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FederalPassed42nd Parliament, 1st Session

Bill S-4 explained in plain English

An Act to implement a Convention and an Arrangement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and to amend an Act in respect of a similar Agreement

Federal Parliament bill summary, status, timeline, sponsor, votes, and official sources.

At a glance

Jurisdiction
Federal Parliament
Legislature / Parliament
Parliament of Canada
Session
42nd Parliament, 1st Session
Bill number
Bill S-4
Full title
An Act to implement a Convention and an Arrangement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and to amend an Act in respect of a similar Agreement
Current status
Passed
Latest event
Royal assent received
Last updated
Dec 15, 2016

Official Parliament of Canada snapshot for 42nd Parliament, 1st Session. MP vote breakdowns appear when the House of Commons publishes a recorded division export for that bill. Senate and House stage details include official debate/sitting links when LEGISinfo publishes them.

Chamber
Parliament of Canada
Current Stage
Royal assent received
Latest Activity
Dec 15, 2016
Plain-language explanation
In plain English (our explanation)

Our plain-language take, written for civic education.

Source: By PoliticalData.ca

AI-assisted, reviewed before publishing
Short Version

Bill S-4 implements tax agreements with Israel and Taiwan and amends the Canada-Hong Kong Tax Agreement Act to avoid double taxation on income.

What It Means

Bill S-4 is a federal law that brings into effect two international tax agreements designed to prevent Canadian residents and businesses from being taxed twice on the same income — once by Canada and once by Israel or Taiwan. The bill has three main parts: **Part 1: Canada-Israel Tax Convention** This part creates the Canada–Israel Tax Convention Act, 2016, which implements a tax agreement between Canada and Israel. The agreement applies to people who live in either country and aims to avoid double taxation and prevent tax evasion. It covers all taxes on income, including taxes on capital gains. The agreement sets rules about where different types of income can be taxed — for example, income from real estate, business profits, dividends, interest, and royalties. It also establishes procedures for the two countries to resolve tax disputes and share tax information. **Part 2: Canada-Taiwan Territories Tax Arrangement** This part creates the Canada and Taiwan Territories Tax Arrangement Act, 2016, which implements a similar agreement with Taiwan. Because Canada and Taiwan do not have formal diplomatic relations, this agreement is between the Canadian Trade Office in Taipei and the Taipei Economic and Cultural Office in Canada. It contains similar rules about avoiding double taxation on various types of income. **Part 3: Amendment to Canada-Hong Kong Tax Agreement Act** This part amends an existing 2013 law to clarify that the Hong Kong Special Administrative Region is treated the same as a country or state for tax purposes under the Canada-Hong Kong tax agreement. This ensures that the tax relief available under that agreement applies to residents of Hong Kong. **Key effects:** - Canadian residents and businesses will be able to claim tax credits or deductions in Canada for taxes paid to Israel or Taiwan on the same income - The two countries agree on which country has the right to tax different types of income (for example, Canada typically taxes business income only if the person has a permanent business location there) - Both countries agree to exchange tax information to prevent evasion - The agreements follow the standard model used by the Organisation for Economic Co-operation and Development (OECD) - The Israel agreement replaced an older 1975 agreement between Canada and Israel

