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ARTICLE 3

U.S. Income Tax Treaty — Canada Income Tax Treaty and Protocols - 1980 · 2026-10-03 edition · updated 2026-10-04 · United States

  1. Paragraph I of Article IV (Residence) of the Convention shall be deleted and replaced by the following: “1. For the purposes of this Convention, the term “resident” of a Contracting State means any person that, under the laws of that State, is liable to tax therein by reason of that person's domicile, residence, citizenship, place of management, place of incorporation or any other criterion of a similar nature, but in the case of an estate or trust, only to the extent that income derived by the estate or trust is liable to tax in that State, either in its hands or in the hands of its beneficiaries. For the purposes of this paragraph, an individual who is not a resident of Canada under this paragraph and who is a United States citizen or an alien admitted to the United States for permanent residence (a “green card” holder) is a resident of the United States only if the individual has a substantial presence, permanent home or habitual abode in the United States, and that individual's personal and economic relations are closer to the United States than to any third State. The term “resident” of a Contracting State is understood to include:

(a) The Government of that State or a political subdivision or local authority thereof or any agency or instrumentality of any such government, subdivision or authority, and

(b) (i) A trust, organization or other arrangement that is operated exclusively to administer or provide pension, retirement or employee benefits; and (ii) A not-for-profit organization that was constituted in that State and that is, by reason of its nature as such, generally exempt from income taxation in that State.”

  1. A new sentence shall be added at the end of paragraph 3 of Article IV (Residence) of the Convention as follows: “ Notwithstanding the preceding sentence, a company that was created in a Contracting State, that is a resident of both Contracting States and that is continued at any time in the other Contracting State in accordance with the corporate law in that other State shall be deemed while it is so continued to be a resident of that other State.”

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▸Contents — U.S. Income Tax Treaty — Canada Income Tax Treaty and Protocols - 1980
U.S. Income Tax Treaty — Canada Income Tax Treaty and Protocols - 1980

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