Both countries taxed the same profit. Which one do I argue with?
Neither, on its own, if the reason for the double tax is that they disagree with each other. A domestic objection asks one authority to change its mind about its own assessment, and where each is applying its own law defensibly there is nothing for it to change. The treaty route is different. The request goes to the competent authority of the country in which you are resident, within the time limit the treaty sets, and the two authorities then negotiate the position between themselves. It is a government-to-government procedure, and what gets resolved is their disagreement rather than your objection.
Can I make a request after my domestic appeal deadline has passed?
Often, yes, and this surprises people. The treaty procedure carries its own time limit, which is not the domestic one, so a competent authority request can be available even where domestic appeal rights have run out. That is not a reason to let an objection lapse, because the domestic route is usually quicker and cheaper where it can work at all. But a closed appeal window is not automatically the end of a double-tax problem. The first thing to establish is where the treaty's own limit stands for the year in question, because everything else follows from that.
What exactly is a MAP request and who do I send it to?
It is a request that the competent authority of your country of residence take a double-taxation problem up with its counterpart in the other country. It goes to that authority, not to the assessing office that raised the adjustment, and it has to be made within the time limit the relevant treaty sets. What follows is a negotiation between the two administrations about how the income or the profit should be divided between them. Your part is the record: what each country has assessed, on what basis, and why the two positions cannot both be right.
Can a one-sided transfer pricing adjustment be corrected under a treaty?
That is the classic case for this procedure. Where one administration increases the profit taxable in its jurisdiction and the other declines to reduce the profit it has already taxed on the same transaction, the same margin is taxed twice and no domestic remedy reaches both sides of it. The treaty route is built for exactly that. The request goes to the competent authority of the country of residence, within the treaty's time limit, and the two then negotiate the allocation. The work on your side is evidential: the transaction, the functions behind it, and what each country has actually assessed.
Two countries both treat me as resident. Can the treaty settle it?
A contested residence determination is one of the standard subjects for a competent authority request, and it is made to the authority in the country you say you are resident in, within the treaty's own time limit. Until the question is settled, both countries continue to assess on their own view, so the practical sequence matters as much as the request. The filings still have to be made and the position documented consistently in both places while the two authorities work out which of them is right, because inconsistent filings become evidence against you.
Is a competent authority request worth starting or should I just pay?
It depends on what is actually in dispute. Where two countries are taxing the same profit and each is applying its own law defensibly, paying twice is the alternative, and the treaty procedure is the only route that reaches both assessments at once. Where the problem is a mistake inside one country's own assessment, a domestic objection is quicker and the treaty route is the wrong tool. We look at three things before advising: what each country has assessed, whether the treaty's own time limit is still open, and whether the record supports one allocation over the other.
What counts as foreign income, and what is a foreign tax?
Foreign income is income sourced outside the country you are filing in — where the work was done, where the property sits, where the payer is resident, depending on the type. A foreign tax, for credit purposes, is a levy imposed by another country that functions as an income tax and that you were legally required to pay. Consumption taxes, property taxes and most social contributions are not, however real the cost. Sourcing is decided by rule, not by which bank received it. See the foreign tax credit.
How much foreign income is tax-free in Canada?
None of it is tax-free for being foreign. A Canadian resident is taxed on worldwide income, so foreign salary, interest, dividends, rent and gains all go on the return, converted to Canadian dollars. What genuinely reduces the bill is the basic personal amount, the credit for foreign tax already paid, and any treaty article that exempts a specific type of income. The reporting thresholds people have in mind — the foreign property statement, for one — govern reporting, not exemption. See the foreign tax credit.