What This Bill Does
  • Enacts the Canada–Israel Tax Convention Act, 2016, which brings into force a tax convention between Canada and Israel to avoid double taxation and prevent fiscal evasion on income
  • Sets out the full text of the Canada-Israel tax convention, including schedules defining terms, tax coverage, residency rules, permanent establishment, and specific taxation rules for different types of income (business profits, dividends, interest, royalties, capital gains, employment income, pensions, etc.)
  • Includes protocols and understandings that clarify how the Canada-Israel convention applies in specific situations
  • Enacts the Canada and Taiwan Territories Tax Arrangement Act, 2016, which brings into force a tax arrangement between the Canadian Trade Office in Taipei and the Taipei Economic and Cultural Office in Canada with similar objectives and structure to the Israel convention
  • Sets out the full text of the Canada-Taiwan arrangement, including similar provisions for avoiding double taxation and preventing fiscal evasion
  • Amends the Canada–Hong Kong Tax Agreement Act, 2013 by adding an interpretation section that clarifies references to 'country' or 'state' in that law are to be read as including the Hong Kong Special Administrative Region of the People's Republic of China
  • Authorizes the Minister of National Revenue to make regulations necessary to carry out the conventions and arrangement
  • Requires the Minister of Finance to publish notices in the Canada Gazette about when the conventions and arrangement enter into force and when they terminate
  • Establishes that the conventions and arrangement prevail over other Canadian laws in case of conflict, except where the Income Tax Conventions Interpretation Act conflicts with them
Who Is Affected
  • Canadian residents (individuals, companies, partnerships, trusts and other entities) who earn income from Israel or have Israeli sources of income
  • Israeli residents (individuals, companies, partnerships, trusts and other entities) who earn income from Canada or have Canadian sources of income
  • Canadian residents (individuals, companies, partnerships, trusts and other entities) who earn income from Taiwan or have Taiwan sources of income
  • Taiwan residents (individuals, companies, partnerships, trusts and other entities) who earn income from Canada or have Canadian sources of income
  • Canadian and Hong Kong residents benefiting from the clarification in the amended Canada-Hong Kong Tax Agreement Act
  • Businesses and enterprises operating in both Canada and Israel, or between Canada and Taiwan
  • Canadian employees working in Israel or Taiwan
  • Israeli and Taiwan employees working in Canada
  • Canadian investors with dividends, interest, or royalty income from Israel or Taiwan
  • Canadian real estate owners with property in Israel or Taiwan
  • Canadian pension plans and registered retirement arrangements receiving income from Israel or Taiwan
  • The Canadian government and the governments of Israel and Taiwan, which will exchange tax information under the agreements
Rights, Duties, Or Obligations
  • Canadian residents earning income from Israel have the right to claim a tax deduction or credit in Canada for tax paid to Israel, subject to the limits set out in the convention (Article 21)
  • Israeli residents earning income from Canada have the right to claim a tax deduction or credit in Israel for tax paid to Canada, subject to the limits set out in the convention (Article 21)
  • Canadian and Taiwan residents have similar rights to claim tax credits or deductions for taxes paid to each other's jurisdiction (Section 22)
  • Canadian businesses are required to report income from Israeli sources and comply with the convention rules about where that income can be taxed
  • Israeli businesses are required to report income from Canadian sources and comply with the convention rules about where that income can be taxed
  • The Minister of National Revenue has the authority to make regulations necessary to carry out the conventions and arrangement (Sections 2(5) and 3(6))
  • The Minister of Finance is required to publish notices in the Canada Gazette when the conventions and arrangement enter into force and when they terminate (Sections 2(6) and 3(7))
  • Competent authorities (the Minister of National Revenue for Canada and equivalent officials in Israel and Taiwan) must exchange tax information to prevent fiscal evasion (Articles 24 and Section 25)
  • Competent authorities are required to endeavour to resolve disputes about how the conventions and arrangement apply through a mutual agreement procedure (Article 23 and Section 24)
  • Resident individuals earning employment income in the other country are taxed on that income in the country where work is performed, unless specific conditions are met (for example, the person is present for fewer than 183 days in a 12-month period and the employer is not resident in that country) (Articles 14 and Section 15)
  • Canadian and Israeli residents must not be subjected to more burdensome taxation than residents of the same state in the same circumstances (Article 22 and Section 23)
  • Tax benefits under the conventions and arrangements cannot be claimed if one of the main purposes of creating or maintaining a structure is to obtain those benefits (various articles including Article 10(10), 11(10), 12(8) and Section 10(7))
Important Dates
  • The Bill S-4 received Royal Assent on December 15, 2016 (as indicated in the metadata)
  • The Canada-Israel convention enters into force on a date determined by the later of two notifications by Canada and Israel through diplomatic channels (Article 28(1)). Once in force, it applies to taxes withheld at source on or after January 1 of the calendar year following entry into force, and to other taxes for taxation years beginning on or after that date (Article 28(1))
  • The old Canada-Israel convention from July 21, 1975 ceases to have effect once the new convention enters into force (Article 28(2))
