Canada's treaties - Article 6

Article 6 in most treaties describes what will happen in the case of immovable property (i.e. land).

In the Canada-Barbados treaty, as in many others, immovable property has the meaning of the tax laws in the country where it is situated.  For Canada, that includes such things as real property.

In all of Canada's treaties, the treaty states that income from immovable property that country may be taxed in that country.  That allows Canada to tax income from activities such as agriculture, forestry or other natural resources.

When a treaty says that the income MAY be taxed in the country, it means that the country may have withholding taxes or may have regular income taxes on income derived.

The MAY in the treaty also means that the country of residence will also likely tax the income (assuming it is taxable under their laws) but that country will allow a foreign tax credit for the tax paid to the original country.

Remember that a foreign tax credit is only permitted if the tax has been correctly paid.  In the case of Article 6, both countries have the right to tax, so a tax credit will be permitted.