Tax Treaty Case Law around the Globe 2013

S. 29Individual Residence Under the Canada – U.S. Tax Treaty: Trieste v. The Queen

David G. Duff

1. S. 31 Introduction

Where an individual is determined to be a resident of two states, Article 4(2) of the OECD Model Convention stipulates that the conflict is to be resolved by a series of tiebreaker rules, considering the location of permanent homes that are available to the individual, as well as the individual’s personal and economic relations (centre of vital interests), habitual abode, and nationality, before relegating the issue to the competent authorities to determine the individual’s residence by mutual agreement. Although the Model Convention does not define the terms permanent home, centre of vital interests, or habitual abode, the OECD Commentary on Article 4(2) contains several paragraphs on the meaning of these concepts. Judicial decisions involving tax treaties based on the OECD Model Convention provide further guidance on the application of these tiebreaker rules.

Trieste v. The Queen involved the tiebreaker rule in Article IV(2) of the Canada – US Treaty. Although this treaty differs slightly from the OECD Model, considering the individual’s centre of vital interests both where t...