  • The Canada-Taiwan arrangement enters into force on a date determined by the later of two notifications as described in Section 27 of the arrangement. It applies to taxes withheld at the source on or after January 1 of the calendar year following entry into force, and to other taxes for taxation years beginning on or after that date (Section 27)
  • The amendment to the Canada-Hong Kong Tax Agreement Act, 2013 is deemed to have come into force on June 19, 2013, even though Bill S-4 received Royal Assent in 2016 (Section 4(2))
  • The Canada-Israel convention has a minimum five-year term and can only be terminated after that period with six months' written notice ending at the end of a calendar year (Article 29(1))
  • The Canada-Taiwan arrangement continues indefinitely but can be terminated with notice given on or before June 30 of any calendar year (Section 28)
  • Once terminated, the conventions and arrangement cease to apply to taxes withheld at source on or after January 1 of the following calendar year, and to other taxes for taxation years beginning on or after that date
Financial Or Tax Impacts
  • Canadian residents and businesses will be able to claim tax credits or deductions for taxes paid to Israel or Taiwan on the same income, reducing the overall tax burden from double taxation
  • The specific tax impact varies depending on the type of income: dividends are subject to different rates (e.g., 5% for companies holding 25%+ in Israel under Article 10(2)(a)), interest is typically capped at 10% in both jurisdictions, and royalties are capped at 10% (Articles 10, 11, 12; Sections 10, 11, 12)
  • Business profits are generally taxable only in the country where a permanent establishment exists, providing relief from taxation in the other country (Articles 7; Section 7)
  • Employment income is taxable in the country where work is performed, unless the employee is present for fewer than 183 days in a 12-month period and other conditions are met (Articles 14; Section 15)
  • Capital gains from the sale of real estate in Israel or Taiwan may be taxed in that country even if the seller is a Canadian resident (Articles 13; Section 13)
  • Pensions and annuities are subject to limits on tax rates in the source country — periodic pensions are capped at 15% or the recipient's overall tax rate (Article 17(2); Section 18(2))
  • The conventions and arrangement provide tax relief mechanisms that prevent the same income from being fully taxed in both countries
  • Changes to Canadian or Israeli/Taiwan tax laws that result in new identical or substantially similar taxes will be covered by the convention/arrangement (Article 2(4); Section 2(2))
  • No direct financial costs to the government are mentioned in the bill text; implementation costs would be covered through existing departmental budgets
Enforcement Or Penalties
  • Competent authorities (the Minister of National Revenue in Canada) are empowered to make regulations necessary for carrying out the conventions and arrangement (Sections 2(5) and 3(6))
  • Tax benefits cannot be claimed if one of the main purposes is to obtain those benefits (anti-avoidance rules in various articles)
  • The conventions and arrangements prevail over other Canadian laws in the event of conflict, except for the Income Tax Conventions Interpretation Act (Sections 2(4) and 3(4))
  • Competent authorities have the power to exchange tax information to prevent fiscal evasion (Articles 24 and Section 25). The bill text does not specify penalties for non-compliance but refers to existing domestic tax laws of each jurisdiction
  • Where competent authorities determine a person is a resident of both countries, different resolution procedures apply depending on whether the person is an individual or a non-individual (Articles 4(2)-(3); Section 4(3)-(4))
  • Either country can apply anti-avoidance provisions of its own tax laws (Article 25; Section 26)
  • The bill text does not specify financial penalties for violation of the convention or arrangement, as these would be enforced under the domestic income tax laws of each country
  • Tax adjustments made by one country based on transfer pricing rules can be adjusted by the other country to eliminate double taxation, with procedures for mutual agreement (Articles 9(2)-(3); Section 9(2)-(3))
Uncertainties Or Limits
  • The exact dates of entry into force of the conventions and arrangement are not specified in Bill S-4; they depend on notifications between the countries and could occur at any time after Royal Assent
  • The bill text does not specify enforcement mechanisms or penalties for non-compliance by individuals or businesses; these are governed by the domestic tax laws of Canada, Israel, and Taiwan
  • The provision about 'permanent establishment' includes a 12-month threshold for construction projects in the Israel convention (Article 5(3)), but a 6-month threshold in the Taiwan arrangement (Section 5(3)), creating different rules for different countries
  • The bill text does not specify how disputes between the competent authorities will be resolved if they cannot reach a mutual agreement under the mutual agreement procedure (Articles 23(2); Section 24(2))
  • The definition of 'resident' for purposes of the conventions and arrangement relies on each country's domestic tax laws, which may change over time
  • The bill text does not specify whether the conventions and arrangement apply retroactively to taxes paid before their entry into force
  • The Taiwan arrangement does not create a formal treaty relationship with Taiwan as a state, due to Canada's diplomatic recognition of the People's Republic of China; the arrangement is between two offices rather than governments
  • The bill text does not specify how the conventions and arrangement interact with tax treaties Canada has with third countries
  • The mutual agreement procedure described in the conventions and arrangement does not appear to have a binding dispute resolution mechanism if competent authorities cannot agree (Articles 23; Section 24)
  • The bill text does not specify the extent to which information exchanged between competent authorities can be used for purposes other than tax administration
Laws Or Regulations Affected
Canada–Israel Tax Convention Act, 2016
enacted

