Explanatory note

The Protocol scheduled to this Order makes certain alterations to the Convention set out in the Schedule to the Double Taxation Relief (Taxes on Income) (Canada) Order 1980.

It includes a provision to bar both States from deducting tax at source from the same remuneration. The right to continue to deduct tax is given to the State in which the employment is exercised.

The Protocol establishes that the first £5,000 ($C10,000) of pension income is wholly exempt in the country of source, and excludes lump sum payments out of a pension plan from the scope of the provisions relating to pensions.

Amendments are made to the provisions concerning a supplemental tax on the branch profits of a permanent establishment to establish that the first £250,000 ($C500,000) of those profits is wholly exempt from such tax.

The Protocol also introduces a new Article concerning the taxation of income from operations on the Continental Shelf. In general each country may tax the profits of residents of the other country which are derived from activity connected with the exploration or exploitation of the seabed and sub-soil of the first country and their natural resources. The provisions of this Article are to take effect in the United Kingdom for any year of assessment, financial year or chargeable period beginning on or after 1 April in the calendar year following that in which the Protocol enters into force. The other provisions of the Protocol are to take effect in accordance with the provisions of the above Convention.