XXXX
K.B. Harding (613) 957-2129
XXXX
APR 6 1989
Dear Sirs:
This is in response to your letter of February 28, 1989 concerning the residence status of XXXX.
XXXX
As you are aware the Department has issued Interpretation Bulletin IT-221R2 which outlines the criteria used by Revenue Canada, Taxation in determining the residential status of individuals who leave Canada. The actual determination of the residential status of an individual is made at the District Taxation Office where the individual filed prior to leaving Canada to locate in a foreign country. Accordingly, we recommend you contact the appropriate District Taxation Office and provide the District Office officials with information required to make that determination. We are forwarding a questionnaire which should be filled out by XXXX and passed to the District Office to assist in determining their residency status for Canadian taxation purposes.
While it may be determined that XXXX are residents of Canada, they may also be considered as residents of Malaysia for taxation purposes. Where such is the case, Article IV of the Canada-Malaysia Income Tax Agreement (Agreement), a copy of which is attached, provides a tie-breaker rule in paragraph 2 for purposes of the Agreement but does not affect Canada's right to tax. However, double-taxation is avoided since Canada will provide a foreign tax credit for taxes paid to Malaysia in accordance with Article XXIII of the Agreement (copy attached) or provide an exemption from taxable income under subparagraph 110(1)(f) of the Income Tax Act where the agreement limits Canada's right to tax any source of income.
We regret we cannot provide you with a firm reply to your request and trust the appropriate District Taxation Office will provide you with a determination of the residency status of your clients.
Yours truly,
for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch