By virtue of these provisions, income earned by way of international shipping
activities is exempt from taxation in Canada if earned by a corporation that is not
resident in Canada even if that corporation’s mind and management is located in
Canada. Given that the definition of “international shipping” sets out specific
exclusions, it stands to reason as a matter of legislative interpretation and the
application of the expressio unius est exclusio alterius maxim that the Parliament
of Canada intended this list of exclusions to be exhaustive. Accordingly, a great
number of activities incidental to the operation of a ship in international traffic would
appear to qualify as international shipping for Canadian tax purposes.
17
Prior correspondence between the Canada Revenue Agency, formerly Revenue
Canada, and the Vancouver International Maritime Centre regarding the “operation
of ships” language formerly set out in sections 81(1) and 250(6) of the Income Tax
Act is to similar effect.
18 That correspondence indicated that an international shipping corporation would be considered engaged in the operation of ship for tax
purposes when the corporation:
• owns and crews ships and transports cargo or passengers for its own account;
• charters ships it owns and crews to another party;
• charters ships from and crewed by another party when it has the right and
responsibility to arrange the transport of cargo or passengers for its own account;
• charters ships from another party and crews the ships itself and arranges the
transport of cargo or passengers for its own account;
• charters ships from another party and crews the ships itself and then charter the
ships to another;
• engages in a combination of the above-mentioned activities; or
• engages in other ancillary activities integrated with the above-noted business for
its own account including:
– raising capital and debt financing;
– overseeing new construction, acquisitions and dispositions;
– crewing and catering;
– performing repairs and maintenance;
– arranging insurance;
– marketing;
– negotiating charters;
– arranging voyages and soliciting cargo and passengers; and
– stevedoring.
19
The second element of Canada’s international shipping tax regime is aimed
directly at the “mind and management” test and its elimination in the context of
17 See, for instance, Sullivan (2008), p. 244.
18 See Hodgson and Brooks (2003), pp. 46–47.
19 Hodgson and Brooks (2003), pp. 46–47.
Taxation and Ship Management: A Canadian Case Study
463
activities is exempt from taxation in Canada if earned by a corporation that is not
resident in Canada even if that corporation’s mind and management is located in
Canada. Given that the definition of “international shipping” sets out specific
exclusions, it stands to reason as a matter of legislative interpretation and the
application of the expressio unius est exclusio alterius maxim that the Parliament
of Canada intended this list of exclusions to be exhaustive. Accordingly, a great
number of activities incidental to the operation of a ship in international traffic would
appear to qualify as international shipping for Canadian tax purposes.
17
Prior correspondence between the Canada Revenue Agency, formerly Revenue
Canada, and the Vancouver International Maritime Centre regarding the “operation
of ships” language formerly set out in sections 81(1) and 250(6) of the Income Tax
Act is to similar effect.
18 That correspondence indicated that an international shipping corporation would be considered engaged in the operation of ship for tax
purposes when the corporation:
• owns and crews ships and transports cargo or passengers for its own account;
• charters ships it owns and crews to another party;
• charters ships from and crewed by another party when it has the right and
responsibility to arrange the transport of cargo or passengers for its own account;
• charters ships from another party and crews the ships itself and arranges the
transport of cargo or passengers for its own account;
• charters ships from another party and crews the ships itself and then charter the
ships to another;
• engages in a combination of the above-mentioned activities; or
• engages in other ancillary activities integrated with the above-noted business for
its own account including:
– raising capital and debt financing;
– overseeing new construction, acquisitions and dispositions;
– crewing and catering;
– performing repairs and maintenance;
– arranging insurance;
– marketing;
– negotiating charters;
– arranging voyages and soliciting cargo and passengers; and
– stevedoring.
19
The second element of Canada’s international shipping tax regime is aimed
directly at the “mind and management” test and its elimination in the context of
17 See, for instance, Sullivan (2008), p. 244.
18 See Hodgson and Brooks (2003), pp. 46–47.
19 Hodgson and Brooks (2003), pp. 46–47.
Taxation and Ship Management: A Canadian Case Study
463