PART III.

TREATY ABUSE

Article 6 – Purpose of a Covered Tax Agreement

1. A Covered Tax Agreement shall be modified to include the following preamble text:

“Intending to eliminate double taxation with respect to the taxes covered by this agreement without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance

(including through treaty-shopping arrangements aimed at obtaining reliefs provided in this agreement

for the indirect benefit of residents of third jurisdictions),”.

2. The text described in paragraph 1 shall be included in a Covered Tax Agreement in place of or in the absence of preamble language of the Covered Tax Agreement referring to an intent to eliminate double

taxation, whether or not that language also refers to the intent not to create opportunities for non-taxation or

reduced taxation.

3. A Party may also choose to include the following preamble text with respect to its Covered Tax Agreements that do not contain preamble language referring to a desire to develop an economic relationship

or to enhance co-operation in tax matters:

“Desiring to further develop their economic relationship and to enhance their co-operation in tax matters,”.

4. A Party may reserve the right for paragraph 1 not to apply to its Covered Tax Agreements that already contain preamble language describing the intent of the Contracting Jurisdictions to eliminate double taxation

without creating opportunities for non-taxation or reduced taxation, whether that language is limited to cases

of tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs

provided in the Covered Tax Agreement for the indirect benefit of residents of third jurisdictions) or applies

more broadly.

5. Each Party shall notify the Depositary of whether each of its Covered Tax Agreements, other than those that are within the scope of a reservation under paragraph 4, contains preamble language described in

paragraph 2, and if so, the text of the relevant preambular paragraph. Where all Contracting Jurisdictions

have made such a notification with respect to that preamble language, such preamble language shall be

replaced by the text described in paragraph 1. In other cases, the text described in paragraph 1 shall be

included in addition to the existing preamble language.

6. Each Party that chooses to apply paragraph 3 shall notify the Depositary of its choice. Such notification shall also include the list of its Covered Tax Agreements that do not already contain preamble language

referring to a desire to develop an economic relationship or to enhance co-operation in tax matters. The text

described in paragraph 3 shall be included in a Covered Tax Agreement only where all Contracting

Jurisdictions have chosen to apply that paragraph and have made such a notification with respect to the

Covered Tax Agreement.

Article 7 – Prevention of Treaty Abuse

1. Notwithstanding any provisions of a Covered Tax Agreement, a benefit under the Covered Tax Agreement shall not be granted in respect of an item of income or capital if it is reasonable to conclude,

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