Canada and the United States announced on December 15,
2008 that the September 21, 2007 protocol (the Protocol) to the
Canada-United States Income Tax Convention (the Treaty) has now
entered into force.
The effective date of the Protocol's provisions varies. The
changes in the Protocol as they relate to withholding tax on
cross-border payments (other than interest) generally apply as of
February 1, 2009. The elimination (or, in the case of payments to
related persons, the first-phase reduction to 7%) of withholding
tax on most cross-border interest payments is retroactively
effective to January 1, 2008.
The Protocol's changes will generally be effective for other
(non-withholding) taxes for tax years that begin in 2009. For
example, such changes would generally apply to a company with a
November 30 year end beginning on December 1, 2009 (unless an
earlier tax year end arises in 2009 resulting, for example, from an
amalgamation involving the company).
