The Federal Court of Appeal (FCA) issued a decision in The Queen v. William A. Dudney (2000 DTC 6169) ("Dudney") on February 24, 2000, confirming the Tax Court of Canada's decision (99 DTC 147) in favour of the taxpayer. The Supreme Court of Canada refused to grant the Crown leave to appeal the FCA decision.
The issue in Dudney was whether a non-resident consultant providing services at a client's premises in Canada had a fixed base in Canada. The court held that a fixed base was conceptually the equivalent of a PE for the purposes of Article V (Permanent Establishment) and Article VII (Business Profits). Under the terms of the Canada-U.S. Income Tax Convention, Canada has the right to tax a resident of the United States who is providing services in Canada only if the person has a fixed base/PE in Canada. Otherwise, the U.S. would have the sole right to tax the income related to those services.
The FCA concluded that Mr. Dudney did not have a fixed base at the client's premises and, consequently, his income was exempt from tax in Canada. The FCA ruled that, to determine whether or not Mr. Dudney had a fixed base in Canada, the factors to be taken into account would include (1) the actual use made of the location in Canada, (2) whether the person had a legal right to exercise control over that location, and (3) the degree to which the location was objectively identified with the person's business. The judge added, "this is not intended to be an exhaustive list that would apply in all cases, but it is sufficient for this case".
When evaluating the factor of the location being objectively identified with the person's business, the FCA discussed Mr. Dudney's inability to carry on all aspects of his business in the space at his disposal. As shown below, generally the definition of a PE within Canada's tax treaties states that the business of the non-resident must be wholly or partly carried on through the fixed place of business, and therefore we are of the view that it is not necessary for the non-resident to carry on all aspects of their business at that particular fixed place in order to have a PE in Canada. As a result, cases under audit should be evaluated to determine if the business of the non-resident is partly carried on through the fixed place of business.
When reviewing the factor of control over the location, the FCA put some importance on whether the person had legal control of a space and set out a number of indices to be considered in determining whether a person has the control over the premises at their disposal necessary to establish that those premises could be considered to be a fixed base/PE. The FCA seemed to put some emphasis on the fact that while Mr. Dudney had access to the offices of the Canadian taxpayer, and did use them, his access was limited to the regular office hours of the Canadian taxpayer. While the Dudney case brought attention to the factor of legal control (sometimes referred to as physical control by the CRA), in cases where we cannot demonstrate that the taxpayer had such control, the case should be further evaluated to identify if there are other factors that may establish whether the taxpayer had a fixed base or PE in Canada. All the facts of a particular case should be reviewed in order to assess which factors are most relevant or determinant.
Therefore, when evaluating a PE case, the case should first, where possible, be distinguished from the Dudney case in terms of the facts of the situation. Next the case should be reviewed to determine if a PE exists. This memorandum provides a framework for making PE determinations, including some potential factors to be considered.
The Federal Court of Appeal (FCA) issued a decision in The Queen v. William A. Dudney (2000 DTC 6169) ("Dudney") on February 24, 2000, confirming the Tax Court of Canada's decision (99 DTC 147) in favour of the taxpayer. The Supreme Court of Canada refused to grant the Crown leave to appeal the FCA decision.
The issue in Dudney was whether a non-resident consultant providing services at a client's premises in Canada had a fixed base in Canada. The court held that a fixed base was conceptually the equivalent of a PE for the purposes of Article V (Permanent Establishment) and Article VII (Business Profits). Under the terms of the Canada-U.S. Income Tax Convention, Canada has the right to tax a resident of the United States who is providing services in Canada only if the person has a fixed base/PE in Canada. Otherwise, the U.S. would have the sole right to tax the income related to those services.
The FCA concluded that Mr. Dudney did not have a fixed base at the client's premises and, consequently, his income was exempt from tax in Canada. The FCA ruled that, to determine whether or not Mr. Dudney had a fixed base in Canada, the factors to be taken into account would include (1) the actual use made of the location in Canada, (2) whether the person had a legal right to exercise control over that location, and (3) the degree to which the location was objectively identified with the person's business. The judge added, "this is not intended to be an exhaustive list that would apply in all cases, but it is sufficient for this case".
When evaluating the factor of the location being objectively identified with the person's business, the FCA discussed Mr. Dudney's inability to carry on all aspects of his business in the space at his disposal. As shown below, generally the definition of a PE within Canada's tax treaties states that the business of the non-resident must be wholly or partly carried on through the fixed place of business, and therefore we are of the view that it is not necessary for the non-resident to carry on all aspects of their business at that particular fixed place in order to have a PE in Canada. As a result, cases under audit should be evaluated to determine if the business of the non-resident is partly carried on through the fixed place of business.
