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ARTICLE · 25 DECEMBER 2008

Fifth Protocol To Canada - U.S. Tax Treaty Enters Into Force

Blake, Cassels & Graydon LLP
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On December 15, 2008, the Fifth Protocol to the tax treaty between Canada and the United States entered into force.

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Blakes Tax Group
Blakes Tax Group
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Copyright 2008, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Tax, December 2008

On December 15, 2008, the Fifth Protocol to the tax treaty between Canada and the United States entered into force.

The Protocol makes many important changes, including:

  • a phased-in exemption from withholding tax on related party interest
  • an exemption from withholding tax on guarantee fees
  • new rules extending treaty benefits to U.S. limited liability companies in certain cases
  • new "anti-hybrid" rules that deny treaty benefits to certain payments from hybrid entities
  • Canada's first comprehensive "limitation on benefits" rules
  • a binding arbitration procedure for competent authority cases, and

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