INCOME TAX |
Exemptions |
Edwards v. Canada
A-534-02
2003 FCA 378, Noël J.A.
14/10/03
19 pp.
Appeal from Tax Court of Canada decision ((2002) D.T.C. 1856) dismissing appeal from assessment for 1997 taxation year--Appellant employed as airline pilot with commercial air company based in Hong Kong Special Administrative Region (HKSAR)--Issue whether Canada-China Tax Treaty applying to HKSAR--If Treaty applies to HKSAR, appellant's employment income would be exempt from taxation in Canada pursuant to Treaty, Art. 15(3) and appellant would be entitled to corresponding deduction under Income Tax Act, s. 110(1)(f)(i)--T.C.C. Judge found, although HKSAR formed inalienable part of People's Republic of China (PRC) since July 1, 1997, Treaty not intended by parties to apply to HKSAR--Appeal dismissed--Basic Law of HKSAR, in effect as of July 1, 1997, provided for continuation of laws previously in force in Hong Kong, and provided for preservation of its tax system as independent taxation system--HKSAR has not entered into any double taxation avoidance agreement since devolution, does not consider itself bound by any of international tax treaties to which PRC party (54 such treaties as of 1997)--In exchange of correspondence in March 2001, governments of Canada, PRC and HKSAR each took position Treaty not applicable to HKSAR--Looking at language of Treaty, does not appear Treaty intended to apply to Hong Kong or HKSAR--Also, commonly expressed intention of parties entitled to great weight and should not be ignored unless contrary intent can be shown in either words of Treaty or in some other expression by parties--No such contrary intent has been shown-- Agreement between the Government of Canada and the Government of the People's Republic of China for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, S.C. 1986, c. 48, Sch.V, Art. 15(3)--Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 110(1)(f)(i).