DATE: April 2, 1986
TO - Specialty Rulings Directorate
FROM - V&C Non-Resident Group Room 406, Ottawa T.C. Eric Hammond
ATTENTION Glen Thornley Reorganizations and Non-Resident Division
Re: XXXX
Attached is an extract from the T2 return of the above-noted non- resident corporation for the fiscal period ended June 30, 1985. Enclosed also are two rulings emanating from your area. One ruling directly concerns the case at hand. The other - authored by yourself - is included for information purposes with respect to the "borne by" provision contained in the 1980 Canada/U.S. Tax Agreement.
It is our opinion that pursuant to the agreement between XXXX (U.S. resident) and XXXX (a Canadian resident) the remuneration of the employees seconded to XXXX is "borne by" XXXX within the meaning of Article XV of the Canada/U.S. Agreement. Consequently, the individuals are taxable in Canada if their remuneration exceeds $10,000.00 in the taxation year. (That is, the individuals may use either of (a) or (b) of Article XV(2) to avoid taxation, but not both.) Please confirm that these provisions apply to the individuals in question with respect to remuneration received commencing January 1, 1985 pursuant to Article XXX(2)(b) of the Canada/U.S. Agreement.
Your response at your earliest convenience would be appreciated.
V & C Non-Resident Group