When reviewing the factor of control over the location, the FCA put some importance on whether the person had legal control of a space and set out a number of indices to be considered in determining whether a person has the control over the premises at their disposal necessary to establish that those premises could be considered to be a fixed base/PE. The FCA seemed to put some emphasis on the fact that while Mr. Dudney had access to the offices of the Canadian taxpayer, and did use them, his access was limited to the regular office hours of the Canadian taxpayer. While the Dudney case brought attention to the factor of legal control (sometimes referred to as physical control by the CRA), in cases where we cannot demonstrate that the taxpayer had such control, the case should be further evaluated to identify if there are other factors that may establish whether the taxpayer had a fixed base or PE in Canada. All the facts of a particular case should be reviewed in order to assess which factors are most relevant or determinant.
Therefore, when evaluating a PE case, the case should first, where possible, be distinguished from the Dudney case in terms of the facts of the situation. Next the case should be reviewed to determine if a PE exists. This memorandum provides a framework for making PE determinations, including some potential factors to be considered.
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The Federal Court of Appeal (FCA) issued a decision in The Queen v. William A. Dudney (2000 DTC 6169) ("Dudney") on February 24, 2000, confirming the Tax Court of Canada's decision (99 DTC 147) in favour of the taxpayer. The Supreme Court of Canada refused to grant the Crown leave to appeal the FCA decision.
ปัญหาใน dudney คือไม่ว่าจะเป็นถิ่นที่อยู่นอกที่ปรึกษาการให้บริการในสถานที่ของลูกค้าในแคนาดามีซ่อมฐานในแคนาดา ศาลจัดขึ้นที่ฐานคงที่มีแนวคิดเทียบเท่าของ PE สำหรับวัตถุประสงค์ของบทความของสถานประกอบการถาวร ) และ 7 บทความ ( ผลประกอบการ ) ภายใต้เงื่อนไขของ canada-u.s. ภาษีเงินได้ในการประชุม Canada has the right to tax a resident of the United States who is providing services in Canada only if the person has a fixed base/PE in Canada. Otherwise, the U.S. would have the sole right to tax the income related to those services.
The FCA concluded that Mr. Dudney did not have a fixed base at the client's premises and, consequently, his income was exempt from tax in Canada. The FCA ruled that, to determine whether or not Mr. Dudney had a fixed base in Canada, the factors to be taken into account would include (1) the actual use made of the location in Canada, (2) whether the person had a legal right to exercise control over that location, and (3) the degree to which the location was objectively identified with the person's business. The judge added, "this is not intended to be an exhaustive list that would apply in all cases, but it is sufficient for this case".
When evaluating the factor of the location being objectively identified with the person's business, the FCA discussed Mr. Dudney's inability to carry on all aspects of his business in the space at his disposal. As shown below, generally the definition of a PE within Canada's tax treaties states that the business of the non-resident must be wholly or partly carried on through the fixed place of business, and therefore we are of the view that it is not necessary for the non-resident to carry on all aspects of their business at that particular fixed place in order to have a PE in Canada. As a result,กรณีภายใต้การตรวจสอบควรได้รับการประเมินเพื่อตรวจสอบว่าธุรกิจของถิ่นที่อยู่นอกเป็นส่วนหนึ่งดำเนินการผ่านการแก้ไขสถานที่ของธุรกิจ .
เมื่อทบทวนปัจจัยควบคุมตำแหน่ง the FCA put some importance on whether the person had legal control of a space and set out a number of indices to be considered in determining whether a person has the control over the premises at their disposal necessary to establish that those premises could be considered to be a fixed base/PE. The FCA seemed to put some emphasis on the fact that while Mr.dudney เข้าถึงหน่วยงานของผู้เสียภาษีชาวแคนาดา และได้ใช้บริการของเขาถูก จำกัด ให้ปกติ ชั่วโมงทำงานของผู้เสียภาษีชาวแคนาดา ในขณะที่ dudney กรณีนำความสนใจไปที่องค์ประกอบของการควบคุมทางกฎหมาย ( บางครั้งเรียกว่าการควบคุมทางกายภาพโดย Cra ) ในกรณีที่เราไม่สามารถแสดงให้เห็นว่าผู้เสียภาษีอากรมีการควบคุมดังกล่าว the case should be further evaluated to identify if there are other factors that may establish whether the taxpayer had a fixed base or PE in Canada. All the facts of a particular case should be reviewed in order to assess which factors are most relevant or determinant.
Therefore, when evaluating a PE case, the case should first, where possible,จะแตกต่างจาก dudney คดีในแง่ของข้อเท็จจริงของสถานการณ์ ต่อไปคดีควรตรวจสอบเพื่อตรวจสอบถ้าเป็น PE อยู่ บันทึกนี้ให้กรอบสำหรับการใช้ PE รวมถึงบางอย่างที่อาจเป็นปัจจัยที่ต้องพิจารณา
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