A new federal law is created that gives legal force in Canada to a tax convention with Israel for avoiding double taxation and preventing fiscal evasion. The convention applies to residents of Canada and Israel and covers income taxes imposed by both countries. It sets rules for where different types of income are taxed and how tax credits work.

Source: Section 2

Canada and Taiwan Territories Tax Arrangement Act, 2016
enacted

A new federal law is created that gives legal force in Canada to a tax arrangement with Taiwan for avoiding double taxation and preventing fiscal evasion. It applies to residents of both territories and covers income taxes. It sets rules for where different types of income are taxed and how tax credits work, similar to the Israel convention.

Source: Section 3

Canada–Hong Kong Tax Agreement Act, 2013
amended

A new interpretation section is added after section 4. This section clarifies that when the existing Canada-Hong Kong tax agreement refers to a 'country' or a 'state', it includes the Hong Kong Special Administrative Region of the People's Republic of China. This ensures that tax relief available under that agreement applies to Hong Kong residents.

Source: Section 4(1) and (2)

Income Tax Act
affected

The Income Tax Act is affected because the Canada-Israel and Canada-Taiwan arrangements will provide relief from some taxation rules in or related to the Income Tax Act. The Minister of National Revenue can make regulations under the Income Tax Act to carry out these agreements.

Source: Sections 2(5) and 3(6) of the enacted acts

Income Tax Conventions Interpretation Act
affected

The Income Tax Conventions Interpretation Act is affected because it provides the framework for interpreting and applying the conventions and arrangement. However, if there is a conflict between the conventions/arrangement and this Act, the Income Tax Conventions Interpretation Act takes priority.

Source: Sections 2(4)(2) and 3(4)(2) of the enacted acts

Income Tax Application Rules
affected

The Income Tax Application Rules are affected because provisions in the conventions and arrangement reference them for how tax relief is applied. The Minister of National Revenue may make regulations under these rules to carry out the agreements.

Source: Sections 2(5) and 3(6) of the enacted acts

Income Tax Regulations
affected

The Income Tax Regulations are affected because the conventions and arrangement apply through these regulations. The Minister of National Revenue is authorized to make additional regulations necessary to give effect to the agreements.

Source: Sections 2(5) and 3(6) of the enacted acts

An Act to implement conventions for the avoidance of double taxation with respect to income tax between Canada and France, Canada and Belgium and Canada and Israel (1976 Implementation Act)
affected

The older Canada-Israel tax convention from 1975 that was implemented by this Act is terminated and replaced by the new Canada-Israel Tax Convention Act, 2016. The 1976 Implementation Act's notification requirements do not apply to the termination of the 1975 convention.

Source: Section 2(6) of the Canada–Israel Tax Convention Act, 2016

Generated using AI from official bill text. Not legal advice. It is written by PoliticalData.ca for civic education, automatically checked and spot-reviewed before publishing.

Official text
Official summary
Official summary (Parliament of Canada)

The official summary published alongside the bill, shown exactly as written.

