Working as a part time consultant in Canada - New US Canada Tax treaty Protocols

Does an American who works part time, as a consultant in Canada, pay taxes in Canada or the U.S.,on the funds received, from the work in Canada?

david ingram replies:

Prior to Jan 1, 2008, it depends upon the contract, the work location, the visa the consultant is working under and whether the income was earned before or after Jan 1, 2008 under the terms of the new treaty that was signewd / passed on Sept 21, 2007.

Prior to Sept 21, trhere was no doubt that if a self employed person worked in Canada and did not have a fixed base of operations in Canada  while continuing to live in the USA, that Self-Employed person did not pay tax to Canada although they had to file a tax return and claim the benefits of Article XIV of the treaty.

Article 9 of the new Protocols,  (find the whole amendment at ) deletes Article XIV and my reading does not find it addressed specifically other than by the new terms of Article XV of the treaty which is amended by Article X of the protocols.  ( Iam wiling to be corrected here Andrew or Gary or??)

This new amendment refers to salaries, wages amnd other remuneration and seems to take into account that self-employed consultant's fees.  In this case, they will be taxable in Canada first if the amount exceeds $10,000 or the consultant is in Canada more than 183 days. 

Now thse new protocols are being introduced in a graduated manner.  Article 27 of the new protocols states that the new rules will take effect on Jan 1, 2008.  Other specific dates are being used for other articles with one going back to Sept 17, 2000 and othe parts (article 3) not taking effect until the third year.  Assuming you are earning over $10,000 in Canada, under Article XV of the Treaty you should expect to pay tax to Canada first and claim a foreign tax credit on your US return by filing US form 1116..

Hope this helps �