. master trust, the trust would be required to provide documentation that will clearly explain how it acted in trust for, or as agent for, the ultimate beneficial owners, the identity and residency of each beneficial owner, and the details of how the income was distributed to them.
17 February 1997 T.I. 962593
Where a trust resident in Canada has made a designation under s. 104(22) with respect to U.S.-source income earned by the trust and distributed to a beneficiary who is resident in Canada and has made a donation to a U.S. charity, such income will not qualify as income arising in the United States for purposes of paragraph 6 of Article XXI of the U.S. Convention, given that s. 104(22) recharacterizes the income only for limited purposes.
1996 Corporate Management Tax Conference Tax Conference Round Table Q. 21
In the context of Article XXI of the Canada-U.S. Convention, "related person" has the meaning assigned in the Act.
"Where a person is a member of a partnership, the Department will look through to the members in determining whether a particular member is related to the person from which the income is derived and whether paragraphs one or two of Article XXI of the Convention are applicable in respect of that member."
15 January 1993 T.I. 923421 (November 1993 Access Letter, p. 508, ¶C180-152)
Re taxation of a U.S. charitable organization's share of dividends received by a U.S. partnership from a Canadian resident corporation.
25 April 1991 T.I. (Tax Window, No. 2, p. 28, ¶1216)
Exempt organizations created in a country with which Canada has a tax treaty are residents of that contracting state for treaty purposes and are therefore entitled to the same benefits as those provided under a tax treaty to other residents of that state. For example, income or taxable capital gains derived by charitable organizations described in Article XXI(1) of the Canada-U.S. Convention, which is resident in the United States, will be exempt from Canadian tax by virtue of that paragraph provided that Article XXI(3) does not apply.
25 March 1991 T.I. (Tax Window, No. 1, p. 18, ¶1169)
Where a tax-exempt organization is a member of a partnership which has been subject to Part XIII tax on income payments received by it, RC on application of the exempt partner will refund the difference between the pro rata share of the Part XIII tax and the amount which would have been withheld if the exempt partner had received the income directly.
87 C.R. - Q.3
a U.S. pension trust or charitable trust is entitled to the exemption provided in paragraph 2 of Article XXI of the Canada-U.S. Income Tax Convention (1980).