In 2002, the taxpayer was resident both in Canada and the U.K. for domestic tax purposes, but by virtue of Art. 4, para. 2(a) of the Canada-U.K Income Tax Convention (the "Convention") he was a resident of the U.K. for purposes of the Convention.
The taxpayer unsuccessfully argued that his treaty non-residence caused him to not be resident under the Act, so that he was not subject to tax under the Act on non-Canadian source income such as $2.9 million of income from U.S. employment, imputed benefits of $1.4 million from free use of a corporate jet, and interest and dividend income.
If he instead had been successful on this argument, he would have faced a further difficulty in Art. 27, para. 2 of the Convention, which provided that income, which otherwise was "relieved" from Canadian income tax under the Convention but was subject to tax in the U.K. only on a remittance basis, would only be subject to such relief to the extent it was so remitted. Rip CJ found that this provision was not restricted to income which arose in Canada, so that it would have permitted Canada to tax Black's U.S.-source employment income (which had not been remitted to the U.K.), stating (at para. 67):
I agree with respondent that reading the words such as "arising in Canada" into Article 27(2) would distort the intended meaning of that provision of the Convention. I cannot fathom that Canadian and British negotiators would agree to hand over any taxing authority to a third country, in the case of the applicant, income from employment in the United States, to the Americans.