Tax Treaty Case Law around the Globe 2015

S. 35Canada: Conrad Black vs. the Queen – Dual Residence and the Remittance Basis of Taxation

Brian J. Arnold

I. S. 36Introduction

This case, decided by former Chief Justice Rip of the Tax Court of Canada and affirmed by the Federal Court of Appeal, raises interesting issues concerning the relationship between tax treaties and domestic law. The case is also interesting because the taxpayer is a prominent and controversial Canadian, a former press baron, a member of the UK House of Lords, a convicted felon, and a noted author.

The taxpayer was a resident of both Canada and the United Kingdom for the relevant years and earned employment income from the United States. There were two major issues in the case. First, was the taxpayer a resident of Canada for the purposes of the Canadian Income Tax Act despite the fact that he was deemed to be a resident of the United Kingdom for the purposes of the Canada-United Kingdom Tax Treaty under the tie-breaker rule in that treaty? Second, did Article 27(2) of the treaty apply? Article 27(2) is a special provision that is sometimes found in tax treaties with countries that tax on a remittance basis. Under Article 27(2), Canada is not obligated to provide any ...