Source: Parliament of Canada (LEGISinfo)

Third-party sourceView on LEGISinfo

The Library of Parliament does not prepare Legislative Summaries for bills that implement treaties, conventions, agreements or administrative arrangements bills. The following is a short summary: On 1 November 2016, the Hon. Peter Harder introduced Bill S-4, An Act to implement a Convention and an Arrangement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and to amend an Act in respect of a similar Agreement (Tax Convention and Arrangement Implementation Act, 2016), in the Senate and it was given first reading. Bill S-4 implements a convention between the Government of Canada and the Government of the State of Israel for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and an arrangement between the Canadian Trade Office in Taipei and the Taipei Economic and Cultural Office in Canada for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. It also amends the Canada–Hong Kong Tax Agreement Act, 2013 to add to it, for greater certainty, an interpretation provision. The convention and arrangement are generally patterned on the Model Tax Convention on Income and on Capital developed by the Organisation for Economic Co-operation and Development (OECD). The convention and arrangement have two main objectives: the avoidance of double taxation and the prevention of fiscal evasion. Once implemented, they will provide relief from taxation rules in, or related to, the Income Tax Act. Their implementation requires the enactment of this Act.

This is the official summary published by the Parliament of Canada, shown verbatim. Not legal advice. PoliticalData.ca did not write or edit this text.

View on LEGISinfo

Parliamentary Process

Step 1
First reading
Nov 1, 2016
Completed

Bill S-4, concerning double taxation and fiscal evasion, completed its First Reading in the Senate on November 1, 2016, and eventually received Royal Assent on December 15, 2016.

Introduction and first reading, Nov 1, 2016
End of stage activity, Nov 1, 2016
Chamber sittings
Introduction and first reading - Nov 1, 2016

During a Senate sitting on November 1, 2016, Bill S-4, concerning tax conventions, was introduced and read for the first time, and other routine parliamentary business was conducted.

Step 2
Second reading
Nov 29, 2016
Completed

Bill S-4, concerning double taxation and fiscal evasion agreements, completed its second reading in the Senate.

Second reading, Nov 29, 2016
Referral to committee, Nov 29, 2016
End of stage activity, Nov 29, 2016
Chamber sittings
Debate at second reading - Nov 15, 2016

During a Senate sitting on November 15, 2016, the chamber introduced new senators, heard tributes, conducted routine proceedings, debated Bill S-4 on double taxation, discussed concerns regarding consultation for Bill S-3 (Indian Act), held Question Period, and debated other legislative and modernization matters before adjourning.

The Senate began its second reading debate on Bill S-4, focusing on its role in implementing international tax agreements and arrangements to prevent double taxation and fiscal evasion.

Debate at second reading - Nov 24, 2016

On November 24, 2016, the Senate held a sitting that included Senators' Statements, Question Period, and debate on various bills, most notably a point of order and extensive discussion regarding the admissibility of an amendment to Bill C-2 concerning tax legislation, and the continuation of debate on Bill S-4 at second reading.

On November 24, 2016, the Senate continued debate at second reading for Bill S-4, with a senator explaining its purpose to implement double taxation agreements with Israel and Taiwan and stressing the urgency of its passage.

Debate at second reading - Nov 28, 2016

During a Senate sitting on November 28, 2016, the second reading debate for Bill S-4, concerning double taxation and fiscal evasion, was continued.

Debate at second reading - Nov 29, 2016

During a Senate sitting on November 29, 2016, Bill S-4 proceeded to second reading debate, with a senator speaking on its importance and the bill ultimately being referred to committee.

Step 3
Consideration in committee
Dec 5, 2016
Completed

Bill S-4, concerning the avoidance of double taxation and fiscal evasion, completed its committee stage in the Senate on December 5, 2016, before receiving Royal Assent on December 15, 2016.

Committee report presented without amendment, Dec 5, 2016
End of stage activity, Dec 5, 2016
Chamber sittings
Committee report presented without amendment - Dec 5, 2016

On December 5, 2016, the Senate received the report on Bill S-4 without amendment, engaged in debates on other legislative matters including tax and pension reform, and adopted a report on the Copyright Board.

Step 4
Third reading
Dec 6, 2016
Completed

Bill S-4 successfully completed its third reading in the Senate on December 6, 2016, before receiving Royal Assent on December 15, 2016.

Third reading, Dec 6, 2016
End of stage activity, Dec 6, 2016
Chamber sittings
Debate at third reading - Dec 6, 2016

The Senate of Canada convened on December 6, 2016, observed a moment of silence for the l'École Polytechnique tragedy, debated and passed Bill S-4 at third reading, and discussed other legislative matters and government business, including Question Period with the Minister of Justice.

