ARTICLE · 18 JULY 2008

Technical Explanation Clarifies Impact Of The Fifth Protocol On Employees

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Amendments to Article XV of the Canada-United States Income Tax Convention (the Treaty) appear to expand the circumstances in which Canada and the U.S. may tax each other’s residents who exercise employment in the other Contracting State.

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Originally published in Blakes Bulletin on Tax, July 2008

Amendments to Article XV of the Canada-United States Income Tax Convention (the Treaty) appear to expand the circumstances in which Canada and the U.S. may tax each other's residents who exercise employment in the other Contracting State.

Under current Article XV, subject to Article XV, a resident of one state may be taxed by the other state on salary, wages or "similar" remuneration from employment exercised in the other state. The Fifth Protocol to the Treaty (the Protocol) changes the wording to remove the word similar. The Technical Explanation (TE) states this change was only intended to clarify that Article XV applies to any form of compensation, including payments in kind, so as to be consistent with the commentary to the Organisation for Economic Co-operation and Development

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Technical Explanation Clarifies Impact Of The Fifth Protocol On Employees

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