5th PROTOCOL ENTERS INTO FORCE

The 5th Protocol to the Canada-US Tax Treaty entered into force today, December 15th. It is generally effective December 15, 2008, except that many provisions have specific effective dates that are different. For example:

• In respect of taxes withheld at source, generally, it will take effect for amounts paid or credited on or after the first day of the second month that begins after a December 15th. (February 1, 2009),
• In respect of withholding at source on certain related-party interest, there is a phase-in from 2008 to 2010, and
• In respect of Article V(9), (regarding creating a permanent establishment through the provision of services), it will take effect as of the third taxable year that ends after December 15, 2008, but will not include any days of presence, services rendered, or gross active business revenues that occur or arise prior to January 1, 2010.

Further, the effective date of some provisions are backdated to prior years.