Foreign Affairs, Trade and Development Canada
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Foreign Affairs, Trade and Development Canada

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Personal Income Tax, Capital Gains Tax and Other Taxes Arising from Sources Within Canada

Circular Note No. XDC-0346 of April 20, 2006

The Department of Foreign Affairs and International Trade (Office of Protocol) presents its compliments to Their Excellencies the Heads of Diplomatic Missions and Chargés d'affaires, a.i. accredited to Canada and has the honour to refer to the matter of liability for personal income tax, capital gains tax and other taxes arising from sources within Canada [Note 1].

The Department would like to clarify that the Foreign Missions and International Organizations Act does not contain any provision exempting foreign representatives from the taxation of income arising from sources within Canada. While salaries and emoluments having their source outside Canada that are paid by the sending State to accredited members of a Mission's representation are considered tax exempt, it is equally the case that income arising from the interest and dividends earned on bank and investment accounts personally held by a foreign representative in Canada, or made in commercial undertakings (i.e. rental income), or made as a result of the sale or disposition of real property, can be considered taxable non-resident income. This is specifically in accordance with Article 34 of the Vienna Convention on Diplomatic Relations and Article 49 of the Vienna Convention on Consular Relations.

As the type and rate of tax a foreign representative must pay and the requirements for filing an income tax return with the Canada Revenue Agency vary depending on both the type of income received in Canada and the application of existing tax treaties on the avoidance of double taxation, the Department encourages all those concerned to contact the International Tax Services Office for guidance at 1-800-959-8281 or visit Non-residents of Canada for guidelines.

With respect to the reporting of professional income, the Department believes it is timely to remind the Heads of Diplomatic Missions of Canada's general prohibition on the practice of private gainful employment by foreign representatives outside official functions, except in special cases where written approval has been granted.

The Department of Foreign Affairs and International Trade (Office of Protocol) avails itself of this opportunity to renew to Their Excellencies the Heads of Diplomatic Missions and Chargés d'affaires, a.i. accredited to Canada the assurances of its highest consideration.

OTTAWA, April 20, 2006


1 This note does not address taxation of Canadian citizens and permanent residents of Canada working in Diplomatic Missions as locally engaged staff or in accredited international organizations.

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Date Modified:
2013-05-03