On 29 July 2008 the Fifth Protocol (the "Protocol") to the Canada-US Tax Convention (the "Convention") was ordered to be reported "favourably" and "without amendment" out of the US Senate Foreign Relations Committee.  We have previously discussed the Protocol in Taxation Law @ Gowlings No 116 in Canadian Tax @ Gowlings Volume 5 No 3 and in Special Bulletins of Canadian Tax @ Gowlings on September 25 and October 10 2007 (all of which can be accessed via the following link http://www.gowlings.com/resources/newsletters.asp)

The Protocol now awaits only full Senate consideration and the President's signature before entering into force.  If the past practice for tax treaties before the US Senate is followed, the Protocol (having been reported without amendment) will be reported and printed by the Chairman of the Committee and presented to the full Senate shortly, at which time (likely within the same day) it will be moved through its Parliamentary stages very quickly and passed by the full Senate.

The past practice is for the Senate to pass a tax treaty within a few days or weeks after being reported out of Committee (defined?).  However, the Senate is currently in adjournment and will resume its regular sittings in September for a period of approximately one month.  We anticipate that the Fifth Protocol will be passed by the full Senate during that time.  At that point, the only further step is signature by the President; again the usual procedure is for this to take only a few weeks.

We remain cautiously (but increasingly) optimistic that the Protocol will enter into force in 2008.  Many of the effective dates and deadlines within the Protocol depend on the calendar year of ratification.  Therefore we will continue to watch its passage with interest.

Your TAXAND contacts for further queries are:

Craig Burley
T. 001 416 369 6179
E. craig.burley@gowlings.com

Stefan Clulow
T. 001 416 862 5695
E. stefan.clulow@gowlings.com