Principal Issues: Status of pending written guidance regarding the interpretation of the protocol including guidance in regard to reliance on the Treaty?
Position: See below.
Reasons: See below.
IFA 2009: Question 9:
What is the status of pending written guidance regarding the interpretation of the Fifth Protocol to the Canada-U.S. Income Tax Convention (the "Fifth Protocol") including guidance in regard to reliance on the Canada - U.S. Income Tax Convention (the "Treaty")?
Answer
The CRA has prepared and provided to publishers various Technical Interpretations regarding the interpretation of various provisions of the Fifth Protocol. As well, the CRA will be issuing three Income Tax Technical News (ITTN) in the near future. The first will address questions asked at the 2008 CTF, the second ITTN will deal with the Taxation of Roth IRAs and the Impact of Article XVIII of the Treaty which was amended by the Fifth Protocol and the third ITTN will deal with the impact of the Fifth Protocol on the taxation of cross-border stock options where employment is exercised in more than one country.
The CRA will also be issuing Guidelines for Taxpayers Requesting Treaty Benefits pursuant to paragraph 6 of Article XXIX A of the Treaty. We expect that this information will be available on the CRA's internet site by the end of the month. There is a new email address at which taxpayers may contact Competent Authority regarding the discretionary relief provision of the LOB Article: CA-LOB@cra.gc.ca or AC-RAA@arc.gc.ca.
In the context of Part XIII tax, the CRA is developing guidance for Canadian resident payers and non-residents regarding the availability of Treaty benefits and regarding the administrative procedures which must be followed by an LLC and other fiscally transparent entities for claiming entitlement to Treaty benefits for their members.
It is expected that Information Circular 76-12R6 and other CRA publications will be updated to include the new information and procedures.