Canada-us Tax Treaty – Key Points

By Author: Josep Guardiola
Total Articles: 49
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Canada has entered into tax treaties with a lot of countries, but none is considered more important that the Canada-US tax treaty. The importance of this treaty is largely because both the countries are neighbors and there are a lot of residents of US are living and working in Canada and vice versa. The first version of the current treaty was signed on September 26, 1980. There have been five amendments to that version of that treaty and these protocols were signed on the following dates.

• June 14, 1983

• March 28, 1984

• March 17, 1995

• July 29, 1997

• December 15, 2008

The United States of America and Canada have strong trade relations and therefore there are a lot of people who cross borders for their work. The need for the Canada-US tax treaty was recognized to be an important step in building relations between the two countries and to facilitate the ease in which citizens of one country could work and earn in the other country. Due to the many benefits the tax treaty has to offer we have a lot of corporations that are based in US who have interests in Canada and many ...
... Canadian corporations have branches and business interests in the US.

Income from Personal Services

According to the Canada-US tax treaty, income that is generated from personal services by a person who is a non-resident of one country and the resident of the other can be exempted provided the conditions that are mentioned in the treaty are met. Some of the exemptions that can be availed by a non-resident are

• An employee that is providing personal services in the other country is exempted from tax if the total payment that is made to the non-resident is less than $10,000 in a tax year.

• This does not apply to public entertainers and there are special rules that are drafted for them.

• A person who is earning more than $10,000, but has spent less than 183 days over a period of 12 months in the country is also exempt from paying tax.

Income from Self Employment

Any income that is generated from self employment is considered to be business profits and is taxed by the US or Canada government if it can be attributed to any permanent establishment in the country. The business profit will be applied to each country and is based on the permanent establishment and how it might be made into a separate entity. Article V of the Canada-US treaty talks about permanent establishments and how one can have them in the countries.

Other Income

Income that is gained out of periodic pensions or annuities that are paid to a non-resident from a source within the nonresident county will be taxed by the nonresident county. But according to the Canada-US tax treaty the maximum tax percentage that can apply for such income is 15% of the gross amount. There are a lot more exemptions that one can get out of the tax treaty.

About Author:-

Josep Guardiola is a Toronto tax specialist, who practices as an independent tax consultant. He is providing lots of information about how to manage tax. In this article you can find details information about Canada-US tax. For more information visit taxca.com.