Tax Conventions

• Author: International Law Group

Ms. Pamela Allchin (appellant or taxpayer) was born in Canada, and, in 1967, moved with her parents to Detroit, Michigan. At that time she obtained a green card. In 1969, she moved back to Windsor, Ontario but kept up her green card status by serving as a registered nurse in Michigan. She renewed her green card status every six months by virtue of part-time employment in Detroit, commuting from Windsor [Ontario] to work day shifts.

Appellant was also on the staff of a Windsor hospital from 1983. She resigned that position in April 1991, however, and began looking for a full time job in the United States. She then enrolled at a Michigan school to gain additional training. Starting in September 1992, and throughout the contested tax years, appellant worked in the hospital industry selling hospital supplies throughout the United States.

The record shows that appellant filed tax returns on her worldwide income in the U.S. as a U.S. resident. Concededly, her qualified tax advisor in the U.S. prepared her U.S. resident tax returns for those years, and filed them on the basis of her representations that she was a U.S. resident.

At some point, the Minister of National Revenue decided that appellant had not cut her ties with Canada. Thus, she had to report and pay tax on her worldwide income pursuant to the Canadian Income Tax Act , R.S.C. 1985, c. 1 (5th Supp.) (ITA) for the 1993, 1994 and 1995 tax years. [8] Taxpayer is now retired and resides in Windsor.

For the three taxation years at issue, appellant claimed to have been a resident of the U.S. and not subject to Canadian taxation under the ITA. In particular, she relied upon the provisions of the Canada- United States Tax Convention Act, 1984 (S.C., 1984, c. 20, Schedule I) (the "Treaty"). During those years, appellant held a "green card," officially known as a Permanent Resident Card, which entitled her to permanently live and work in the U.S.

In July 2003, a Judge of the Tax Court of Canada ruled on the issue of appellant's tax residence. The Judge reviewed the leading Canadian authority of Thomson v. Minister of National Revenue, 2 D.T.C. 812 (S.C.C. 1945) as well as the evidence presented. In his view, there was not "sufficient permanency" in taxpayer's links to the U.S. to sever her residential ties to Canada. From this, the Judge reasoned that Article IV(2) of the Treaty, dealing with dual residency (the "tie-breaking" provisions), did not apply. Taxpayer appealed that decision. The...