Article IV(3)

A situation of dual Resident Corporation may arise if a corporation is considered a resident in the U.S. under the treaty by virtue of its incorporation in the U.S., and resident in Canada by virtue of its central management and control situated in Canada.

Under this situation such corporation will be considered a resident of the State where it was incorporated.

If a Canadian corporation is continued to the U.S. in accordance with the relevant corporate laws of the U.S. State and becomes a resident both in the U.S. and Canada under the place of incorporation test, it should be considered resident in the U.S.

Article IV(4) – Mutual Agreement

Where by reason of article IV(1) an estate, trust, or any other person is resident in both Canada and the U.S. that person may apply to the Competent Authority in either State who should then endeavor to settle the conflict and determine the application of the Treaty to a particular person. The mutual agreement procedure in respect of the residency of an individual should be initiated under Article IV(2).

If a taxpayer has been found not to be resident in Canada for a particular tax year, the tax consequences to the taxpayer who previously filed a tax return as resident in Canada would be re-determined as it were non-resident in the particular year.

Article IV(5) – Residency of Governmental Employees and their Family Members:

A particular individual should be deemed to be resident in Canada if she is an employee of the Canadian federal government, a provincial government, a municipality or instrumentality thereof rendering services in the discharge of functions of a governmental nature in the U.S. or a third State, provided that the individual remains at all times subject to tax as a resident of Canada.

References:

Advisor’s Guide to Canada – U.S. Tax Treaty

By:  Vitaly Timokhov, Raymond Montero, David Kerzner

Published by: Thomson Carswell