PART B - CABOTAGE - NBAA

LARK & 

OMPANY 

REGULATION REQUIREMENTS FOR OPERATIONS TO/FROM 

CANADA INCLUDING CABOTAGE RESTRICTIONS AND 

CANADIAN TAX ISSUES 

William F. Clark 

Barrister & Solicitor 

Clark & Company 

200 Adelaide St. West Telephone: (416) 681-9900 

Suite 011 Facsimile: (416) 681-9500 

Toronto, Ontario Mobile: (647) 500-7115 

M5H 4E2 E-Mail: clark@yyzlaw.com 

CROSS-BORDER ISSUES CONFERENCE 

Montreal, Quebec 

November 18 – 19, 2010 

PART B - CABOTAGE 

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Cabotage 

Canada Customs and Revenue Agency 

www.ccra-adrc.gc.ca 

MEMORANDUM D3-2-1 - International Air Traffic 

Authorized Use of Private and Company- 

Owned Aircraft 

16. A foreign non-tax paid aircraft is restricted 

to international flights from a point abroad 

to a point or points in Canada and return. 

The carriage of Canadian residents to and 

their arrival from foreign destinations is 

permitted provided the flight is limited to 

international service. 

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Cabotage 




Authorized Use of Private and Company-Owned 

Aircraft 

17. The non-commercial operation of non- 

Canadian private aircraft by a non-resident of 

Canada is generally unrestricted. Customs 

procedures pertaining to these aircraft are 

explained in greater detail in Memorandum D2- 

1-1, Temporary Importation of Baggage and 

Conveyances by Non-Residents. 

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Cabotage 





Owned Aircraft – Continued 

18. Non-Canadian corporate aircraft operating in 

Canada are restricted to operating 

international services into or out of Canada 

and are not permitted to operate point-topoint 

domestic services within Canada. In the 

performance of international service, the 

aircraft may stop at more than one Canadian 

location and disembark or re-embark 

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Cabotage 






18. passengers, provided the passengers are the 

same passengers who originated outside of 

Canada. Similarly on the outbound portion of 

an international flight, the aircraft may stop at 

one or more locations in Canada and may 

disembark and re-embark passengers who are 

ultimately taken out of Canada as part of the 

outbound international service. 

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Cabotage 






19. Within the definition of an international flight, 

Customs has traditionally allowed the uplift of 

Canadian passengers when their carriage was 

incidental to the intended or declared purpose 

of the flight. 

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Cabotage 





Aircraft - Continued 

• Example: A United States based aircraft 

carrying company personnel from a location in 

the U.S. to a branch meeting or conference in a 

Canadian city may, while en route to the 

meeting or conference, stop at another 

Canadian city and pick up additional personnel 

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Cabotage 





Aircraft - Continued 

who will also be attending the same meeting or 

conference. They may subsequently return the 

same Canadian passengers to the Canadian 

city where they were embarked, during the 

return portion of flight destined to a point in the 

United States. 

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Cabotage 



• Note: Customs generally considers all 

corporate aircraft to be non-commercial 

operations unless specifically engaged in a 

commercial charter or other operation for 

hire or remuneration. However, some 

corporate operations may be classified as 

commercial air services under other 

government legislation and may be 

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Cabotage 



prohibited from operating an air service 

between two points in Canada. Corporate 

operators are advised to consult with the 

Canadian Transportation Agency (CTA) 

regarding possible restrictions on carrying 

passengers between points in Canada . 

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Cabotage 




Authorized Use of Private and Company-Owned Aircraft - 

Continued 

20. Under no circumstances may a foreign non-tax paid 

aircraft enter Canada for the sole purpose of carrying 

passengers from point to point in Canada. In this 

situation, it is deemed that the aircraft is imported for 

that specific purpose and is not performing an 

international air service. 

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Cabotage 



26. From time to time, non-tax paid aircraft are 

chartered by groups of non-residents who wish 

to visit several Canadian centers. Normally, the 

point-to-point carriage of passengers by a nontax 

paid non-Canadian aircraft would be 

considered a cabotage movement. However, 

such movements are allowed if the passengers 

originated outside of Canada and are initially 

brought into Canada by a carrier that is 

operating under a continuing tour charter. 

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Cabotage 



MEMORANDUM D2-1-1 

Temporary Importation of Baggage and 

Conveyances by Non-Residents 

45. Foreign-owned corporate aircraft may be 

used to transport non-resident company 

personnel/clientele into, out of, and within 

Canada without any restrictions on 

itinerary. All movements must be for the 

benefit of, or 

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Cabotage 



on behalf of, a non-resident of Canada, and 

any sales or subscriptions to be solicited 

must be on behalf of a business based 

outside of Canada. In addition, no goods or 

passengers may be transported for 

compensation, nor may goods be 

transported for sale. 

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Cabotage 



46. Residents of Canada may accompany 

non-resident company personnel/clientele 

on movements from point to point in 

Canada only if their presence on board the 

aircraft is incidental to the primary purpose 

of the trip and no remuneration is involved. 

In other words, each movement of the 

aircraft in Canada must be for the purpose 

of transporting or accommodating an 

eligible non-resident user. In any case where 

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Cabotage 



the aircraft is used to travel from point to 

point in Canada solely for the movement or 

accommodation of a resident, the aircraft is 

no longer eligible for the provisions of tariff 

item No. 9803.00.00 and becomes subject to 

assessment in the usual manner. 

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Cabotage 



47. However, one-way movements into 

Canada to a customs-authorized airport 

and one-way movements out of 

Canada from a customs-authorized 

airport may be made without regard to 

the residential status of the passengers 

carried or the requirements of this 

Memorandum, provided no local use is 

made of the aircraft while it is in 

Canada. 

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Cabotage 

Canadian Transportation Agency 

• The transportation of passengers between 

points in Canada, by a U.S. airline as part of a 

trip originating in or destined to the United 

States, is international transportation and not a 

“cabotage” movement. When the 

transportation is part of a continuous 

international journey with stopovers at points 

within Canada and is covered by a single 

contract, the entire transportation, including the 

portions between points in Canada, is 

considered to be international. 

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Cabotage 


Under this Agreement designated airlines of Canada and 

the United States may operate scheduled or charter 

flights between any point or points in the United States 

and any point or points in Canada and may provide 

stopovers at points in either territory. There is no limitation 

on the number of points at which such stopovers may be 

made. In the case of charters, there is no longer a 

requirement for the aircraft to remain with the charter 

group at the point of stopover . . . Or for the same aircraft 

to be 

used for the entire journey. 

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Cabotage 


In view of these provisions, a United States airline 

may transport passengers from the United States 

to a first point of arrival in Canada, return to that 

Canadian point at a later date and transport 

the same group to another point in Canada for 

another stopover, provided that the entire 

transportation of the group is under a single 

contract with that airline for transportation 

which originates in, or is finally destined for a 

point in the United States. 

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Cabotage 


The CTA would consider that the carriage of a charter 

group on a journey which included roundtrip 

transportation between two points in Canada, with 

stopovers at that point on both occasions, would not be 

an international journey. As an example, the 

transportation by a U.S. carrier of a charter group on a 

“continuous journey” from Pittsburgh to Montreal, as a 

stopover point and subsequently from Montreal to Toronto 

and return to Montreal with stopovers at each point, even 

if the journey ultimately continues to another point in the 

U.S.A., would be considered to be two separate trips, one 

of which would involve cabotage. 

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PART B - CABOTAGE - NBAA

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