Step 1
First reading
Dec 7, 2016
Completed

Bill S-4, concerning the avoidance of double taxation and the prevention of fiscal evasion, completed its first reading in the House of Commons on December 7, 2016.

First reading, Dec 7, 2016
End of stage activity, Dec 7, 2016
Chamber sittings
First reading - Dec 7, 2016

This is a record of the House of Commons sitting on December 7, 2016, noting the first reading of Bill S-4, after which various other debates and proceedings took place.

Step 2
Second reading
Dec 8, 2016
Completed

The House of Commons completed the second reading of Bill S-4 on December 8, 2016, referring it to a committee, before the bill received royal assent later that month.

Second reading and referral to committee, Dec 8, 2016
End of stage activity, Dec 8, 2016
Chamber sittings
Debate at second reading - Dec 8, 2016

During the second reading debate of Bill S-4, the House of Commons discussed the implementation of tax agreements with Israel and Taiwan, while also extensively debating the government's approach to electoral reform and its public consultation methods.

During the second reading debate on Bill S-4, Members of Parliament discussed the procedural aspects and potential economic impacts of implementing tax conventions with Israel and Taiwan.

During the second reading debate on Bill S-4, members of Parliament debated the merits of tax conventions with Israel and Taiwan while also extensively criticizing the government's approach to electoral reform consultation.

The House of Commons debated Bill S-4 at second reading, discussing the implementation of tax conventions with Israel and Taiwan to avoid double taxation and prevent fiscal evasion, with overall support for the bill's trade and investment facilitation aspects.

Step 3
Consideration in committee
Dec 13, 2016
Completed

Bill S-4 completed its committee stage in the House of Commons on December 13, 2016, before receiving Royal Assent on December 15, 2016.

Committee report presented without an amendment, Dec 13, 2016
End of stage activity, Dec 13, 2016
Chamber sittings
Committee report presented without an amendment - Dec 13, 2016

The House of Commons considered Bill S-4, reporting it from committee without amendment, and began debate on other government orders including the Canada-Ukraine Free Trade Agreement and the Comprehensive Economic and Trade Agreement.

Step 4
Report stage
Dec 14, 2016
Completed

The House of Commons completed report stage and third reading for Bill S-4 on December 14, 2016, before it received Royal Assent on December 15, 2016.

Concurrence at report stage, Dec 14, 2016
End of stage activity, Dec 14, 2016
Chamber sittings
Concurrence at report stage - Dec 14, 2016

On December 14, 2016, the House of Commons completed its report stage concurrence and third reading of Bill S-4, a bill to implement a tax convention and arrangement, and adjourned for the holiday break.

Step 5
Third reading
Dec 14, 2016
Completed

Bill S-4 successfully passed Third Reading in the House of Commons on December 14, 2016, and received Royal Assent the following day.

Third reading, Dec 14, 2016
End of stage activity, Dec 14, 2016
Chamber sittings
Debate at third reading - Dec 14, 2016

The House of Commons concluded its debate on Bill S-4, an act to implement international tax agreements, and passed it at third reading.

Step 1
Royal assent
Dec 15, 2016
Royal assent, Dec 15, 2016
End of stage activity, Dec 15, 2016
Chamber sittings
Royal assent - Dec 15, 2016

We don't have a plain-language summary for Debates of the Senate yet. The official source linked below is the full record.

Debate and sitting links point to official parliamentary sources when LEGISinfo publishes them. Any plain-language discussion summaries should be generated from those official texts and reviewed before public display.

Vote Summary

No published recorded division

This bill does not have a published recorded division in the current official sources, so representative-by-representative vote counts are not shown.

Sponsor
Peter Harder
Senator | Progressive Senate Group (PSG) | Ontario
Jurisdiction
Federal Parliament

No published representative vote breakdown

The current official sources do not publish a recorded division breakdown for this bill, so there is no representative-by-representative table to show.

Official sources

Status, sponsor, votes, and timeline on this page are drawn from these official legislative sources and public records. Each summary above is attributed to its own source.

How this data is sourced